zuzin, I expect PGN to report it generated $150 million of free cash flow in 2015 2Q--more than the equity cap of the entire company. And, that's cash Paragon can use to buy back its debt. 2Q results are likely to be much better than most expect.
Sure--if you are able to take a meaningful position in the bonds. None of the big PGN bondholders are selling. Few bonds actually trade. If you try to buy a decent size chunk of PGN bonds, you will push the bond price way up because there's no liquidity, and few bonds actually change hands. Sometimes some money manager who owns a few PGN bonds will sell a few to try to dress up his portfolio, and he has to sell them at a distressed price because there's no volume. There isn't an active market in PGN bonds, so there's insufficient price discovery.
yebin, I agree with you! Republic takes huge depreciation writedowns every quarter, so even though quarterly earnings will miss consensus in 2Q, the airline is still solidly profitable, and has strong cash flow from operations. I figure there is "downside protection" to the stock price, because Republic owns a very valuable franchise as it is basically the only feeder airline serving many small and mid-sized airports, and the major domestic airlines are heavily reliant on Republic to ferry passengers to their hub airports. If Republic were to run into some temporary financial turbulence, I'm pretty sure that its competitors would love to buy Republic to expand their footprint and gain scale, which brings a competitive advantage. Whichever of RJET's competitors is able to acquire RJET will be the long-term winner in the feeder airline derby.
Sentiment: Strong Buy
...which faces little risk of bankruptcy. RJET continues to be profitable. The Teamsters lawsuit won't have a major impact on RJET. The 50% plunge in jet fuel costs over the past year more than compensates for higher pilot compensation. And, jet fuel costs are set to remain low for years because of the oversupplied oil market. That's a nice tailwind for RJET. The labor dispute and pilot shortage are an overhang, but will be resolved in the fullness of time. I see blue skies ahead for RJET.
It will be if Finjan wins a multi-million dollar judgment. Finjan is a "show me" stock. Investors will remain skeptical until Finjan actually scores a meaningful license settlement or judgment. "Show me the money"--that's what investors are saying!
xgrk88a, the way I see it is: Shale oil output is likely to remain flat through the end of 2016 unless the price goes up. Global oil production ex-shale and ex-OPEC will decline in 2015 and 2016. Total global oil consumption tends to grow 1.5-2 million barrels annually. I'm guessing that by 2017 or 2018, oil consumption will exceed supply, which will mean oil prices will rise, and then N. American shale producers will ramp up output. Higher oil price will mean more demand for rigs of all types. The big, western oil companies like BP, Chevron, Exxon, Shell, etc. are cutting back on investments, which will lead their production to plateau and drop in a year or two. There's actually very little spare capacity available to meet steady demand growth outside of N. America. But, N. American can't ramp up shale oil output with WTI at $50.
On Finjan's website it states a Summary Judgement Order was entered against Blue Coat. For laymen like myself, exactly what does this mean? Clearly the after hours stock price spike suggests somebody thinks it is important.
So, does the Summary Judgement Order mean that the judge has determined that Blue Coat did in fact infringe, and the jury trial is just to determine the amount of damages? (I have no legal training.)
I suppose the Mexican government can sweeten the terms and run a new auction. They expected there would be a lot of interest among oil companies to participate in Mexico's opening of new oil basins.
truth, you have a point. Because the reality is, even if Bluecoat, Sophos, FireEye, or one of the other defendants were to prevail in court, it still loses financially because of the enormous expense of putting on a defense. It often makes more business sense for a defendant to just settle, even if he thinks he has an even chance to win in court. Either way he has to pay.
Probably some money manager figured out that NM stock trades for roughly the market value of its stockholdings per share in NNA and NMM. Or, maybe he figured out that NM's dividend is completely covered by the dividend payments it receives from the aforementioned stockholdings in other Navios Group companies, so that even if NM's dry bulk operations are breakeven for the quarter, NM's common dividend is 100% covered by the dividend payments it receives from its stockholdings. In other words, when you buy NM stock, you get its dry bulk shipping business essentially thrown in for free.
Sentiment: Strong Buy
Yes, the auction was a failure. It doesn't appear that oil companies are eager to spend a lot of cash to explore for oil in Mexico, and pay 40% of pre-tax profits to the Mexican government for the privilege of doing so. Maybe if they change the auction terms so instead of "production sharing", the bidders can bid straight cash for the blocks.
Lost in the discussion of PGN's senior bond discount is the fact that few bonds actually trade. These are extremely illiquid bonds with only a few smallish trades. The biggest holders of PGN bonds aren't selling. I'd say the bonds market value is "indeterminate", because there isn't an actively traded market. In other words, whether you are trying to buy a decent size chunk of PGN bonds, or whether you are trying to sell a chunk, you'll end up moving the price way up or down, because there's nobody on the other side until the price moves significantly. For bond price discovery you need a reasonable volume of trades, which happens to be lacking for PGN bonds.
Even though Brent price has swooned to $57/barrel or so, much of the price drop is due to dollar appreciation. In Mexican pesos, Brazilian reals, or even euros, oil hasn't dropped nearly as much. Also, I think the company's work is 60% or so workovers and development drilling. Paragon is able to compete on price for those contracts with its "fit for purpose" standard jackup rigs.
goskiing, my sense is that few PGN bonds actually change hands. The bonds are thinly traded. If PGN management wants to buy back a significant chunk of their bonds, they have to find a bondholder who is willing to sell. My understanding is that none of the big PGN bondholders are willing to sell at the currently distressed price of 34 cents on the dollar. To buy back a meaningful chunk of bonds, PGN would have to run a tender, and then hope one of the big holders changes his mind and parts with some of his PGN bonds. It might be worth a try.
My explanation is that the bonds are thinly traded. So, although a few bonds do trade at distressed prices, few bonds actually change hands. Ie, the trading volume is very low. The big holders aren't selling. So, it may not be possible to take a significant new position in PGN senior bonds, because they don't trade much. If a trader charged in and tried to buy up blocks of PGN bonds, he'd drive up prices in short order because there's no liquidity. When that is the case, it's hard to know what the "real" price of the bonds is.
bigluke, I agree with your assessment. It definitely inspires confidence that PGN continues to score extensions. It shows that even in the current low oil price environment, there is demand for Paragon's workhorse rigs. I'm looking for Paragon to produce $150 million or so of free cash flow (before capital investment) in 2Q, and a combined $200 million in 3Q and 4Q. Business is holding up fairly well, and Paragon's finances look sustainable at this point.
docpvh, I am long PSEC, but my sense is it's very unlikely the PSEC BOD will actually proceed with a share buyback. First, where is PSEC going to get the cash needed to buy back shares? PSEC management is taking pains to avoid increasing the leverage ratio, because doing so could adversely affect its investment grade credit rating. If PSEC had large holdings of liquid assets that could easily be sold at the valuation they are held on the balance sheet, then the BOD could explore the possibility of selling those assets to raise cash to be used for a share buyback. Unfortunately, PSEC doesn't have large holdings of liquid assets such as U.S. Treasury bonds, bills and government-backed mortgage bonds.
...according to FINRA's corporate bond data website. Paragon's bonds are priced for bankruptcy.