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Compass Diversified Holdings Message Board

marty.chilberg 18 posts  |  Last Activity: Jul 7, 2014 11:52 AM Member since: Dec 30, 2009
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  • Reply to

    Cash

    by niku_until_retire Apr 28, 2014 10:35 AM
    marty.chilberg marty.chilberg Apr 28, 2014 11:21 AM Flag

    Cash is an issue for investors until it isn't. Sounds strange but it helps to focus on the difference between expectations versus execution. They have made a lot of statements in the past in the form of expectations which didn't materialize. Accrual basis has been projected within a year for 3 years. Last year they had a management comp plan that was based upon diagnostic revenues of $206m and they reported $119m. They had the goal of the premarket 510 submission for almost 2 yrs before it finally was filed. They were adamant that their IP would prevail in court. Bottom line, they have to prove they can execute before their expectations will be relied upon by investors.

    Cash burn relates to the risk of dilution. If they can show steady progress this quarter and next, the risk is abated. That will provide some comfort to institutional investors that their expectations are reasonable. That's likely one of the reasons the short levels declined. The CMS issue is slowly getting resolved. The billing systems are now apparently reliable. The incremental risk status of the IP is at a low with the last ruling. The cash burn is showing steady progress and likely indicates that another raise has a lower probability.

  • Reply to

    Cash

    by niku_until_retire Apr 28, 2014 10:35 AM
    marty.chilberg marty.chilberg Apr 28, 2014 2:29 PM Flag

    Personally I completely agree. Been wrong before, but going into this call I think we will be relatively pleased with print for a couple of reasons...
    1) Executive management got shut out on their bonuses last year by performing under 80% level. So they reduced their goals for this year to focus on cash flow and net income improvement.
    2) They cut way back on "free" testing which brought the logical drop in tests in Q4-13. In Jan they tell us tests are growing again at new record levels. Seems pretty likely these are paid tests so we get a natural revenue and profit bump.
    3) With new management bonuses focused on cash flow improvement, do we really think they would go from 8 open job reqs at end of January to 21 today? Granted there could be some turnover but looks consistent with growing tests and cash flows.

    45k seems pretty optimistic. If they could see a 10% sequential increase to around 40-41k with an increase in the cash receipts per test accessioned, Id say they were on target for their goals.

  • Reply to

    Cash

    by niku_until_retire Apr 28, 2014 10:35 AM
    marty.chilberg marty.chilberg Apr 28, 2014 3:06 PM Flag

    Didn't forget the govt payer impact. Whether the increase in tests was from commercial or govt payers was not disclosed, We won't know the break down until the call. We know they disclosed progress to get to 12 states now covering going into 2014. That could be the bump up in tests and we hope they continued to sign additional states since then.

    Obama care is likely not an impact this quarter. The govt says that they have 8m enrollees by end of March. 35% are between 18-34 so they don't get classified as high risk. This will be a big upside though at some point. All the clinical labs believe it will help increase throughput. The first big step will be to get the CMS code up for C15. Then we need to get low risk approved. At that point, the numbers should explode for NIPT market.

  • Reply to

    Illumina Launches VeriSeq PGS

    by uirapuru0 Apr 30, 2014 4:20 PM
    marty.chilberg marty.chilberg Apr 30, 2014 7:25 PM Flag

    Hey Indi-This is actually a pretty interesting market and one where Natera is very entrenched. This is similar to Illumina filing the IP suit against Ariosa. Natera is also planning to to file this year and Illumina going after this market will definitely hurt them. Not sure why Sequenom isn't active here as a lot of these fertilization centers overseas and in US offer Panorama only. Maybe because they also do the screening with Natera One along with miscarriage testing etc.. The cost issue helps justify the test. The of invitro fertilization is very high making the NIPT cost benefit more compelling.

  • Reply to

    Illumina Launches VeriSeq PGS

    by uirapuru0 Apr 30, 2014 4:20 PM
    marty.chilberg marty.chilberg Apr 30, 2014 11:48 PM Flag

    I don't have any TAM estimates. Will keep an eye out for it and let you know if I uncover anything. Likely going to be covered pretty well whenever Natera files their S-1

  • Reply to

    Phantom AR Rollforward

    by harry_ash May 3, 2014 2:13 PM
    marty.chilberg marty.chilberg May 4, 2014 8:28 AM Flag

    Working on it but am traveling for several days first. You appear dead right on the issue, but my calculations are a little below your range. Note also that this difference existed in Sep and Dec quarters as well. If I can figure it out, I'll put my reasoning in my next article in a week or so. If it's just a guess, I'll probbly keep in on the blog. Harry-Feel free to add comments on my current blog where I refer to it. Maybe we can collaborate a little with some back and forth thoughts.

  • Reply to

    Phantom AR Rollforward

    by harry_ash May 3, 2014 2:13 PM
    marty.chilberg marty.chilberg May 9, 2014 1:09 PM Flag

    Published a blog post after conversation about this today.

  • marty.chilberg marty.chilberg May 27, 2014 3:18 PM Flag

    Pumping a penny on a different board is almost always a great short candidate. Thx!

  • Reply to

    Have to Give it a Couple of Quarters

    by listener2307 May 30, 2014 11:53 PM
    marty.chilberg marty.chilberg May 31, 2014 11:46 AM Flag

    LOL. Appreciate the correction! A couple of thoughts:
    1) Company has said their goal is to be cash flow positive in Q4-14 and to reach break even GAAP results. The cash from this transaction should be received prior to Q4 so the primary impact of this transaction will be the elimination of the Bioscience segment operating results.
    2) Bioscience had segment operating income of $5.5m in 2013. I can't decide whether they were trended better or worse for this year. Upsides are that they were marketing it so likely were trying to maximize interim results for potential buyers. Downward pressures were likely coming from continued work for FDA submission and new panel R&D and rollouts. Guess we'll have to wait and just assume the trend was relatively flat.
    3) If Q4-14 is similar to Q4-13, the elimination of Bioscience will likely drop income by $1.5-$2.5m given seasonality. This will make it harder to achieve goals and since management bonuses are tied to achievement of these objectives, they likely either put in an adjustment mechanism for this or they had a cushion sufficient to feel comfortable they could get there.

