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Wabash National Corp. Message Board

deshrex 27 posts  |  Last Activity: Mar 26, 2015 3:38 PM Member since: Jun 16, 1998
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  • Reply to

    Debt is larger than the market cap.

    by adamstrosberg Mar 25, 2015 7:29 AM
    deshrex deshrex Mar 26, 2015 3:38 PM Flag

    A secondary offering would be very interesting if the result is to dilute the Artal holding below 50%. An offering of this kind would be a signal Artal is willing to give up control.

    The price to sales is now .26,so the stock is very cheap if a person believes the debt can be handled.

    The shorts have been winning hugely even though the US has 35% obesity rate and the problem is growing in other countries like China. I would say the shorts must be a fairly powerful group because so far no one is trading against them...

    Sentiment: Hold

  • Reply to

    The juice is due

    by bozot.clown Feb 24, 2015 10:20 AM
    deshrex deshrex Mar 17, 2015 4:00 PM Flag

    According to FINRA/TRACE, the new bonds are trading fine, at about par for a yield of 6.5%.

    Sentiment: Hold

  • Reply to

    question folks

    by raya_q8 Mar 16, 2015 3:12 PM
    deshrex deshrex Mar 16, 2015 4:25 PM Flag

    It's the amount of earnings that have been retained over the years and reinvested in the business. Not all earnings are necessarily retained. Some earnings may be used to pay a dividend or buy back stock. That money is not considered to have been invested in the business. S&P develops a number called 'total capital' which is another measure of the money (a running total) that has been invested in the business over the years. That number is $2.784 at the end of '14.

    Meanwhile, Bloomberg reports that PG's beauty revenues have not increased since 2010 and its beauty business has also been harmed by foreign exchange.. So it's not just AVP that is struggling in this sector.

    We are coming down to .3x revenues. I never thought I would see the day. REV is far ahead at 1x revenues. It will be interesting to see what multiple of revenues the market give the PG beauty business.

    Sentiment: Hold

  • deshrex deshrex Mar 5, 2015 7:53 PM Flag

    Why not give the top job to the woman who has done the best job selling product? I would say that sales skills are scarcer and rarer than administrative or financial skills, and they are what the company needs right now.

    Sentiment: Hold

  • Reply to

    WTW paradox

    by deshrex Mar 5, 2015 3:09 PM
    deshrex deshrex Mar 5, 2015 4:16 PM Flag

    Yes, but that's EV to sales - EV includes debt.

    Sentiment: Hold

  • Reply to

    WTW paradox

    by deshrex Mar 5, 2015 3:09 PM
    deshrex deshrex Mar 5, 2015 4:08 PM Flag

    Well I hope I don't have any delusions of grandeur :) The shorts are winning, to be sure.

    But the problem that WTW is trying to address is massive in our society. And to some extent the l believe the shorts have been winning based on what I think is a false narrative - i.e. that apps and smart watches and clothing etc. will win the day in the obesity fight. So the stock is worth watching on that count. The stock has been decimated, with the price to sales ratio now far below 1.

    Another interesting aspect of this stock is the ownership structure, which as I have said in previous posts, goes unremarked upon in the business press but which is well understood in the hedge fund community, based on the evidence of the large short position. How this majority owner has behaved in the past I guess is a private matter so I will take a pass in discussing it, but I think it's fair to say that this behavior in the past has had a big impact on the stock, especially in terms of how much debt is on the balance sheet.

    Sentiment: Hold

  • Reply to

    WTW paradox

    by deshrex Mar 5, 2015 3:09 PM
    deshrex deshrex Mar 5, 2015 3:39 PM Flag

    Well, the idea is that WTW provides encouragement and a way of reducing weight if people stick to the program. At the end of the article I cite, a public health expert says that the ideal rate of obesity in a society is 5% with perhaps 10% being acceptable. So the US is far above this number. I would never deny that people can lose weight on their own without having to spend the WTW fee, but on the other hand the obesity numbers speak for themselves that plenty of people are not doing so...

