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Skullcandy, Inc. (SKUL) Message Board

deanmortensen 68 posts  |  Last Activity: Dec 19, 2014 6:21 PM Member since: Feb 15, 2009
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  • Reply to

    IRT just jumped .24 on 80K shares

    by stablestock Dec 19, 2014 4:42 PM
    deanmortensen deanmortensen Dec 19, 2014 6:21 PM Flag

    Davis, you were smart to buy IRT on the cheap. I've been eyeballing IRT, but didn't get around to pulling the trigger. I woulda/shoulda/coulda bought a good sized chunk of shares before the price moved up. Investors get a fat dividend yield while they can sleep at night with IRT's simple, low risk business model.

    Sentiment: Strong Buy

  • WAC management needs to focus on doing one thing well. Management is obviously unable to run its diverse businesses of mortgage servicing, originations and reverse mortgage to produce consistent profitability. WAC needs to just focus on mortgage servicing, and shed the other business units, which are a distraction and are not consistently profitable. If WAC management can eliminate the distractions caused by those other businesses, and focus instead on servicing, maybe it can avoid running afoul of government regulators who have WAC and other servicers in the crosshairs.

  • deanmortensen deanmortensen Dec 19, 2014 3:04 PM Flag

    Beats me! According to Yahoo Finance Statistics, WAC has $421 of debt per share! The amount of operating leverage WAC has is truly amazing! They are levered up to the hilt, but are still unable to pay even a tiny dividend. This is a maximum risk, minimum (zero) return investment. The idea of returning cash to shareholders never occurred to WAC management.

  • deanmortensen deanmortensen Dec 18, 2014 4:47 PM Flag

    The latest disclosure that Schorsch is implicated doesn't change my investment thesis. The single tenant net leased assets are unimpaired. A complete changeout of the management team will be undertaken. A company of this size will be able to attract top shelf management talent. Out with the old, and in with the new!

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 18, 2014 3:54 PM Flag

    I think a reit's share price is determined mainly on the basis of AFFO/share. The reits that own a portfolio of CMBS or other financial securities trade at lower multiples than property reits. Large multifamily property reits like Simon trade at a premium to smaller reits. Single tenant net leased reits should trade at a premium to the industry because they are considered to be more stable with less execution risk. Since ARCP is the largest single tenant net lease reit in the U.S., it should trade at a premium to the average reit, all things being equal. On the other hand, ARCP has more leverage, which increases risk. Then, throw in the accounting irregularities, fraud, and the resignations of the Chairman and the entire management team, and then throw in some year-end windowdressing by institutions and tax-loss selling, and ARCP has to trade at a wide discount to its underlying asset value. It will take at least a year to unravel this mess and restore ARCP's investment grade credit rating.

  • deanmortensen by deanmortensen Dec 18, 2014 3:24 PM Flag

    when first we practice to deceive! This poem applies to Schorsch, Kay, Beeson, McAlister, Block, and the whole bunch of them! This whole ugly mess has erased billions of dollars in stock market value, led to the collapse of the Cole sale, and will likely ultimately result in prison time for criminal fraud. And, it's all because Schorsch thought it would be better to cover up the small accounting irregularities stemming from the first quarter rather than be transparent and disclose it. How foolish! That decision has ruined his reputation and that of his lieutenants. From that point on, the top management of ARCP were caught in an ever widening web of lies and deceit from which they could not extricate themselves.

    It would be funny were it not so tragic! It's hard for me to understand why Schorsch would direct his team to cover up accounting irregularities. Why didn't he direct them to disclose the irregularities as soon as he learned of them. What exactly did he stand to gain by covering them up? This situation doesn't make sense to me. Schorsch put himself at risk and imperiled ARCP by trying to hide some relatively small (in a balance sheet sense) accounting irregularities. Am I missing something? Or, are there other important details that bear that have yet to be disclosed?

  • Reply to

    Even With a Dividend Cut

    by alexalekhine Dec 17, 2014 2:18 PM
    deanmortensen deanmortensen Dec 17, 2014 5:51 PM Flag

    To maintain its reit status, ARCP has to pay out 90% of reit taxable income in the form of dividends. So, management doesn't have a lot of discretion to arbitrarily set a payout ratio.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 17, 2014 4:52 PM Flag

    Prem Watsa is buying. Watsa made his name in the aftermath of the financial crisis with his prescient bond bets. He has a value investing bent.

  • FVE could avoid tax by becoming a reit. The owned properties are good reit assets, so it shouldn't be to tough to get it approved. Could happen within 9 months, although FVE still needs to cut operating expenses and improve its financial performance. I wish they'd give that CEO the boot. If an activist hedge fund took a stake in FVE, it could shake things up and really improve financial results. There's plenty of scope to cut operating expenses while maintaining a quality living experience for the residents.

