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Weight Watchers International, Inc. Message Board

deshrex 18 posts  |  Last Activity: Jul 22, 2015 4:32 PM Member since: Jun 16, 1998
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  • Reply to

    New Low?

    by jmedwick Jul 6, 2015 3:19 PM
    deshrex deshrex Jul 22, 2015 4:32 PM Flag

    Market cap today is lower than long term debt. 325/356=.91

  • deshrex deshrex Jul 20, 2015 11:38 PM Flag

    Well, I do think the HL management is a known quantity at this point. All other things being equal, Baker and co. will probably try to expand production if given the resources to do so, as opposed to buying the stock back or paying a higher dividend. But the interest expense is not inconsiderable at about 5% of revenues in the latest qtr, and has averaged between $6 and $7 million per qtr over the last year. The Yahoo estimate for 2015 is for a modest net loss. Realistically or not, I would hope the next step the HL management would take would be to pay some of the debt down with cash - no more dilution, no more infernal convertible debt :)

  • deshrex deshrex Jul 20, 2015 9:57 PM Flag

    The senior management has been extremely well compensated without creating a dime of shareholder value. What I do with my proxy votes hasn't made any difference :( If HL gets into trouble with its interest expenses, we could be diluted into oblivion. The example of extremely well compensated coal pope CEOs riding their shares into BK isn't reassuring!

  • Reply to

    Honestly BK soon

    by chessheadfan Jul 8, 2015 6:48 AM
    deshrex deshrex Jul 11, 2015 11:44 PM Flag

    I do agree that the secular background of increasing obesity is favorable to WTW. Let's hope that revenue can be stabilized in the $250 to $300 million per qtr range. I don't think the 2016 maturity will be a problem. I think it has been whittled but not paid off completely at this stage. If WTW is still a relatively viable business in the 2018-2019 time frame, rolling over the 2020 debt should not be a problem. I would point to the example of RAD. 7 years ago or so that company was relentlessly BK-baited by the shorts here on Yahoo and other places. But guess what - the bond markets never closed to RAD, and as long as it paid the fees, RAD was able to roll over maturities as they came due. At its nadir, RAD stock was below $1...

  • deshrex deshrex Jul 6, 2015 6:38 PM Flag

    It's probably no more than a debt trade for this un-named hedge fund. Possibly it was able to buy the 2016 debt at less than par and will wait to get paid back at par next year, if not sooner. According to press reports today, this 2016 debt is senior debt, and so has better rights in BK than the $2.1 billion junior debt due 2020. As long as WTW stays current on its interest and principal payments, the creditors can't force Artal to do anything it doesn't want to do. It is interesting that WTW itself apparently hasn't made any kind of response today...

  • deshrex deshrex Jun 17, 2015 7:15 PM Flag

    Well, I think that the SEC had to intervene on the issue of PBOB - 'payment on behalf of borrowers.' I guess the allegation would be that PBOB was muddying the waters in terms of ESI's obligation to post cash collateral to the PEAKS and CUSO trusts to the extent that student borrowers from the trust were defaulting on their loans. But I would say we are at the point now where Wall Street is basically assuming a 100% default rate on the $440 million of loans that were funded by these trusts.

    It would be nice to know: A) the current default rate on the $440 million of student loans, and B) the amount of fixed income securities that were used to fund the trust that are still outstanding. These securities are a huge monkey on the back of shareholders.

    Needless to say, ESI shareholders cannot afford any kind of default, a miss on interest or principal due, with these fixed income securities issued by the trusts. And by extension, it will be a great day for shareholders when all these fixed income securities are paid off.

  • Reply to

    Word to the wise

    by wiscodisco02 Jun 3, 2015 7:23 PM
    deshrex deshrex Jun 9, 2015 10:18 AM Flag

    Well, my point would be .4 sales is an undemanding valuation. And of course the combination of low price to sales and high PE necessarily means margins must be compressed. But like I said in my previous post, $1.38 for June '16 does indicate a 3% net income margin and a 13.4 PE at the current share price, assuming BGG can make the number (46*1.38/1930 = .032).

    Sentiment: Hold

  • Reply to

    Word to the wise

    by wiscodisco02 Jun 3, 2015 7:23 PM
    deshrex deshrex Jun 4, 2015 12:42 PM Flag

    Well, I don't know if you guys are short, but BGG has a big short position against it - about 20% of the shares. It's really not very expensive at about .4x sales. The $1.38 estimate for '16 works out to about a 3% profit margin. There's no BK risk with just $225 million long term debt. BGG has been spending about 1% of revenues on interest in recent years. The dividend yield is above the current 10 year Treasury. The dividend is costing the shorts about $4 or $5 million a year, so it helps to keep them honest...

