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WebMD Health Corp. Message Board

fiberbull 61 posts  |  Last Activity: Oct 31, 2014 6:44 AM Member since: Jan 12, 2000
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  • Reply to

    ....wow

    by stjudeprayer Oct 30, 2014 7:50 PM
    fiberbull fiberbull Oct 31, 2014 6:44 AM Flag

    Hello, I'm here. This is one of the best stocks I ever invested in. Keeps giving and it still seems substantially undervalued. They are throwing off nearly $70 million in cash a year now. Stock should be 50% higher, right now.

  • fiberbull fiberbull Oct 31, 2014 6:41 AM Flag

    Yes, I agree, $3 is a fair near term price target as that represents around 10X unlevered free cash flow in my estimation. The question here is what the financials will look like once topline growth resumes, which should happen next year, as Meaningful Use Stage 2 implementations increase. There is good operating leverage in this business model, so with growth free cash flow should increase dramatically, and the company will get a higher multiple. The trouble with MRGE of course is that their client base is slow to move on new implementations and generally slow to invest in anything new technology-related. So the sales process here is lumpy and quite unpredictable. But, I think they have a solid base now.

  • Reply to

    Great Quarter - Takeover Target

    by focus_on_value Oct 29, 2014 9:32 AM
    fiberbull fiberbull Oct 30, 2014 10:22 AM Flag

    That's funny. Because after I read your negative comment on MRGE with regards to capitalized software costs, I'm convinced you are simply a worry wart who focuses on the wrong things. I'll stick with my JAKK call also, due to the valuation. Incidentally, I've been in MRGE since $1 from the financial crisis. You'd be wise to consider others viewpoints, instead of constantly spouting childish comebacks.

  • Reply to

    Great Quarter - Takeover Target

    by focus_on_value Oct 29, 2014 9:32 AM
    fiberbull fiberbull Oct 29, 2014 3:35 PM Flag

    Yes, I know, but I don't think they are required to pay down principal. Honestly, I don't remember the terms of the debt and too lazy to look it up. Anyhow the free cash flow here is very strong as per the released 10-Q. Capitalized Software costs for the 9 months was only $3 million, so only $1 million a quarter. It's basically insignificant.

    The key thing for MRGE is to show revenue growth. Once they do (Q4 I think), this stock will increase significantly. Company will be acquired within the 12 months, in my opinion. They are managing it for an acquisition.

  • Reply to

    Great Quarter - Takeover Target

    by focus_on_value Oct 29, 2014 9:32 AM
    fiberbull fiberbull Oct 29, 2014 2:58 PM Flag

    Your comment is true but irrelevant, because it's the unlevered free cash flow that matters for any business, not the earnings. As far as free cash-flow, EBITDA in the quarter was around $14 million. Cap-Ex per quarter (INCLUDING capitalized software costs) is around $1.6 million, and interest is around $4 millin, which means Free Cash Flow is around $8 million per quarter or $0.08 per share. The stock should be trading at $3.50 based on these numbers.

  • fiberbull fiberbull Oct 26, 2014 12:10 PM Flag

    With all due respect, I think your arguments are speculative and based on your statements I'm not sure you have kids, as you don't seem to understand their buying patterns.

    1. The notion that every kid who wants to buy a Frozen costume/merchandise has done so, is ludicrous. There is something called population growth and product expansion. Did Barbie peak in 1959, after all the girls at that time got their Barbie doll?

    Clearly as the 5 year old girls in 2014, who loved Frozen, outgrow it in 2015, there is a whole new bunch of 4 year old girls (and younger) who become 5 years old in 2015, who never bought Frozen before. The growth comes from new kids who enter the age where they get attached to the brand, on top of existing kids buying new merchandise, plus expansion of the brand via new merchandise.

    Plus, even though kids don't buy the same exact costume/merchandise every year, they do prefer certain characters. So for instance, I have bought my son a different Power Rangers costume from Jakk (Disguise) for the last 3 years, and I'm sure my daughter will still want Frozen presents next year (after I bought some this year).

    2. Snow Glow Elsa: The sales of this may or may not decline. But, JAKK will have other Frozen merchandise to sell. They don't have to sell the same exact toy to grow, and nobody does. They develop new toys around the licenses. As long as the licensed property remains popular, JAKK will do well.

    3. Star Wars: Perhaps you are not aware that Star Wars is becoming very popular with young boys again because of the cartoon on TV (my son is loves it, as do all his friends). That is driving growth there.

    4. "The rest of JAKK's business is garbage" - This is a blanket statement with no credibility. I have already addressed Star Wars above, and suffice to say I've bought enough of JAKK's non-Frozen merchandise for my kids to know it's not garbage and surely 40-year old virgins are not the ones supporting $600 million in sales.

