Really? The claims get more and more out there every time I see them. There are ways this could all fall apart, but none have anything to do with what was referenced here.
Seemed crazy a few years ago that a #$%$ track to do a few bucks in EPS was screaming lower into the low teens. This thing gets traded so hard. I still think the earnings power is there, but this is now in the danger zone. All the traders and then some have gotten on board. If SWKS gets to $5 EPS there should be some more upside, but the risk reward is not there for me anymore. Ever the contrarian, I am taking a small short position.
Not ready to pull the trigger yet, but a few down days and it could be time. Would love to restart a position here. About a buck under my final sells, but need a little more juice than that.
I would be willing to speculate here, but it is just that, very speculative. The new products may or may not get a serious foothold. If they do, FEYE type multiples would be amazing upside. To me the core business is pretty solid, but some of the backlog may be at risk, although I am not really qualified to say. If this work were to go away the downside would be very large. If the new products flop i think the downside is limited because the government services business is supporting valuation (excluding hexis losses of course). I do expect the shorts are speculating at least as much and probably more than the longs here.
That was a nice window to cover on the 8k release. Financing risk is off the table, now the lowered guidance is out in the open. Will they really be an 80 mil ebitda co in a couple of years? I don't know, but I think the co and the current SP have given them a runway of at least a couple or few quarters to get on track. And in the meantime the shorts with a long term view may have to sweat it in the interim.
GMCR reports next week, and would not be surprised to see some weakness going into this ER with general concern over Keurig Cold announcements. If there is some type of announcement or new info could be a big irrational sell off, like when GMCR sold off 25% over SBUX verismo.... will be watching.
Yeah, that is playing in to my math too. Hard to sit out while the market is rallying, but then weeks like this last one suddenly make up for months on the sidelines. I still think the S&P could irrationally shoot up to 2200 or 2300 in the next year if the economy accelerates and fed stays easy. But in that scenario I also still think we revisit 1800s or less, and may be sooner than later. Like I posted the other day, SODA is coming off of a severe bottom, there could easily be a lot of upside, but I am feeling lucky the last few trades made some nice gains despite big interim losses... Will buy back is soda revisits the lows. Need a couple of weeks to see how the market digests the latest news.
Not sure what you are getting at exactly. The handful of posts on the board all seemed to think the convertibles were dilutive and bad for shareholders. So you are saying the purchases came ahead of this supposedly bad news? Or is this news good and most of the board is just missing the point? I'm just not seeing the issue, CEO was buying at the lows, then entered an agreement to sell shares 40% higher or some such from where he bought. Good luck with that class action....
I don't think it is veiled at all, pretty plain for all to read. If they had done a secondary it would have driven the already depressed stock price lower. The convertible was probably the best move. They gave the banks the upside of equity, at a modest premium, and the downside of a first position secured creditor. And it came with more flexibility. Would longs rather they kept the prior senior debt and issued equity at bargain basement prices? Not sure how that would have helped. Alternatively they could have trimmed hexis to the point they could keep regular senior debt and not invest in that business, is that better? A lot of "experts" here and on SA seem to know what to do, but don't think it is that obvious. This is a speculative play to be sure, but not nearly as clear as most pretend it is. Happy trading.
I'm not sure how you are looking at it, but I am looking at the government services business as basically a $40 mil EBITDA co now. It is obviously debatable but a double digit valuation in the intel space is not out of the question, even if recent acquisitions have slowed down they are still getting done at that level for the few meaningful targets out there. That being said, I think the fld business deserves a lower multiple and is a significant part of cash flow. Its a great business to be in and has potential to grow, but seems to be risk factors on the existing work and growth is uncertain. Could actually make sense for a big player that wants to be in that business and has the contract vehicles to get the work funded more solidly. Actually could be huge, and could also go away some day.
Hexis is losing a boat load, but if you back that out the core business has a lot of value. And hexis may or may not have a lot of value. It is hard to break into a new line of business. Installations with 13 customers was more than I was expecting really. That alone is potentially worth a buy to me. To me the long thesis is the valuation is primarily supported by the government business, and you get to speculate on hexis with limited risk. The short thesis is that hexis fails, fine, but also seems to be reaching for the rug is about to come out on the government business, which is far less clear. And like I said in the original post, financing risk is off the table for some time. And so what if it was expensive, it should be, hexis is a startup. They could have done a secondary, but instead the banks were happy to take a piece. If the whole thing fails they will easily get paid out on the principal and if hexis takes off they will make a ton. If only we could all negotiate our investments that way. Really though makes sense, cheaper than equity by giving that senior position, but not really that far off from equity either...
Okay, sorry for all the bwahahas lately, but managed to trade this round trip again into earnings after selling on the PE pop last week. Bought at 30.55 and 29.80 or so going into earnings and flipped trading shares yesterday. This has been a gut wrencher at times but really seems to be the gift that keeps on giving. Good chance I sold way early as usual and there is the very real possibility for 50% upside near term. I don't think the quarter was by any means stellar, so I am happy to look for a buy point again down the road rather than hanging on here, and I hate the market right now, but still. Expectations are low, valuation is there. EBITDA guidance was solid, and as a multiple of that number we are still in a very reasonable range. There is a long and short case right now so I am fine looking for a better entry point, and I have never been fully convinced on the product, but have to love trading this thing and feel very good about the upside vs downside here. Happy trading.
As far as I am concerned financing risk os off the table, which so many of the SA analyses focused on. Now investors are free to focus on whether Hexis is getting off the ground. Which is of course still very much in question, but not sure that it justifies being one of the most shorted stocks around. The government business alone supports much of the valuation.
Thats pretty funny when you think of what people widely believed about GMCR when it was trading sub 30.... good luck following the herd.
Why does it seem that ridiculous? They were $0.50 out of the money on a stock that regularly moves a dollar a day and was down for basically a month consecutively. It would be a ridiculous bet to expect a 3000% return, but plenty of day traders would try for it in the hopes of making a few K on a quick swing
You think a $7500 bet was the 1%? Give me a break. Some kid just hit the lottery is all, probably was hoping to make a couple thousand bucks on a quick pop and hit the ultimate options traders jackpot.
I hear you. Good for whoever that was. You aways see this stuff and think about how easily that could have been you. Way more people experienced the opposite though unloading on a relentless decline into no volume only to miss a 20% pop. Tough to trade unless you can keep it pretty emotionless.
Unloaded a bunch of trading shares at 34.5 today. Would have sold more if I had the whole story, but was very unclear what the halt and news was about at that point. Not that I think there is that much downside here or a deal can't get done, but have seen enough of these pops. It definitely was a gut wrencher with week after week of declines, so have to take those profits when they come up. Will reload if we revisit sub 30 before or after earnings. Pretty sure that in the medium term I took profits too early, but like I said, when you are buying on the way down and positions get big you have to take the opportunity when it comes up and be thankful for it. Wish I still had my GMCR shares from 55 or so, but even that was more than a double overall....