    Sentiment: Buy

  • deanmortensen deanmortensen Dec 16, 2014 11:43 PM Flag

    Tough for Vanguard. Their REIT index fund and other index funds are required to own ARCP. ARCP is the largest single-tenant net leased reit in the U.S., so Vanguard has to own a decent size chunk of ARCP shares in several index funds. And, I'm sure Cohen & Steers would love to dump their ARCP shares, but it's very difficult for them to exit that outsize position. Cohen & Steers owned about 4.5% of outstanding ARCP shares as of September 30th. With all these mutual funds trying to get the shares off of their books by year's end, it's little wonder the stock price has been savaged. Most fund managers are motivated to liquidate their "big losers" to save face rather than "fess up" to their shareholders that they made an investment mistake. When they all head for the exits, that's when the stock price gets knocked down way below the fair market value of the underlying assets.

    Vanguard, Cohen & Steers, and the other big institutional holders are going to be "riding shotgun" on the ARCP board. Nice to have activist Marcato Capital Management looking over the board's shoulder. I'm sure this will be a long slog. The audit results, appointing new management, settling all the shareholder lawsuits, implementing new controls and accounting oversight, etc. Moody's downgraded ARCP's credit to junk, and it will take a long time for ARCP restore its investment grade credit rating. The process of fixing this mess will take a year at least. Meanwhile, the assets should continue performing well. Size is a real benefit to ARCP, because it enables it to afford the legions of high priced lawyers and accountants needed. The dividend might dip for several quarters because of elevated litigation and G&A costs to clean up this mess. But, I expect ARCP to maintain its reit status, which requires that it pay out 90% of taxable reit income to shareholders as dividends. ARCP is a "dog with fleas", but I expect it to pull through and ultimately trade much higher.

    Sentiment: Strong Buy

  • ...along with his lieutenants Kay and Beeson. As long as Schorsch and his people were still in charge, it raises doubts about BOD independence and credibility. With Schorsch and his people out of the way, the board can now exercise control and put a competent, professional management team in charge, without interference or influence from Schorsch. This is a time of great uncertainty for ARCP investors, but the board will act decisively to install a credible management team that can keep ARCP on the rails as the audits and investigations proceed. The board will keep ARCP on track operationally, because there is so much money on the line with the big name institutions that own huge chunks of ARCP shares. These institutions, such as Vanguard, own millions of shares, and of course the mutual fund managers who bought the shares want to dump them to get them off of their books before the end of the year, so they don't have to disclose the ARCP share ownership in their annual reports to shareholders. Because the share price has cratered, Vanguard fund managers don't want to look like bagholders by disclosing they had bought millions of shares of ARCP at higher prices. Trouble is, Vanguard owns millions of shares, and can't sell them without nuking the stock price. Basically, Vanguard's pain can be your gain if you buy the shares on the cheap. As of September 30, Vanguard owned 13% of the outstanding shares of ARCP. Cohen & Steers also owns a huge block of ARCP shares.

    Sentiment: Strong Buy

  • Reply to

    Questions for the MILL board

    by deanmortensen Dec 13, 2014 3:35 PM
    deanmortensen deanmortensen Dec 15, 2014 1:59 AM Flag

    colecoman1, thanks for the info. Much appreciated!

  • Reply to

    Questions for the MILL board

    by deanmortensen Dec 13, 2014 3:35 PM
    deanmortensen deanmortensen Dec 13, 2014 9:26 PM Flag

    I'm guessing you're right. I was using $9M quarterly adjusted EBITDA, but I probably should have used $14M instead, because the latest quarter included a lot of one-time charges. If MILL can get EBITDA back up to $14M and maintain that run rate going forward, then it should squeak by if it can cut some costs. For example, a tiny company like MILL doesn't need three corporate offices. MILL needs to consolidate into one office. It doesn't make any sense they're keeping a corporate office in Tennessee even though they just sold all of their oil and gas assets in Tennessee. MILL really needs to rein in spending, but I didn't hear much from Giesler about cutting spending.

  • Reply to

    Questions for the MILL board

    by deanmortensen Dec 13, 2014 3:35 PM
    deanmortensen deanmortensen Dec 13, 2014 7:35 PM Flag

    don_t_panick, thanks again for your take. Actually I did listen to the call, but Giesler's repeated pledges to continue preferred dividend payments didn't inspire confidence. I think selling hedges is probably a bad idea for MILL, but clearly MILL needs some liquidity. I'm guessing MILL will be limited to drilling at NF. Giesler talked about "options" like monetizing the hedges and selling a rig, etc. But, as you point out, liquidity is very tight. Actually, I sort of think cutting or cancelling the preferred dividend might be the best course for MILL by providing it with some breathing room. Giesler said the preferred dividend is "sacrosanct", but when a CEO has to address the sustainability of dividend payments, it suggests the situation is dire, or may be dire soon. Then again, just as a company can have a run of bad luck, it could then have a run of good luck. My sense is that management is facing up to the seriousness of the situation, and if they make the right decisions and execute well they could stabilize MILL. At this point, stabilization is probably the best they can hope to accomplish in the near-term, IMO.

