Higher markdowns, and lower initial markups, is more of the same bs. The same store sales increases mean NOTHING, if gross margin dollars are down as much as they are. Operating expenses much higher. AZ distribution center delayed.
I'm not convinced that Becker won't be changing his mind, and waiting for the low $4's before buying more. (One wonders if he regrets his purchases in the low $5's.) I suspect you will see MORE of the institutions that loved this as a "darling" growth stock throwing in the towel.
I think it's "dead money" between $4 and 6, for the rest of this year. Possibly $5 and $6....but only if Becker continues to support it in the low $5's.
There is a very real question, which becomes ever more larger, which each passing quarter, on whether there really is any NICHE left for this company. I believe it is marginal at best, and they are destined for low to mid single digit ROE going forward, which a continued slow erosion in their ability to earn even those kinds of returns.
If Becker can find someone to buy it out at $7 or higher, I think he should take it.
There are definitely better buys out there than this one.
He has a voice mail that says he is "no longer with the company." I am presuming management is taking an additional meat cleaver to costs, to gain the full confidence of the lenders....and Gary is an unfortunate casualty.
Mike, you are a scourge on these boards...and unto yourself. Your self-pitying negativity, and dwelling on past losses does not FREE YOU UP to find the "next winner." You are a sad sack. Investing is about learning how to "move on," first and foremost, and looking for where the greener pastures are, rather than gnashing one's teeth in permanent cynicism. The markets are the markets; it is nothing personal. Why don't you just admit to yourself you don't have a mature enough pyschology to manage your own money, and put it all in mutual funds. And free us of your seemingly interminable bitterness....which drags everyone down on these boards...and is a complete embarrassment to you. Have you ever tried GRIEVING, in order to let things go?
...give me great confidence. Both of those authors clearly know the company from front to back...and one of them refers to "Bob" on a first name basis. It is clear to me that the underlying break up value of the company's assets, even in this depressed potash market, is worth CONSIDERABLY more than the current enterprise value of the company. So, for now, the debt holders are very likely willing to "play ball," and give Bob & Co. a chance to see through the company's remade business model, which, I'm guessing, WILL involve a closure of West, and, of course, the conversion of East to Trio. Then, we'll look at where things are at, a year from now, on potash prices, and whether the company is materially EBITDA positive. If pricing is modestly higher, a year from now (as I would think likely), and the company is cash flowing again, then we are fine. If not, THEN we are at a point where the possibility of a need for a cash infusion is at hand.
When they (very likely) get the relaxed covenants/waivers from their financiers, over the coming weeks, I'm thinking the stock goes up to $1.75-2.00 in the short term....with near term resistance at $2. But if the covenant waivers are rather broad and "permissive," the stock could trade back up to the $2.00-2.50 range again. Either way, I am extremely bullish here, because, in the near to intermediate term, I am convinced the company is worth a lot more than the current trading price, in a sale or breakup. And of course, in the longer term, if the company can get back to even HALF of its historical operating margins, the stock is going to $10-15, in such a scenario. We just need the RUNWAY of the "newfangled" covenant waivers, and this thing is "off to the races."
Sentiment: Strong Buy
.....and highest FCF return of any public newspaper company. Selling at 3x earnings. Debt will be maybe $655 million at March 31st. Do we need to know anything more?
Sentiment: Strong Buy
I absolutely love this stock, and now own 3% of the entire company, making me one of the largest holders. This is about as good as it gets, as a Graham & Dodd style play, with TURNAROUND POTENTIAL to boot.
1) Cash and securities are around $2 per share. Tangible book is just shy of $5.
2) The company has returned to double digit revenue growth, for a few quarters now, and operating losses are being significantly reduced. Management seems optimistic in today's press release that growth will continue. I would think it possible the company could return to profitability in the new fiscal year beginning April 1st, certainly if improvement continues at the rate it has.
3) The company pays a 9% dividend, so you know the cash is REAL. (Offsets any concerns about the company being located in Macao.) The company has been public for 20 years, with a seasoned and stable and conscientious management team.
