Yahoo won't allow me to post the link, but The Hartford Courant has a good article about two lawsuits just filed by EDAC shareholders. The lawsuits assert that EDAC executives and BOD are rushing the sale to benefit themselves over shareholders. Hit it up via a google search. Good article.
Out of stock. Out of stock. Out of stock. Out of stock on all the common items. Out of stock, all the time.
Today it was spark plugs, bolts to attach license plate to trailer, Oil based Armor paint. Out of stock, out of stock, out of stock. Last week it was sandpaper, nails for nail gun, and 2" oil based paint brush. Out of stock, out of stock, out of stock.
Lowes is always, ALWAYS a roll of the die as to whether they will have what I need. It's gotten so very bad, that at times I just don't even try. I drive right on by that sorry store and travel the extra 5 miles down the road to go to HD. Ever since they centralized all ordering and inventory control at Corporate, and took it out of the hands of the local store managers, it's been nothing but OUT OF STOCK, OUT OF STOCK, OUT OF STOCK.
You want to know why HD is kicking Lowes tail now?
Easy ... OUT OF STOCK. LOWES stands for OUT OF STOCK.
If you look over the list of portfolio companies of both GrenBriar and MidOcean, its fairly obvious that GreenBriar is positioned to realize a greater number of synergies between EDAC and other portfolio companies. Therefore, GreenBriar should be positioned to pay more for EDAC than MidOcean. I would expect GeenBriar to up their offer and to eventually win the bidding ... Provided no strategic buyer materializes. It'll probably settle out at around $19 ... Would be my bet. Could go to $20 - $21 if a strategic buyer enters the fray and uses their stock to acquire. Just a guess.
On February 21st, Party C calls Stifel and says, hey ... We hear you are holding a bake-off for EDAC ... We might be interested in buying it .... Keeping in mind that Party C was not even on the radar of Stifel, EDAC mgt, EDAC lawyers. Just a phone call, out of the blue.
Did it not occur to ANYONE it was obvious on Feb 21st that news of the effort to sell had leaked? A phone call, out of the blue, from someone not on anyone's radar. Hello? Anyone with a brain at home?
That was absolutely the day that the IDIOT lawyers of EDAC should have said ... The news of the bake-off is out. The stocks volume is spiking. The shares are leaping. We should immediately disclose to the public that a negotiation for sale of the company is in progress.
The fact that it took another month to make that disclosure is an absolute CLUSTER FORK. And I hope both Puggy and Purple, and their sorry piece of junk lawyers get b@tch slapped for it.
Yep, I did a poor job of scanning the filing. Missed that. Assumed EDAC hired Stifel after being approached with an offer. It is obvious they hired Stifel specifically to shop the company. My bad. Glad I did miss that though. Had I read it, I likely would have hit the exit, taken the $17.70 - 17.73. Lady Luck on my side.
This is disappointing. I am shocked there was not more interest, especially from strategic buyers. There are few opportunities to get positioned in Aero engine part manufacturing. And it's a significantly less cyclical area than other aspects of Aero. Would have thought the frame manufacturers would jump on it. The size of the deal could have been a factor. $100 M is chump change for most. Too much trouble.
Although, EDAC is a perfect fit for WWD. Woodward recently acquired an Aero frame manufacturer. While it does mostly biz jet work, they are trying to make in-roads into commercial. More importantly though, WWD is heavy into parts machining for gas turbines, wind turbines, et al. They could have easily recognized synergies with EDACs skills and facilities.
Now that we know it was shopped, far and wide, it is even more obvious that the jump in volume and price from mid-Feb was trading on insider info. Someone is going to get nailed here.
However, this raises an entirely new and troubling issue. When a public company hires a representative to find a buyer, an immediate disclosure is made to shareholders. Insiders who know the company is being shopped are sitting on material information. Just the act of not selling their shares during this period opens them up to insider trading accusations. We should have been told back in Oct that Stifel was engaged to look for a buyer for the company. Anyone who sold from Oct to the point of the $17.75 offer got harmed by that lack of disclosure, and I bet lawsuits will fly over this issue.
