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Office Depot, Inc. Message Board

kamins.moore 4 posts  |  Last Activity: Dec 2, 2014 10:06 PM Member since: Mar 18, 2009
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  • kamins.moore kamins.moore Dec 2, 2014 10:06 PM Flag

    Boone Pickens talked about the price of oil coming back, due to across the board lower capex in 2015, and reduced production. He also seemed to think that OPEC will eventually cave and cut production. My question is, what are you guys doing at these levels, buying more? If you agree with some of the valuations out there this was worth around 5/share on an asset basis prior to the oil crash knock off 30% for the price of oil drop and there is still a large margin of safety. Alot of the uncertainty for me is given current conditions, the assets are worth far less on a short term basis. The trick will be what they decide to do. Are they going to continue spending to develop these plays, which will require either selling assets at cheap prices, equity dilution, or debt financing within the next 2 quarters, none of which are good. Or will they cut capex, and wait it out with the 1 producing well, and hopefully production coming online from the CO2 well. The former has the potential to destroy alot of the value I saw when I initially bought in. Any thoughts?

  • Reply to

    What do people think?

    by mmscott32 Nov 17, 2014 9:31 AM
    kamins.moore kamins.moore Nov 17, 2014 7:00 PM Flag

    I think it will, come back, I bought it about a year ago around 7//share. When I bought my thesis was that the legacy contracts would be run off and replaced with more profitable ones. I think the downturn in oil while important, should not affect the ability to write profitable business. This oversimplified is properly judging how much the projects should cost//time to completion and completing change orders efficently. If oil remains depressed for a prolonged period then new business may slow, but as long as they can execute what business they do get profitably, they should be able to weather the storm. With that said I will be watching the next 3 quarters very closely, for signs of improvement, it remains to be seen if they can write profitable business. I think this could be a 10-12/share stock in the next 1-2 years if they continue to execute the turnaround well.

  • kamins.moore kamins.moore Oct 31, 2014 2:33 PM Flag

    Glad to see they announced the 300mil dutch tender offer today. It should allow them to lock in lower prices at these levels, and take some of the uncertainty off the table about how many shares they will be able to buy back.

  • kamins.moore kamins.moore Oct 29, 2014 8:31 PM Flag

    I agree, assuming they repurchase the 500mil near these levels, that should shrink the total equity pool by around 20-25% or so depending on the avg price. The payment of 250 mil of debt should decrease interest expense which will flow directly to the bottom line. That still leaves 250 mil for either additional buybacks, a dividend or maybe an acquisition. Even if they maintain profitability at current levels there should be at least a 20-25% rise in the equity assuming no mutiple expansion.

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