    Sentiment: Hold

  • Reply to

    ACAT

    by stockpicks92 May 13, 2015 10:01 PM
    deshrex deshrex Jun 1, 2015 12:00 PM Flag

    Well, ACAT is paying out $6.2 million a year in dividends (.015*.60*697), a sum which is less than 1% of revenues. ACAT is also being shorted pretty heavily, with 6.9% of the shares short, according to Yahoo. ACAT is conservatively financed, with no long term debt, according to Yahoo. The dividend is about a 30% payout ratio of the $1.80 estimate for fiscal '17. So I would say the dividend is affordable and salutary, since it gives shareholders a little something while they wait for crop prices to recover (since they seem to be the deciding factor as to when farmers buy these vehicles) and the dividend keeps the shorts honest, since they have to pay it on the shares they have shorted.

    Sentiment: Hold

  • The Fiscal Times today says lifetime costs of obesity above those of person with normal health are at least $92k. 30 years of Weight Watchers at $500 a year is $15k. 78.6 million Americans are considered obese. This number does not include adolescents in this condition. There's no evidence at all so far that gadgets are making a dent in the obesity numbers.

  • Reply to

    Same $300 million program

    by deshrex May 12, 2015 1:25 PM
    deshrex deshrex May 12, 2015 7:31 PM Flag

    Well, you will have to point me to something specific, forensically speaking, to get me to believe that $700 million figure. Today's SEC complaint mentions PEAKS at $300 million, and CUSO for $140 million, 5 and 6 years old respectively. However, according to a schedule released by ESI in 2014, ESI was due to put a large amount of cash into the PEAKS trust in the 2014 (and in 2015 too, etc.), which payments would diminish the combined sum of those aforementioned numbers.

    I will stick with my contention that the market has been saying for a while now that ESI is on the hook for the all of the money. The question is can ESI muster the cash to satisfy creditors and stay in business at the same time.

  • deshrex deshrex May 12, 2015 2:46 PM Flag

    Thanks for your work GGW. It makes sense that it's the note holders who are the unhappy ones, since the notes have probably been trading below par in the secondary market. But I would assume they have been getting their coupons paid all along, and that at maturity they are going to get par value.

  • Reply to

    Same $300 million program

    by deshrex May 12, 2015 1:25 PM
    deshrex deshrex May 12, 2015 2:11 PM Flag

    Well, I am pretty sure some of the $300 million debt has already been paid down by ESI. As of September '14, the long term debt stood at just above $100 million (Yahoo), but I don't know if this debt number accounts for all of the $300 million private debt program. The proper answer is to get these accounting issues adjudicated before a judge and jury if need be. It's not fair to convict ESI in the press or on the message boards. Potential students should probably be focused on job placement rates.

  • The market wants to endlessly discount this $300 million private loan program that goes back 5 years now. No new sum of money is involved in today's headlines as far as I can see. The market seemingly long ago discounted a 100% default rate for the students taking the loans, meaning ESI itself will have to cough up the money to make the lenders whole. The actual student default rate is probably below 100%. ESI actually does have a defense to make because it bent over backwards to get the SEC's blessing as to how the loans were being accounted for on its balance sheet and income statement etc. ESI's market cap is now but a fraction of the value of the loans.

  • Reply to

    New concept?

    by prithd May 4, 2015 5:10 PM
    deshrex deshrex May 11, 2015 5:48 PM Flag

    Well, $.78 for '15 is still the current number at the Yahoo Analysts' Estimates tab. But it may go up. Meanwhile I paid $5.49 today for a gallon of TruMoo. If DF could get that price for every gallon it sold it would be made in the shade...

    Sentiment: Hold

  • Reply to

    The volume is heavy

    by rsneuat May 1, 2015 10:37 AM
    deshrex deshrex May 6, 2015 9:45 AM Flag

    The shorts are getting hammered. They really went after this stock, and are losing now. Not the widows and orphans either - it had to be the so-called smart money...

    Sentiment: Hold

  • Reply to

    New concept?

    by prithd May 4, 2015 5:10 PM
    deshrex deshrex May 5, 2015 10:25 AM Flag

    I would add also that if brands are being discontinued we may see a write off of good will, in so far as some of these brands have been considered intangible assets.

    Sentiment: Hold

  • Reply to

    New concept?

    by prithd May 4, 2015 5:10 PM
    deshrex deshrex May 5, 2015 10:17 AM Flag

    Earnings estimates have been dropping now to $.78 for this year, which works out to less than a 1% net income margin (94*.78/8390=.008). Milk futures are no longer going down, but apparently there will be very little DF bottom line benefit from the drop from around $20 per hundred weight last fall to $17 now (about a 15% drop).

    Sentiment: Hold

WTW
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