  • fiberbull fiberbull Oct 25, 2014 8:04 PM Flag

    You have no basis to conclude categorically that Frozen is a "one-time windfall profit," that will be gone in 2015. Nobody in the toy industry believes this to be the case, at least for 2015, nor does Disney who is looking to make this into a long-term property. There are several things that will happen in 2015 that will continue to drive Frozen merchandise sales. Notably, Hasbro signed for a Frozen license that starts in 2016! Irregardless of Frozen, JAKK has other properties that will gain momentum in 2015, so there is a strong possibility that sales will increase again in 2015.

    As for next quarter, as you well know, in the toy industry, they already basically have the orders in for the next 3 months (holiday season), so they have a very good idea of the sales and margins. So I would say their estimates are very realistic and probably low.

    As for management, they are going to do $700 million in sales this year and $50 million in EBITDA, and have the hottest toy for the holiday season. I think it is quite evident that are quite capable of running a toy business. They don't talk well to Wall Street well, on that I agree, but since most of these analysts have no clue how to run a business, I don't blame JAKK's management for having lost patience with the analysts. I think the numbers speak for themselves.

  • Reply to

    No Chance of a Buyout

    by checkoutking2000 Oct 24, 2014 10:42 AM
    fiberbull fiberbull Oct 24, 2014 10:52 AM Flag

    Firstly, it's not HAS or MAT who will buy them. It's a private equity company that will buy them. A private equity company owns one of the biggest competitors to Disguise. Certainly, they are looking at JAKK.

    Secondly, Frozen craze dying out next year? Obviously, you don't have any kids, if you say that. Frozen will be around for many more years. May not be a craze, but it's not dying out by any means, any time soon.

  • Reply to

    B. Riley cut JAKK to neutral. Reason is unknown

    by ksu_50 Oct 24, 2014 8:40 AM
    fiberbull fiberbull Oct 24, 2014 10:33 AM Flag

    I agree. I've also followed JAKK for years. I'm convinced based on what I have seen the last few quarters that management is being conservative right now in their forecasts and will handily beat Q4. I predict a $10 price by Q1 of next year, which is a nice return, at least for me. Just takes a few quarters for people to start to believe again.

  • Reply to

    B. Riley cut JAKK to neutral. Reason is unknown

    by ksu_50 Oct 24, 2014 8:40 AM
    fiberbull fiberbull Oct 24, 2014 10:20 AM Flag

    It was downgraded because the analyst doesn't think JAKK can meet their 4Q guidance. This, of course, is ludicrous, but doesn't surprise me, since the analysts on the conference call were mostly morons. They don't like that JAKK is providing upside guidance? Would they rather the company provide terrible guidance? Analysts don't like that JAKK is selling too much Frozen merchandise. Would they rather that JAKK sold toys that nobody wants?

    Unfortunately, most analysts on Wall Street don't understand business, because they have never run one. But, of course, in any business you sell products that are in demand now from your customers and continue to build the pipeline for products that you think will be in demand in the future. This is what JAKK is doing and they are doing a great job of it right now.

    What's obvious, in the end, is that JAKK is being conservative with guidance. The demand for all of their products will be huge going into the holiday season and earnings in Q4 will surely beat expectations.

    As for 2015, anyone with young kids understands that Frozen is not a fad, and will be around for many years, and obviously will be big in 2015 again. Star Wars will also be big next year. 2015 will be another great year for JAKK.

  • If you are an investor, you simply need to focus on the business and the valuation. If JAKK was at $20 a share, then I would be concerned with the reliance on Frozen etc. and the stupid accounting questions on the call from annoying analysts. But at $7, these worries are basically priced in. The company has an enterprise value of around $300 million, with nearly $700 million in sales, and $50 million in expected EBITDA. The current price basically assumes that JAKK's revenue will fall in half next year. Can that happen? Yes. Will it happen? Unlikely. So there is a risk here, like in any other stock. But, at this price, the risk is well worth taking as an investor. A fairer valuation for the company is probably around $12.

    No serious short (and I don't consider day traders serious) will continue to hold onto their short at current prices. There simply isn't much more downside here.

  • Reply to

    I am speechless

    by tvhomer88 Oct 23, 2014 10:53 AM
    fiberbull fiberbull Oct 23, 2014 1:50 PM Flag

    This guy who is spewing negative comments is not even an investor. He is day trading the stock with 10K shares (supposedly). So he has not interest in the EBITDA or anything else. If the stock was going up, he'd go long for a day trade. If you are an investor, just focus on the business, which is doing fine, and the valuation which is cheap. Does that mean the stock will go up? No. But, it's a good risk/reward at current prices.

  • fiberbull fiberbull Oct 23, 2014 1:47 PM Flag

    Thank you, you just proved my point. You are not an investor. You are day trading (which is an absurd thing to do, in today's day and age, but it's your business). No serious investor has a problem with these earnings. The company is doing much better and the valuation is dirt cheap. Other than a few day traders like yourself, the vast majority of the rest of the volume is short covering and computer trading 100 shares between themselves. When the big shorts have covered, the stock will go up and then the day traders will go long and probably lose money.