  • Reply to

    Questions for the MILL board

    by deanmortensen Dec 13, 2014 3:35 PM
    deanmortensen deanmortensen Dec 13, 2014 6:25 PM Flag

    don_t_panick, thanks for your take on MILL. It appears MILL is unable to borrow more from its lenders or sell more preferred shares, so it has little room to maneuver. With the preferred shares currently yielding roughly 25%, the market is pricing in a 50% probability that MILL will cancel the preferred dividends. That indicates that the market perceives MILL is in financial distress, or soon will be. It's hard to know what's the true situation at MILL. David Hall seems to have a long experience with MILL's Alaska assets--yet MILL had an awful run of failures last quarter with Olsen #2, RU-9, and the massive writedown of Redoubt. One wonders how could so many things go awry one after another. I'm hoping after last quarter the worst is over, but MILL's recent operating performance is scary to say the least. It's unclear if MILL management can work its way out of the tight liquidity spot it's in. I don't think MILL's lenders will open the borrowing spigot anytime soon, so MILL will have to rely on "self help" as Giesler put it. Of course, if oil prices go back up above $90 it would instantly brighten the outlook.

  • deanmortensen by deanmortensen Dec 13, 2014 3:35 PM Flag

    On the 2015 2Q conference call, Giesler tried to make the case that MILL can find a way out of its debt load problem over time by increasing cash flow via increasing North Fork gas production from new wells and the Badami acquisition, which adds 600 Boepd. Given the hedge position, and adjusted EBITDA of 9M for the quarter, it appears MILL has a shot at it if they execute, and if oil prices stabilize at around current levels. My concern is with calendar year 2016 and beyond. The hedges provide decent oil price protection through calendar year 2015. But, it looks to me that gross margin and cash flow will collapse after that. In other words, MILL faces a "fiscal cliff" at the end of calendar 2015. Am I missing something? The analysts have mostly "buy" ratings on MILL. Are the analysts just cheerleaders who sell buy ratings for a piece of MILL's capital raising business? Giesler stated MILL gets "ANS - $4" for it's oil production. Can anyone on the board tell me what ANS is? The hedges are mostly only in FY15 and FY16. What would MILL's profit on a barrel of oil be currently without hedges? Is there any way MILL can avoid bankruptcy after 2015 if oil prices don't rebound?

  • deanmortensen deanmortensen Dec 12, 2014 7:09 PM Flag

    Basically, PWE's lenders are "co-dependents" of PWE. PWE's lenders don't want to liquidate PWE under any circumstances. PWE will be able to meet its debt service, but if it runs into trouble, PWE's lenders would likely forbear. Look, lender's are like dairy farmers and PWE is the cow. The dairy farmer doesn't want to kill the cow--he wants to milk the cow, and to do that, he needs the cow to be alive and healthy. PWE and its bankers are in this together--all in the same boat.

  • deanmortensen deanmortensen Dec 11, 2014 6:31 PM Flag

    All PWE needs is for oil to go back up above $80. If that happens in the next few years, PWE will ultimately trade for a far higher price than today's depressed price. But, if oil stays at $60 for years and years, then PWE is toast, and so are many other companies in the oil biz. Go ahead and short PWE if you have a crystal ball to predict where the price of crude oil will be in a year from now. As for the prescience of "professional traders", I don't share your confidence in their superior knowledge and ability. Even the top pros like Icahn and Ackmann frequently do spectacular belly flops.

  • ...in the sense that at today's price, you'll probably either win big or go sideways. If oil goes back above $90, PWE could be a 4- or 5-bagger. As long as oil stays at $60 or so, PWE will be stuck down in the alligator pit. I don't envision PWE going BK, because it can always sell acreage to raise cash to make interest payments on the debt even if cash from operations drops to zero. Hard to know if PWE can drill profitably with oil at $60. Roberts's earlier asset sales probably saved this company's bacon.

  • deanmortensen deanmortensen Dec 9, 2014 1:38 PM Flag

    mako, thanks for the moral support. An article in today's "Wall Street Journal" calculates the revenue lost because of Hamm dropping the oil price hedges. The WSJ and several analysts have documented that unless the price of oil bounces back above $92 fairly soon, Hamm's move will be a net money loser. Like Aubrey McClendon, Hamm appears to have slipped up by dropping his hedges. But, also like McClendon, Hamm has a nose for finding prolific new shale plays, and has shown great ability and skill in building his company into a multi-billion dollar enterprise with a solid balance sheet and assets.

SKUL
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