I agree this is stupid cheap. At these levels it's like just under 4x cash flow. Management should take it private and be done with it already. Just getting to a 6x cash flow would require a 50% move to $32.
Proprietary info - just have a look at any recent Kinder financing and you'll see who the bookrunners are. Do you think they get that position w/o holding inventory?
I'm an owner as well. Valuation seems ridiculously cheap in my opinion. I would suspect we could see some sort of corporate action (buyout solicitation, management LBO, etc.) occur if this continues for a couple more quarters.
There's a lot to like here, and I too am baffled by investor's inability to see this and many other values in the market today - but that's how one makes money! Good luck all.
Sentiment: Strong Buy
My thought is that the secondary is a failure - both based on management's inability to place the 43MM shares and trading in the aftermarket. I have to guess the rest of the deal will get funded short-term either by a line of credit, or debt offering and that this new funding will make the deal at least less accretive than we've been sold on.
Why such a failure...my hunch is there are two things that detrimentally impacted this offering. First, despite what we are told, liquidity is draining out of the market for anything less than the large-cap growth companies. Little interest in funding a small-cap, slow grower in this environment..
Second, there has been rather large compression in valuation over the last two months - and REITs have been hit by that along w/ a back up in interest rates. I suspect MPW would've been caught up in this regardless of whether they were pursuing a deal.
I don't see any issue with the assets, nor the operating business...it's simply a timing issue...fwiw, I own MPW and will continue to do so.
The issue is that the company is not generating enough cash flow to support the exaggerated stock price everyone has come to expect. Do the analysis yourself. Valuation of 14.3x cash flow @ $32.70 same as GOOG btw, and no growth whatsoever for the past year...in fact cash flow is decreasing.
Not to rain on your parade, but its just too darn expensive. And FWIW, I too believe they are the quality player in the space, but a multiple of 10x EBITDA is more reasonable. It won't likely hit that level as the dividend should provide a cushion, but a yield of 6.5% is likely IMO which is about $30.
Revenue beats are not that difficult when you pay $0.50 for each dollar of revenues in "media fees". You're looking at the wrong statistics.
Agree - they're starting to show some real consistency in cash flow generation. I suspect they'll start to get noticed soon by the investor community. Full disclosure I'm already an owner.
Sentiment: Strong Buy
I'd like to believe B&W has got it right and I too have been a long-term investor, having scooped up a bunch in the $10 range back in 2009. I suspect capital will be quite a bit tighter in coming years and having a ready source will be of obvious benefit. Heck, we're already seeing capital tighten up - probably one reason why Kinder has been trading down of late.
That said, I'll likely take some chips off the table in my accounts...basically to get them back below 5-10% of overall portfolio value. I'll redeploy those funds in higher yielding MLPs and/or preferreds to compensate for the yield giveup in the deal.
As you see it, will this be a tax-free merger (except for the $3 cash component), or are we going to get hit with taxes on the sale?
I think management came off well in the conference call - they acknowledged their poor forecasting YTD, they've thought through each and every question raised by the analysts and their executing to the best of anyone's ability.
That said, in listening to the call it was clear that the analyst community was pushing back on management's read of the economy...they simply don't agree with what management forward outlook - thinking management is overly constructive. Second, analysts don't seem to feel pricing has any visibility. I suspect their also concerned that a pricing war in rental equipment may be in the offing.
Overall I think management's doing well...perhaps a little rosy, but they're in the field so I'll tend to go with their views.
Sentiment: Strong Buy
You don't seem to understand. KMI is in bed with all these brokerage firms and in many cases pays their bills via acquisitions. It serves neither party for analysts at these firms to slap a sell rating on the stock, so they don't do it. Yet they can'f very well re-iterate a buy recommendation when the business is clearly deteriorating, can they? Instead you get silence.
KMI has been able to be the acquirer it has been because the stock has had a ridiculously high valuation and has been used as currency. Those days are coming to an end.
IMO, fair value is still lower than $35.