This whole process was terribly mishandled.
Who are you, and how do you possess so much information that most others are unable to obtain? For example, where did you find out that EDAC engaged Stifel to find a buyer? How do know that all strategic buyers were approached and none were "remotely" interested? And, how did you find out that 3 financial buyers were the only ones at the table? I'll admit I only scanned the latest SEC filing, but don't recall seeing any of that info disclosed. And, I called Stifel, spoke with multiple people there, they would tell me nothing. I also called EDAC mgt, they would only point me to SEC disclosures. How the &$@/ is it that you know about these key issues that aren't getting disclosed to shareholders?
Another thought comes to mind as well ... THE LEAK. Trading on insider info, and its impact on rushing the deal.
Obviously, news of the pending offer got out in mid-Feb. Volume spiked. The shares started running. I suspect that wound up having the effect of a rushed effort to get a decision made and out to the mkt. There wasn't ample time for all interested parties to thoroughly do their work to determine value. Could be that mgt just went ahead and aligned with someone, anyone, to get the news out ... knowing they could then run a fair and open auction afterwards? Given ... Even if they did commit their shares to Greenbriar, they aren't locked. They have legal duties to shareholders to accept the best offer.
This could turn into a circus. The move is happening. Sales are ramping. New contracts are expected soon. A bidding war for the company is on. And the SEC has been alerted to the trading on insider information. I suspect the SEC will walk into this situation soon, which will truly turn this into a EDAC three ring circus.
I traded CVU actively in the early/mid 2000s. I drank the kool-aide there too, for a couple years. Mr. Fred is an impressive sounding CEO, initially. But, you'll soon catch on. He's a promoter. All hat, no cattle. He promises the moon in the way of new business, but fails to deliver.
The more significant problem there is their accounting. They use % completion accounting, which is highly subjective. Mr. Fred is a former CPA, he knows how to massage the numbers so that profits show continual growth. It can be done for a number of years, but eventually it catches up with you and massive write-offs ensue. Their last major write-off was a year or two ago. They'll have another within the next 1 to 2 years. You simply can't trust GAAP accounting there. Book income is meaningless in these cases. The only gauge you can use in judging CVU's performance is FCF (free cash flow).
Look at the cash flow stmt of CVU. They book profits, but never generate cash. In the last 3 years alone, they have USED $38 Million in cash from operations. The company has a mkt cap of only $71 M. Last time I saw such a massive imbalance ... Enron.
CVU is simply dangerous. Their CEO has no credibility. Their financials can not be trusted. You'd be smart to stay away from CVU.
It wasn't all roses with Pagano. There was a long period where sales were slowly rising, but income went no where (2008-10). We got nothing in the way of decent disclosure in the SEC filings, and the conference calls were even less informative. When things got cranking on the bottom line (2011-2012), we learned of the massive product development expenditures of earlier years to bring the new products to market.
You showed up years after I had been playing in the EDAC sandbox. I was there for the fall from $11s to $1s (2007-08). Riding it down wasn't fun. But that ride, and being so familiar with the story, gave me that much more comfort to back up the truck.
WSCI can unfold in a similar manner. They are taking hits to the P&L now to get the necessary AS9100 quality certifications, and development costs, to attact Aero business. We know what's in store for Aero as a result of our exposure to the EDAC story - massive growth. WSCI is so small, that even a crumb from Aero can cause this company to explode overnight. We just need to have patience. It may take awhile for them to get their foot in the door somewhere, but it will happen eventually.
On the energy front - there's an air pocket happening now on the drilling front. The number of domestic rigs operating has fallen appreciably. This is a short term factor that will take another year or two to iron out. Many were drilled when gas was $8 - $14, then capped with the price fell to $2-$3. We're going to have to wait until those are opened and pumping before well count starts increasing again. Plus, there are a number of pipeline expansions that will be opening soon that can take gas from the fields in Ohio and Pa down to the Gulf for storage and processing. Well count should start another round of torrid growth later this year or early next.