  • Reply to

    Just shorts, this is a buy

    by fiberbull Oct 23, 2014 1:22 PM
    fiberbull fiberbull Oct 23, 2014 1:38 PM Flag

    Sorry that's not how it works in real life. Like anything in the market, it is counterintuitive. You think shorts want to cover into an up market? They want to make money also. They drive prices down to absurdly low valuations and then cover.

    Always do the opposite of the market, if the fundamentals say so. When a stock is soaring and looks overvalued, it is usually massive long positions causing the stock to go way past any sane valuation so they can exit and sell to the greater fool. So you sell. When a stock is cratering on strong fundamentals and cheap valuation, it is obviously shorts exiting their position, buying from scared longs, so you buy.

  • Reply to

    Just shorts, this is a buy

    by fiberbull Oct 23, 2014 1:22 PM
    fiberbull fiberbull Oct 23, 2014 1:35 PM Flag

    Sorry, I listened to the call and management provided clear answers. It's not too complicated. The analysts, quite frankly, are the ones that are brain dead and asking stupid questions that have no bearing on the company's long term value. If I were management, I wouldn't answer the questions either. The analysts should take an accounting class, if they are so confused.

  • If you don't believe this is just shorts manipulation, then ask yourself one question: where are all these shares coming from today? This stock has traded over 7 million shares today! Last earnings it traded 3 million shares. Does anyone seriously believe some long are suddenly dumping 7 million shares on the market? Who has this many shares to dump? Anybody who is long the stock at these levels or lower understands the story and the impact of Frozen. Nobody is selling because the CEO had a cold and some analysts asked some nitpicky questions that no serious investor actually cares about. The volume here is insane and uncorrelated with anything related to the fundamentals of the company. The only explanation is a short attack to facilitate covering of a massive short position.

  • Reply to

    for better or worse....I added a bunch in the 7s

    by hopeful200 Oct 23, 2014 10:32 AM
    fiberbull fiberbull Oct 23, 2014 1:27 PM Flag

    Nonsense. They didn't fabricate anything. The EBITDA figures exclude this accounting benefit. This company will have $50 million in EBITDA this year. Valuation is ludicrously cheap. Someone will buy them at this price. They have a great line up of products.

  • So all the analysts are worried that JAKK's sales growth is too much related Frozen. Well, duh? That's what is supposed to happen in toy business with a hot property and that's why the valuation is so cheap (enterprise value of $300 million vs $700 million sales, please this is cheap). Nothing wrong with being so dependent on Frozen right now. Also, Frozen is not a fad. It will be around for many years.

    As for management, they can't be that dumb if they got the Frozen license early and have the most popular toys for Christmas. Actually, they are quite talented in the toy business, even though they guessed wrong for a few years. Well, finally they got it right. Also, JAKK does have other great toys in the line up, besides Frozen, and other assets that can contribute to growth.

    So why is the stock down? It's simple folks: There are 9 million shorts in this stock. The only way for them to cover is by having a huge sell off in the stock. Given the massive volume today, I'd say alot of shorts are covering. I have no clue how shorts manage to manipulate stocks this much, but they do. But, there is simply no reason to be short JAKK at the current valuation. Not much downside really. Once the vast majority of shorts cover, (which could be today) the stock will rally significantly.

  • Reply to

    Numbers to support $50 per share

    by fiberbull Oct 10, 2014 2:50 AM
    fiberbull fiberbull Oct 10, 2014 6:51 AM Flag

    I'm not sure you understand that there is as of yet no cure or vaccine that works for Ebola. So we to slow down the transmission of the disease first and foremost, otherwise it will grow exponentially. That means getting more and more medical personnel into the effected areas and getting the people there the care they need. PPE's are absolutely necessary for all personnel, as well as all the residents who will come in contact with those who are sick with Ebola. So, of course, PPE won't cure Ebola, but it will certainly help contain/slow down Ebola, which is the first step in stopping it.

  • Let's do some math here folks to show why the price of LAKE is still not that crazy. The demand for personal protective equipment (PPE's) is about to go simply parabolic and LAKE is one of a handful of global operators that can meet this demand with high quality and tested PPEs.

    The numbers: CDC estimates over 500K Ebola cases by January 2015 at the low end. Even if they are off by half (and it's possible they are underestimating), you are talking 250K cases by January, which is 30X the current level. Estimates are that the industry is currently using 300K personal protective equipment (PPE's) a month (due to assumptions that each medical worker uses around 7 a day). A 15-fold increase in PPE usage to manage the 30X increase in Ebola, would be 4.5 million garments a month, which at $75 a PPE would be over $300 million a month for the PPE industry.

    So it could cost nearly $1 billion just to get enough PPE to contain Ebola in just the next few months under conservative assumptions. If LAKE gets 5% of that market, you are talking $50 million in additional sales, which at 30% margins, this is $15 million that goes to straight to the bottom line. There are only 6 million shares outstanding, so you are talking around $2.50 per share in earnings. 20X that is $50 per share.

    In closing, I would note that the numbers above are conservative and assume all the governments of the world work together to contain the virus. Unfortunately, it still seems like they are acting too slow.

WBMD
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