    Sentiment: Hold

  • deshrex by deshrex Mar 5, 2015 3:09 PM Flag

    The business is doing poorly, but not because people are losing weight. According to today's Bloomberg article, using CDC research, 35% of the American public was obese in 2012. Do people really think smart phones and watches have made dent in this number since then? According to the same article, the medical costs associated with obesity per annum per person are well over $3K, far higher than a year's subscription to WTW. WTW has a huge base of potential customers, but the sad reality is that most people are probably going to eat themselves into illness and death. It's very dangerous in middle age, late middle age and old age to get two illnesses at once, like diabetes and heart disease, or diabetes and cancer, to say noting of all 3 together...

    Sentiment: Hold

  • deshrex deshrex Mar 3, 2015 6:01 PM Flag

    Well, I am not all saying ANF will succeed. But .4 sales discounts the need for only modest success. A 4% net income margin will get ANF a 10x PE at the current value, by definition. Now retailing can be difficult, but this 4% number is not a wild aspiration (it's about average for S&P 500 retail, according to Wall Street research). KATE and KORS are over 3x sales, and LULU is over 5x sales. The dividend costs ANF about $56 million a year, about 1.5% of the Yahoo forward revenue estimate of $3.66 billion, so it's affordable if ANF can make this 4% margin number...

    Sentiment: Hold

  • deshrex deshrex Mar 3, 2015 11:33 AM Flag

    It's not wildly overvalued. .4 sales is a pretty modest valuation. And that metric uses a sales number that is well off its $4.5 billion peak...

    Sentiment: Hold

  • deshrex deshrex Mar 3, 2015 2:29 AM Flag

    Gonna be fun to see what transpires. According to Yahoo, just one analyst is providing earnings estimates. This fact alone probably tells us that PB is none too popular on Wall Street. Of course, with his Deep Capture site he has been rocking the boat. But if he doesn't rock it who will? The senior executive of a big powerful English bank that's sounds a bit like 'Macau and Beijing Bank' has been quoted in the French press saying that his bank will not advertise on sites and papers that run negative stories about the bank - for instance, stories about tax havens and so on. There's a reason why the business press is full of bland stories like '10 best places to retire' and '10 best cities for millenials' etc...

    Sentiment: Hold

  • deshrex deshrex Feb 27, 2015 12:12 PM Flag

    I would say this big short position is one of the more interesting stories in the stock market, but it's not reported on by the business press...

  • Reply to

    Nutrisystem vs WTW

    by jpraschnik Feb 26, 2015 7:10 PM
    deshrex deshrex Feb 27, 2015 1:29 AM Flag

    Well, if people go away from WTW, use their apps and lose weight and keep it off then WTW would be really up against it. Apps are giving people an easy out for the time being. Who can deny that WTW has been set back a bit here. But I don't think WTW should stray too far from its roots. Let's see how this Humana link up goes.

  • Reply to

    Nutrisystem vs WTW

    by jpraschnik Feb 26, 2015 7:10 PM
    deshrex deshrex Feb 26, 2015 10:13 PM Flag

    The reality is that dieting will power is the world's scarcest commodity. I honestly believe that WTW's problem is that their system (going to meetings etc.) works too well. Another reality is that probably almost everyone yoyos. They have periods of good dieting followed by periods where they fall off the wagon. Diet shakes lend themselves to this kind of yo-yoing.

    Meanwhile a scrap of positive news from the CC is that management seems to have the green light from Artal to focus on getting down the debt. WTW has until about 2020 to get this issue under control...

    Sentiment: Hold

  • Reply to

    why is chambers still ceo ?

    by kevinb212012 Feb 24, 2015 9:57 AM
    deshrex deshrex Feb 24, 2015 4:30 PM Flag

    Well, it's Artal that calls the shots, and if Artal fired Chambers, he would be the 2nd CEO fired in about 3 years. Chambers really hasn't been on the job all that long.

    Meanwhile the price to sales ratio is well below 1, but Wall Street has completely embraced 'disruption' and 75% of the float is short, according to Yahoo. I'm very much a skeptic that weight loss apps alone will lead to weight loss. Probably going to Weight Watchers meetings is a much better bet if a person is really serious about weight loss. But we shall see what we shall see, and it's a fair enough contest, although Wall Street is betting that the success of the apps is a foregone conclusion.