If nothing else, stay engaged here with a small position. This is another EDAC, just waiting to unfold.
I bought shares in a turd once at $11, years ago. Quarter after quarter I suffered through terrible results, terrible press releases, terrible earnings calls. But I had faith the turd's industry was on a major upswing. I backed up the truck when the turd fell into the highs $1s and low $2s. You know that turd too Argyle. It just got stolen from us at $17.75. ... EDAC
I have faith that if I hang with this WSCI turd awhile longer, it will eventually pay off too. Not this year. Maybe not next. But I suffered through 4 or 5 painful years before scoring an 8 bagger on EDAC.
WSCI is trying to get positioned in AERO. We know the story there Argyle. There is massive growth ahead.
WSCI is trying to get positioned in Energy. Fracking. Check out the Business Insider tweet this evening re: Fracking. Follow the link to the presentation. One slide indicates there are currently 12,000 operating wells in just the Marcelles field alone .... Moving to 100,000.
There's tremendous opportunity and growth in the areas where WSCI is making the effort to get positioned. The only question is whether the 2 clowns running the WSCI show can get us there. These clowns remind me of the EDAC clowns. And EDAC worked out pretty darn well.
So, I'm warming up my truck again ....
When the stock trades down to a penny, it'll have a monster dividend yield.
Monster dividend yield possibility? That's got to be worth at least 50 cents per share in our sum of the parts valuation method. Lets recap the hidden value here with our little jewel:
$4.50 Putting a 10 PE on T*urd like earning
$0.50 Idiot CEO
$1.00 Stupidly worded press releases
$0.25 High probability of constantly being sued for dumbness
$0.25 Chest pounding about underutilized capex
$0.25 Empty plant premium
$0.50 A gazillion percent Divy yield when stock trades to 1 penny
Man, our little jewel is worth at least $7.25 .... In the entertainment industry.
We're on a roll. There's even more hidden value in our little jewel. Our stupid CEO keeps citing the power of having empty plant capacity to offer up for new business, so there must be empty plant value in our stock. Yes? Empty plant, teamed with unused machines, are worth at least another .25 per share. No?
Wow, we're really killing it on that sum of the arts valuation method. I think we've climbed all the way up to $6.75 per share.
Someone phone Goldman. We're ready for a killer secondary. We need to raise more funds to expand our empty plant and order more unused machinery.
Oh heck yes, I found more value! They are buying new machines. They don't have the incrementally new business to justify the capital expenditures, but new machine purchases must, never the less, be worth something, Yes?
Let's add another .25 per share to our sum of the parts valuation for stupid new machine purchases. What are we up to now in valuation? $6.50? Yes?
Honest to God, if you could sue a company for being really stupid, the WSCI management team would spend all their time in court.
That's got to be worth another .25 per share. Right?
What are we up to now? $6.25 per share?
OK, so they will fall short of the .51 per share that they earned last year. What does that mean? Let's just guess around .45. They've already earned .17 over the first 2 Qs. Next two they earned .21 and .21 last year. Guess then that they'll come in at around .14 and .14 for the next two Qs, to hit .45 for the current year. Just my guess.
Still, surely this T*rd is worth a 10 PE, at least? .45 x 10 = $4.50. Right?
But hey ... there's significantly more value to be had here ....
When a CEO grows plant capacity by 50% and then reports a follow-up year of declining sales, that has to have some value, don't you think? I mean, idiot CEOs aren't just a dime a dozen these days. Let's say $1. That's reasonable. Right?
Then, there's the fact that these guys are clueless in how to write decent press releases. That's worth at least .50 per share in entertainment value. Right?
So, let's do a sum of the parts valuation:
$4.50 for T*rd like earnings
$1.00 for an idiot CEO
$0.50 for stupidly worded press releases
= $6 a share.
This thing is worth at least $6 a share. Don't you figure?