    I added another SA blog post on Agena today. Clearly appears to be a private equity decision that was implemented by setting up a new entity and interim CEO to kickstart. Really looks like they wanted this announcement out before ASCO so they could generate awareness at event. Pretty good strategy, just wish they announced before close of market.

  • Reply to

    Sell the news.......

    by jeremyrichardskerx May 31, 2014 7:30 AM
    marty.chilberg marty.chilberg May 31, 2014 11:54 AM Flag

    Good luck with that. No serious investors believed they would get $300m or the market cap would have been at least double the current level. Price was low but not low enough to generate a fire sale or we would have seen some of that occur in AH. The stock has had a nice run and could be due for a pull back, but shorting into it with this chart is bad risk/reward play.

  • Reply to

    What's your business worth- really?

    by calvina2 May 31, 2014 6:49 AM
    marty.chilberg marty.chilberg May 31, 2014 12:05 PM Flag

    This was a reasonable deal. The missing variable to the CNN calculation is growth rate or market opportunity. The price can be looked at from two different perspectives. Trailing performance would indicate that Agena overpaid. 6-7x operating earnings for 2013 is pretty high considering two points:
    1) flat revenues so multiple is quite low.
    2) segement results likely only included directly attributable spending so admin for running a company will bring it down.

    The forward indicator view point, which I was hoping for, was that the FDA approval will dramatically increase the total available market. Drives up the valuation to a motivated buyer. Selling this before the FDA resolution and with a minimal price kicker is a little disappointing to me.

    Your bottom line conclusion seems right on. Fair deal and allows them to focus on the bigger opportunity with a larger cash cushion. What is also interesting is that if they announced an FDA approval first, the expected valuation would likely have gone up quite a bit. So in reality this is probably better to keep the stock on a bullish technical trend.

  • marty.chilberg marty.chilberg Jun 2, 2014 12:20 PM Flag

    Any one time gain from the sale of a segment has no impact on share price. The impact will come from the incremental capital (cash) and impact on future earnings and growth. In that context I would assume finance will use their discretion to write off assets and book reserves against the sales price to the maximum extent possible. To get to a loss they would have to find around $28-29m in assets or reserves to book against the net sales price. Hard to believe they can get that aggressive but if that's your objective, I'm all for it.

  • marty.chilberg marty.chilberg Jun 4, 2014 11:30 AM Flag

    CKSW appears to be caught up in the rotation to earnings multiples. Seems quite similar to many companies...
    AMZN down 25% C15 PE 92x
    DATA down 44% C15 500x
    FEYE down 69% C15 loss
    LNKD down 39% C15 62x
    TSLA down 23% C15 64x
    TWTR down 57% C15 130x
    ZU down 56% C15 63x
    CKSW down 31% C15 54x

  • Reply to

    Great Article On Seeking Alpha This AM

    by citamar Jun 26, 2014 10:58 AM
    marty.chilberg marty.chilberg Jun 26, 2014 3:38 PM Flag

    Thanks for all the comments here. We're approaching 2,000 unique page views since published 3 hrs ago. Also received notification that another article on PRO linked to my article. Could mean there will be another article out tomorrow on regular site. Noe that more hits/comments, the longer the article stays visible on Seeking Alpha so any traffic helps keep it visible. After 30 days it becomes exclusive to paid subscribers again like my previous articles. GL all

  • Reply to

    Great Article On Seeking Alpha This AM

    by citamar Jun 26, 2014 10:58 AM
    marty.chilberg marty.chilberg Jun 26, 2014 5:48 PM Flag

    We had a pretty good run in June so treat yourself to a Partagas rather than a Macanudo!

  • Reply to

    Great Article On Seeking Alpha This AM

    by citamar Jun 26, 2014 10:58 AM
    marty.chilberg marty.chilberg Jun 26, 2014 5:48 PM Flag

    YW. Appreciate the post.

  • Reply to

    I'll Probably Be Wrong....

    by mark7182002 Jul 3, 2014 11:01 AM
    marty.chilberg marty.chilberg Jul 3, 2014 9:00 PM Flag

    Nice to see some of the old timers posting again. I'm still hanging around with a full position. Sold my trading shares and now am just waiting to hear an update. Interestingly I was contacted by the managing editor for SA asking if I would write a new article, given my prior interest. When I looked into it I could find an angle to write about given how little we know about what is happening. This run up is with virtually no analyst or retail support which seems like a bullish sign, but nothing more than a coin flip to me.

    I'll also look to sell prior to the call if it runs much more. Been burned too many times, but right now it has a nice trend line with little resistance. The break through 3.50 should mean there is a more room absent negative newsflow or a bad tape.

    FYI I occasionally post a blog on TSYS in my instablog on SA. I got too bored with the yahoo flames and spammers so decided it wasn't worth it. Anyone registered (aliases are ok) on SA can send me a private message or comment on my blogs.

  • marty.chilberg marty.chilberg Jul 7, 2014 11:52 AM Flag

    So are they also the culprits behind the selloff of all the other small cap bios that are similarly down today? IBB down almost 2%. Stocks I track with similar selloffs between 3-6% today:
    ACHN,ARRY,BMRN,CLDX,CLVS,CYTR,ICPT,IMMU,ITMN,LGND,NKTR,NPSP,PGNX,RGEN,RPTP

CODI
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