I agree with your take. The Street didn't like the last financial report, and the fact that the debt comes due soon. But the fact of the matter is that this company is probably the best positioned it has been, on an operating basis, since inception. In theory, if Pinson fires on all cylinders in 2016, the company could be selling at a market cap, right now, equal to an unfathomably cheap 1x free cash flow. And that, incredibly, would be true even if gold stays at the current price.
Atna has the chance, over the next 6-12 months, to FINALLY achieve respect on the Street. Pinson has the chance of becoming a truly "signature" asset for the company, with REAL financial results and free cash flow generation.
Producing low cost "return of capital" gold from Briggs, which should allow a significant reduction in debt over the coming months. Meanwhile, Pinson continues to ramp up, and has the potential to be burnished as the "crown jewels" of Atna. (I note in their latest investor presentation, done at today's gold conference, they indicate that Pinson is the EIGHTH HIGHEST grade gold mine on the face of the planet, at roughly 14 grams per ton.)
The only risk seems to be the fact that their debt comes due in January, and they need to get a refi under their belts. But it would seem that at $1138 gold, the prospects for a succesful refi are high...especially considering their sub $900 all in stated cost guidance for 2016.
This is one of my largest holdings....and I am one of the company's largest shareholders. There is certainly risk here. But the reward potential is enormous....and the successful achievement of a refi would constitute "blue skies," likely giving a significant boost to the stock, as risk is suddenly dramatically reduced in one fell swoop.
Sentiment: Strong Buy
NOTHING else matters....except MERCHANDISE and MERCHANDISING. He can brag about "rebuilding" a company, with all these vaunted initiatives....but is anyone convinced he's doing that much better than where Kathleen Mason would have the company right now, if she stayed on board? My guess: She'd be at break even.....and he's at EPS of 20-25 cents. Considering all of Rouleau's bluster and hot air, we should be at 60-75 cents in trailing EPS, at this point, MINIMUM.
THE EMPEROR HAS NO CLOTHES. Rouleau's swan song is that of a siren, a harpee, a banshee, or a succubus....very alluring....but intended to MANIPULATE, ENTHRALL, and BEGUILE. What a SHAMELESS and pathetic way to wind down a career.
I agree there is a good chance they reenter here. On the other hand, they have probably lost faith in the business model themselves....and Rouleau's ability to turn it around. That is, if they thing getting this thing over 40-50 cents in EPS, any time soon, is unlikely.....do they really want to reenter at $6?
My own reentry point here is $4.00-4.50. And waiting until tax loss selling in Nov/Dec. to see it "hit bottom." But I suspect I'll find more attractive bargains in Nov/Dec. than TUES.
The new merchandising strategy has FAILED. 1) traffic is higher with the increased variety of merchandise (wider and thinner) but basket size has NOT increased. 2) distributing costs are HIGHER because of the "wider and thinner" merchandising strategy.
Rouleau continues to FRAUDULENTLY play sleight of hand with the shareholder base, shamelessly talking about all of the "wonderful initiatives" they are working on, as if everything that has been happening, the last few years, since he came on board, is EXACTLY coming off as they intended. The plunge in the stock price is the WHITE ELEPHANT IN THE ROOM, they TOTALLY IGNORED in the conference call.
This thing is, and was, pie-in-the-sky at $18. Now, it is fairly valued, based on book value, the strong balance sheet, fact that the company is nominally profitable, etc. However, my own estimate of fair value is probably somewhere between $5-9, so it's not a stock I plan on entering, at current prices.
The company is SPINNNING ITS WHEELS, and Rouleau continues to look like a rah rah rah, sis boom bah nut case. As long as he is continuing to whistle Dixie, and purvey the snake oil, I wil remain convinced that he really has NO CLUE how to turn this company around. FACT: 80% of what this company needs to do, to make money again is in the MERCHANDISING end. Higher margins, and higher sales. And that CRITICAL strategy has FAILED. All the other "fluff" that this idiot talks about, including new cash registers (now long since forgotten) is just that.....FLUFF. The proof is in the pudding. And there IS NO pudding, as it stands now. The conclusion I have been making for a year or more now stands: Tuesday Morning doesn't have the business model it used to. It is an anachronism...the concept of the "high end discounter" with "sales events" is passe.....just like the K-Mart blue light special. People "see past" that kind of gimmickry today. TUES's "no frills" approach is actually a liability.
There is no return on the assets. They have lost money, essentially for a decade or more. The offer is hardly generous....but the premium to the trading price, and getting out from being "tethered" to a failed manager, justfies taking the money and running. With gratitude. And if not gratitude, at least relief.
I agree. I own 2.5% of the public float. The only question is what the special committee will recommend. And whether or not they allow Sham to just vote the deal through, or whether a "majority of the minority" shareholders has to vote it through.
I believe this is a great arbitrage at the current price. Buy for $5.50 now. Sell for $8.75 in a few months. We KNOW the cash is real...because they paid a special $1 dividend a few years ago....which is UNHEARD of for a Chinese company.
Sham knows the non affiliated holders of this company are TIRED of the losses, and the destruction of value. With the offer being nearly 3x the trading price prior, I intend to vote my shares in favor.
And banks have given additional waivers for the meeting to occur after August 30th. (See the recent 8-K filing.)
It looks like blue skies here....and the arbs should increasingly come in and drive this stock up into the 50's.
The deal is for real. And the recent plunge in the Chinese stock market couldn't kill it. With that market now stabilizing, and Total Merchant having a passionate strategic interest in entering the U.S. market for scrap, it's hard to see why this deal will not go through.
This still looks like a great arbitrage play to me.