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Spirit AeroSystems Holdings, Inc. Message Board

jch548 8 posts  |  Last Activity: Jun 20, 2014 9:45 AM Member since: Aug 2, 2001
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  • Reply to

    New member intro, "Big 3", and what about SPCB?

    by merouleau Jun 19, 2014 7:23 PM
    jch548 jch548 Jun 20, 2014 9:45 AM Flag

    I went with MX after looking over the financials. Tripped up by accounting issues. No financials since Q313 but the company stated their cash and debt levels won't change. The problem was some sales being booked to distributors when shipped to them but not sold.

    Their financials look pretty decent in that debt hasn't gone up much over a multi year period while the company has done buy backs, capex, R&D etc. With all these expenditures and the fact that debt hasn't increased much gives me some comfort that the final adjustment shouldn't be disastrous and the stock could be significantly undervalued.

  • jch548 by jch548 Jun 14, 2014 10:51 AM Flag

    Nobody around here talking WAC numbers? These servicers and originators have certainly fallen out of favor. I'm guessing the market is concerned with runoff of servicing rights and regulatory matters. Perhaps the fears are overdone. WAC recently stated that their UPB of servicing rights is slightly higher than the balance at the end of Q114. Since they originate loans and retain servicing rights the burn rate of their UPB could be significantly longer than seven years.

    FCF looks very good. By my calculations WAC could FCF near $400mm this year. Plenty of money to make acquisitions or pay down debt. That's nearing a 40% yield on the common.

  • Reply to

    Talk Is cheap

    by sean777007 May 13, 2014 9:33 PM
    jch548 jch548 May 14, 2014 5:56 PM Flag

    I have to admit I'm kind of bothered by the cash issue. We should get a fair ADR ratio when the time comes but $100mm in cash sitting in Bermuda is another story. Maybe too tempting as someone may try an end run and go for the till with both hands. I don't have any specific reason to be suspicious except this is starting to sound like the check is in the mail routine. I mean talk of buybacks that don't happen and meager dividends etc.

    Anyhow, I'm sure some of the posters here can chime in on what sort of safe guards may be in place to protect are interests.

  • Reply to

    Off Topic: Stock Pick

    by jch548 May 8, 2014 1:51 PM
    jch548 jch548 May 8, 2014 8:23 PM Flag

    At the moment drillers are out of favor as rates have been dropping. The NCS is holding up as the supply/demand picture is better. You also need extreme weather type rigs to operate off Norway so a rig in warm waters can't simply be contracted out to the NCS. I just read a report from a major brokerage where they have NCS rig rates holding firm for at least the next couple of years.

    Russia is also very big on drilling their arctic waters so that could pull rigs out of the NCS.

    One last tidbit is I think on the last CC transcript they were saying how they signed up their three rigs at the bottom of the market and they could get a better price when the contracts roll off. Also, don't forget the Statoil contracts on the newbuilds run eight years.

  • Reply to

    Off Topic: Stock Pick

    by jch548 May 8, 2014 1:51 PM
    jch548 jch548 May 8, 2014 6:17 PM Flag

    I haven't seen any brokerage reports for Songa and there is still some risk. First they have to finance the last two newbuilds but I'm thinking the first two may have been the riskiest as whoever lends on the last two now knows they have two big earners in front of them. The second risk is cost overruns on the rigs. This risk is diminishing daily as the first newbuilds should be around 80% done and the last two are similar so the ship yard has a learning curve benefit. So far management has stated all is within budget.

    As far as projecting what cash flows will look like all the data is there to make a reasonable extrapolation for the new rigs. The old rigs in the NCS are also HE mid-water semisubmersibles, just a much older generation. We know what their day rates are and also their daily costs. This information is in the quarterly report and/or the quarterly presentation. Same for the day rates on the new rigs the company will be earning. The older rigs have something like 100 beds while the new ones have larger quarters by 10 to 15% I believe. They may cost more to operate manpower wise but they should be more economical in other ways.

    I worked the numbers and it looks really promising.

  • Reply to

    Off Topic: Stock Pick

    by jch548 May 8, 2014 1:51 PM
    jch548 jch548 May 8, 2014 1:58 PM Flag

    Just wanted to say I've been invested in IMOS for a number of years and benefitted from following the long-time posters here. Trying to contribute to our continued success.

    Whoops. The stock is Songa Offshore, SONG in Oslo.

  • I looked at this stock awhile back and thought there might be some potential except for the fact they had contractual obligations related to four newbuild HE mid water semi-submersibles and were short on cash. They also had a debacle spending around $400mm refitting two of their rigs.

    The company has since recapitalized raising over $400mm in new equity. They have three old mid water semi-submersibles operating in Norwegian waters. Songa just announced the sale of their two rigs operating in SE Asia. They will clear $100mm on closing in May plus some possible earnout bonuses.

    The big kicker is they should be taking delivery of four new MW semisubmersibles over the next year. The first two should be delivered in Q414. They have just signed financing for the first two newbuilds. In talks for the last two. All four of these rigs are under firm eight year contracts with Statoil.

    Songa ended the year with $440mm in cash. Not much more expenditure is needed from now until they take delivery of all four new rigs. They have over $500mm on the books for the newbuilds.

    So pro-forma Songa will have three old rigs and four new rigs all operating on the NCS. The three old rigs are also under contract through 2015.

    I did some number crunching projecting what ebitda and FCF will look like and I believe the shares have 100% upside over the next two years.

    Songa has a FD market cap around $490 which includes the conversion of $150mm in debt to stock. My 100% upside also includes this conversion.

    I'm projecting around $225mm FCF annually once all the newbuilds are in operation.

  • jch548 by jch548 May 2, 2014 11:43 AM Flag

    Anyone listen to CC?

SPR
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