  • Anyone know why?

  • A French newspaper has reported that KO plans to sell its milk drink product for roughly twice the price of regular milk. I think it's safe to say KO is not going to be happy with anything like a 1% net margin for this business...

    Sentiment: Hold

  • Reply to

    For Pete's sake....

    by havanabaycompany Feb 12, 2015 11:29 AM
    deshrex deshrex Feb 12, 2015 5:05 PM Flag

    Well, I think questions about rent are fair enough. Rents do become more burdensome as revenues decline, there's no doubt about it. My understanding is that on income statements rents are incorporated in the 'cost of revenues' line - i.e. rents are one of the items that go into determining gross margins. The rents that ANF is paying now are baked into that 3% net income projection (previous post), assuming ANF can make the revenues projected. I don't think the $.8 dividend is too high if ANF can make the $1.72 earnings projection for FY '16. It's a touch under a 50% payout ratio, which is fair to shareholders. Yes some long hedge funds get the dividend, but the funds that are short have to pay the dividend out of their pockets to the true owners of the shares, so the dividend cuts both ways in the hedge fund world.

    Not to mix apples and oranges, but I have followed RAD for many years, and in the past RAD has been bedeviled by the problem of 'dark rents' - i.e. RAD has to keep paying rent on closed stores because the landlords won't let RAD out of the leases. But consider RAD's socio-economic circumstances. RAD operates in a lot of less affluent parts of the US where landlords really don't have a lot of tenants lined up to take over space, so it's in the landlord's interest to just milk the lease for as long as possible.

    But when you mention a city like Shanghai, the story is different. If a retailer is operating a flagship store in a desirable location, the landlord will probably easily be able to line up a new tenant. So the ending of the old lease becomes much more a question of a business negotiation with a settlement at the end, than a case of the landlord sitting back and milking the lease, although that result could happen of course. ANF will probably get stuck with some leases, but will likely get out from under others.

    Sentiment: Hold

  • Reply to

    For Pete's sake....

    by havanabaycompany Feb 12, 2015 11:29 AM
    deshrex deshrex Feb 12, 2015 3:05 PM Flag

    Well, hold on there a minute. According to the most recent Yahoo data for ANF, their long term debt is $347 million, and while it has been increasing, it's still far below the market cap of about $1.7 billion. In the qtr ended last October, ANF spent well less than 1% of revenue on interest, so interest is not much of a burden so far, and BK is remote.

    Now obviously Mr. Jeffries was a controversial figure, but love him or hate him, he did provide an identity to the brand. Yes that brand was probably more popular with younger shoppers of 4 or 5 years ago than today's cohort. (S&P shows peak sales of $4.5 billion in FY '13.) My fear is that without Mr. Jeffries ANF will go into a period of floundering before it finds a new identity.

    The price to sales is about .5, so it already discounts a lot of bad news. The Yahoo net income numbers for ANF '15 and '16 assume a net income margin of about 3%. So yes a person could say that one half times sales is too much for a business with 3% margins, and the stock may drop more. But the flip side is that 3% margins could be a bottom and will improve as ANF scales back and finds a better footing with a mix of international, online and reduced US store sales...

    Sentiment: Hold

  • Wall Street continues to bet massively against WU. As of Jan. 15, per Yahoo, 71 million shares with nearly a $1.3 billion value, were sold short. Now that the dividend has been raised to $.62, the shorts will have to pay $44 million a year to keep a short position of this size going. Last summer, WU could be had for less than 1x revenues. Now with today's spike it's pushing up towards 2x revenues and is less of a bargain I would say.

    But Wall Street has been very hard on WU over the last 7 years of so and even after this little spike WU's chart still retains an out of favor pattern, though I suspect it will begin to show up on momentum screens if it retains its recent strength. The advent of the smart phone has made WU a victim of one of these open ended disruption memes, like the 'death of the PC,' with apparently no finite end date...

    Sentiment: Hold

WNC
14.10-0.07(-0.49%)Mar 31 4:04 PMEDT