4) Best of all, the cofounder of the company has been BUYING UP THE PLACE, in the open market, with a SLOUGH of 13D filings over the last couple years, taking his ownership up to 33%, from like 15%, a couple years ago. With the CEO also owning 8%, closesly held shares are now well over 40%. This seems like a "going private over time" situation, and I would personally think that they could decide, at any time, to use the company's cash to take the entire thing out at, say, $2.50 a share.
5) My guess is this will get back to a more normalized historical trading range. Target: $2.00-2.60 in the next 3-12 months. And if they continue to grow it like they have, it could be more like $2.50-3.25 in 12-18 months.
This is the largest holding in my portfolio.
Sentiment: Strong Buy
I believe this is an opportunity, and they are likely to have the chance to implement their efforts to "right" their business model, with the Trio conversion at midyear. The leverage is modest enough, the existing liquidity is ample enough, and the underlying asset value, from an intermediate to long term perspective, quite sound. Furthermore, management is fully vested, with its 25% ownership position, and it sounds from the conference call that they have a close and trusted "partnership" with the lending group. The additional cost reductions provide a good faith statement of a robust effort to control cash burn....and the conference call reference to a 5 million ton reduction in global capacity/output this year are suggestive on a market that has a good chance of being brought into balance, over the next 6-12 months.
Sentiment: Strong Buy
I've been trading it, in and out a number of times over the last couple months. No loss here.
I think the 8.4% means nothing, with gross margin dollars subtantially DOWN. They are not running the business right. Traffic is up, but average ticket is flat or down slightly. People are finding more "bargains," and coming back more often....but they are not buying ENOUGH MORE, to move the needle. Basically, the "broader and wider" strategy, with "better bargains right off the bat," has added to costs, and lowered initial markup. They are, simply put, running in place, or spinning their wheels. They have NOT found a successful merchandising strategy, and the fact that all the other things that Rouleau did to improve operations (which he deserves credit for) have NOT helped them enough to boost profits, shows that the business model continues to be a very challenging one. No, they are not going bankrupt, over night, and yes, they should be able to continue to achieve marginal profitability.....but every single effort to make this thing "work," many of them quite valiant and laudable, has effectively resulted in "pushing on a string."
Your "he could sell it for $9-10" is pulling a number out of a hat. The fact that a premier guy like Rouleau failed, means that any other private equity guys who want to take a swing at the thing would want to pay, in my view, no more than $6-7 for it. Becker's massive buying in the low $5's is certainly interesting, but I'm going to trust myself here. I want to see if these bad results, and poor guidance for the near term, bring out significant sellers from the old "suckers," who are still around, that were lured in by Rouleau's outrageous, and totally misplaced, bombast.
Fair value is $5-6.50. We are in the middle of that range. And near term, unless Becker supports it, it could drop to $4.00-4.50. I will continue to view this as a "swing trade" stock, on any material breaks below $5. Weak hold/mild sell.
Actually, I think Braintree sounds quite intelligent and you sound like you are irrationally "inflamed."
This was reported on an SEC Form 4 filing, AFTER Friday's close, and indicated buying over the prior 3 days. Clearly, this expression of confidence strongly suggests the company will get the waivers it talked about in its Q4 earnings call.
The stock was up to $1.37, after hours, Friday.....and I would not be at all surprised to see it trade up to as high as $1.75, on Monday. Once, and assuming they do, get the actual convenant waivers, on the current "going concern" situation, I wouldn't be surprised to see the stock trade back up to $2.00-2.25, even....especially considering the fact that both MOS and POT are trading at 2+ month highs.
Sentiment: Strong Buy
The price increase only applies to north american sales, which is 70% of their total. Therefore, the $80 million increase in EBITDA I talked about, annualized, is actually 70% of that, or $56 million. (They won't capture the whole $56 million in 2016, since the increases were phased in in Q1. I'm guessing $46-48 million is a good range of incremental EBITDA for 2016 from the price increase.
The amount of the buyback is what is significant. It is an amount equal to TWO YEARS WORTH of dividends. That alone should inspire confidence.
