Koch actually converts his private shares into public and sells those via automatic set throughout the year. He has converted 285k and sold 277k YTD.
The firm on the other end structured this deal safely. Not easy to do a deal like this with a company that could reorganize within a year. Very little cash, and when cash is to be exchanged it's done so only when they drill, even the sunk cost portion.
Analyst are holding solid estimates but the market is uneasy. If the Benzinga article is correct that AO represents 40% of sales I'm afraid that this could get extremely wobbly.
Through an economic lens the producers look stupid. However, RRC and Co. are likely maintaining this because of the availability of cheap capital. Almost literally a day after this crash money poured in from distressed funds- flooding the sector with enough capital that by and large distress has yet to be an issue, though some shareholders might disagree. If among the crowd a "wise" CEO decided to only produce enough to cover the fixed cost until prices rebounded- he would deny his company access via EBITDAX multiple. Ultimately his company would shrink relative to others and be no better off.
I do know of 3G and DEO is the type of target they would seek. I just question the story. I mean a story of the principal of 3G is "contemplating" a takeover of DEO seems too weak to act on. The story didn't mention that they would use AB/Inbev as the vehicle but it would make sense and make it more digestible.
I don't want to rain on anyone's parade myself, but this story is sourced from an outlet in Brazil and Bloomberg ran with it. A deal of this magnitude requires a lot of capital- over $100B of it. That kind of capital isn't in Brazil. Only in London and NY is where that kind of capital is available and if that were the case the FT or Wall St Journal would have almost certainly picked up on it.
Followed this stock forever and if history repeats they'll pull something off when sentiment is mostly negative which is where we're at. Knowing how close or not they are to something that could put to rest the liquidity issue is really powerful leverage. Each passing day is bait for more shorts to pile on. Take the institutional- insider shares out the share float is 54mil that against a month prior 48mil shares shorted could lead to a big move. Placed a small bet on May and June $2.50 calls
At 3% below book Einhorns annual 2% charge is more than covered. The market is effectively discounting by 1% a pool of capital plus some float that happens to be managed by one of the worlds best money managers who's track record is 20% per year. So the question is does DE use some of the capital to buy back the cheap stock--- even if it reduces the capital base on which he charges an annual 2%? He does on the other hand own a lot of the stock.
My guess is the patriarch received a big year end consultant fee, and then maybe some cash bonuses went to the rest of the H-clan. The operating assets are very mature so for these guys to outspend the revenue by such a factor is a joke. Watch how fast that remaining $3mil burns.
I wonder if this approach of leaking to the media that you want to be sold deep in a down cycle doesn't generate a few chuckles from the few in a position to acquire it. The stock might take a hit next week because it looks desperate.
The problem with mid-twenty percent growth is the comps that follow. The last big miss they had resulted in the stock falling below $100. That miss was then followed by a blow out the very next Q and turned the $100 shares into an excellent investment. The recent history of bounce backs is kind of a built in premium until proven otherwise. bbdott believes that the next Q will be a bounce. I have my doubts. Comps are a high hurdle, and competition is always tight. A new IPA, I doubt will move the needle.
Given the valuation of Craft makers you would think the Grossman family would want to cash in. Have not heard a peep of an IPO.
Interesting idea but I didn't see it from the top 10 holdings as being weighted towards energy. Also while its packaged and convenient for us joe six packs to buy from they do take a nice slice from the top. if Fed policy finally shifts you can say goodbye to 7% yielding junk bond era which could be a real drag on total return.
Better yet can you find me the next Rich Kinder? Find me a guy who can build a $90 billion beast from a $40 mil base. I would like to get in early so my initial investment pays back 10 fold in annual dividends. And the 100 fold capital gain would be nice also...Find me THAT GUY!
Thinking along those lines maybe we see a Canadian tar sand producer to make a horizontal buy of a sizeable Marcellus/Utica producer? The house passed the Keystone pipeline. It seems that might be why COG is catching a bid. Either way more Marcellus will eventually be shipping north.
Exxon is sitting like a king in front of a harem right now. If they have one problem it's that they have a lot to choose from. A triple A rating gives it around a 2.5% cost to borrow billions long term. They have billions of international cash, and billions in treasury stock. With these tools you have to think that they do some big M&A in this enviornment.
It's not nearly as dramatic as you want it to be. He will simply convert another 100k or so of B's into A's. Of the newly converted batch he will transfer some A's into his families trust funds, and then sell most of it into the open market for some cash. He has 3.8mil B's that are always freely convertible into A's. If he felt that this was wildly over priced he would be converting and selling at a rate of 1 mil per year, and bypass transfering to trust funds. Theoretically he could convert and sell all the way down to 100 B shares and still have control of the company. But he doesn't...I wonder why?