Plus, the way they phrased this in the press release announcement was encouraging. Specifically, they are talking best "capital allocation"...which is music to my ears.
The company is roughly breaking even, give or take, and selling fo less than 2/3 of net current assets. This is for a company with a billion in revenue. That is pretty much insane...and this is a sitting duck for a takeover....assuming the 89 year old chairman of the board, and the family trust, wouldn't fight it, with their 25% or so ownership. Or maybe they want t take it privatr themselves. I'll take $8.75 for my shares in a buyout...or a 50% premium...whichever is higher.
Sentiment: Strong Buy
Plus, who cares where it is at now, if your "fastidious" buy and hold for max price strategy is more likely to result in your riding this back down to $7, or $6.50, when it inevitably reverts to the mean? Does $7.96 matter at that point? Will you come on here and chiripily report your 20% loss in opportunity cost when it goes from $8 to $6.50? Will you factor in the fact that you probably could have sold at $7.96, and bought something that WENT UP INSTEAD?
I scale in and scale out of positions, as prices change. EVERY SINGLE ONE of my portfolio positions, needs to be thought of in terms of RELATIVE VALUATION, compared to every single other one. You are not as disciplined in doing that, because you have shown in spades, over the years, that you are more afraid of "missing gains," and "selling too early," than you are in "maximizing net undervaluation" in your portfolio. I understand it's a balancing act between letting momentum "fly" and swapping out for something that is more of a bargain, but i have said before, and i will say again, that your methodology is too rigid for me, and results in your GIVING BACK GAINS, far more often than you "create more gains." This lowers your overall returns, and probably means you have only beat the market by 3-4% annually, i'm guessing, over the long run. The tragedy is you could do much better....because you are a great stock picker. But for some reason, you overly favor buy and hold.
Competitor POT has had two $20 per ton price cuts on Potash, in just the last 6 weeks. This is why IPI is expected to violate the debt covenants it JUST renegotiated several weeks ago. I agree with your viewpoint that this is an overreaction. I was fortunate to sell half of my IPI position, last week, when I saw that competitor MOS was guiding for significantly lower potash prices for Q1 2016, when it released its Q4 2015 results. However, at 70 cents, buying IPI for 1/3 of what it was trading for, a week ago, seems like a reasonable bet, at this point. If you are conservative and fearful, wait for an announcement of their achievement of debt waivers, and buy IPI stock at that point (even if you have to "pay up"). If you are comfortable that they will achieve the waivers (which is my position), I intend to add here in the mid 60's, and just keep adding as it drops.
I believe in the conversion strategy to Trio at the East facility, and suspect that between that, and closing the West facility (if they decide to do that), that the company will be in a FCF positive position in 2017. If potash prices rebound by then, the stock be as much as a 10-bagger. My own 12-18 month target here, although admittedly risky, is $3-5....on an assumption that the production cuts in potash, in a market that is 95% controlled by 9 producers, will result in a balanced market by the end of this year.
What exact form are you, or runsfortheroses, thinking a final version of the bond amendment will look like?
Just for example, my overall portfolio value is up 50%, from my bottom 6 or so weeks ago (although admittedly only back to where it was at the beginning of 2016) which was roughly the time i sold my TUES at $5.75, or whatever the price was. But you, in being overly "rear view mirror" oriented, are more worried about having "missed additional gains" you "could have had," than in finding something that is BETTER. Even though The relative valuation comparison between TUES and the entire universe of stocks changed DRAMATICALLY when it went from $5.75 to $8 in the last few weeks, especially since the fundamentals of the company are desultory. At $5.75, you are in the top 20% of undervaluation arguably (but i sold because that wasn't cheap enough for me). At $8, the stock becomes nothing more than an AVERAGE SELECTION for the year ahead. You should have sold at LEAST half, but you're too afraid you'll miss out and be kicking yourself if you sold and it "keeps running" in the short term. That is self defeating thinking, to me, and again, limits your overall long term gains, merely because it is more psychologically satisfying to you to get "multi-baggers," or "ride 'em for max gains."