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Microsoft Corporation Message Board

puzzled48 26 posts  |  Last Activity: Oct 10, 2014 2:08 PM Member since: Nov 30, 1999
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  • Reply to

    Mouthy crustacean

    by frank.goudreau5 Oct 10, 2014 10:08 AM
    puzzled48 puzzled48 Oct 10, 2014 2:08 PM Flag

    Volume 3.1 million shares today, or four times normal as of 1:00 PM CST. Perhaps Mr. Ackman's hedge fund is vomiting up shares because of margin calls. Other railroads, such as Union Pacific, are not showing this kind of volume, because they are not hedge fund playthings.

  • Reply to

    Berkshire Hathaway

    by puzzled48 Oct 2, 2014 9:37 AM
    puzzled48 puzzled48 Oct 7, 2014 10:10 AM Flag

    I'm guessing too. Nobody really knows what BRK did until the13F Forms are filed with the SEC.

  • Reply to

    Berkshire Hathaway

    by puzzled48 Oct 2, 2014 9:37 AM
    puzzled48 puzzled48 Oct 5, 2014 10:00 PM Flag

    Berkshire frequently owns multiple companies in the same industry.

    In credit cards, VISA, MasterCard, and Am Express.
    In banking, MTB, Wells Fargo, USBancorps, Bank of NY Mellon
    In insurance, GEICO, Gen RE, Berkshire Re, Homestates, MedPro, etcetera

    I can't think of any regulatory hurdle to BRK owning shares in a Canadian RR. Recall that BRK owned shares in both Union Pacific and Burlington Northern in the past. Perhaps somebody here would like to explain which regulation would prohibit Berkshire from owning shares in CP?

  • puzzled48 puzzled48 Oct 4, 2014 2:19 PM Flag

    Maybe I shouldn't be poking around here, trying to find the exact trough for Ruger shares. There are safer low P/E, high growth, high margin shares in the universe, such as Microsoft and Gilead. There are companies with better moats, such as Moody's and Google. Also, Ruger is hard to enter and exit in a hurry, because of the low market capitalization.

  • My theory is that Ruger has a roughly 14% market share in the U.S. firearms market, and that it has improved from 10% four years ago. I speculate that you can predict Ruger's quarterly units sold by multiplying the NSSF adj NICS by 14%. If true, one could estimate Ruger's earnings based on the quarterly adj NICS.

    Here is my spreadsheet:

    Quarterly NSSF adj NICS Units sold (thousands) Units sold/
    (thousands) Distributor to retailer adj NICS
    2010Q1 2425 254 10.5%
    Q2 1961 213 10.9%
    Q3 2117 198 9.4%
    Q4 2933 235 8.0%
    2011Q1 2739 284 10.4%
    Q2 2220 264 11.9%
    Q3 2374 245 10.3%
    Q4 3467 292 8.4%
    2012Q1 3376 461 13.7%
    Q2 2619 410 15.7%
    Q3 2904 397 13.7%
    Q4 4882 505 10.3%
    2013Q1 4926 514 10.4%
    Q2 3032 560 18.5%
    Q3 2907 522 18.0%
    Q4 3932 495 12.6%
    2014Q1 3830 565 14.8%
    Q2 2672 389 14.6%
    Q3 2830 ???

  • Reply to

    Coincidence in the Military

    by rabies_00 Oct 2, 2014 5:52 AM
    puzzled48 puzzled48 Oct 2, 2014 4:58 PM Flag

    The military contract is for 400,000 sidearms, according to Fox News. At $300 per pistol, that would be almost exactly equal to one quarter's revenue, or $120 million, for SWHC. I wonder what the profit margin would be on such a contract? Ruger management has said that military contracts are low profit....is this true?

  • puzzled48 by puzzled48 Oct 2, 2014 9:37 AM Flag

    I believe BRK bought CP yesterday. Mr. Buffett told Becky Quick on AM business news that he bought a company in a business he was very familiar with which was beaten down yesterday. I believe CP fits the bill exactly.

  • puzzled48 puzzled48 Oct 1, 2014 1:14 PM Flag

    How about looking at a different time interval?

  • Reply to

    Longs on margin are getting killed...

    by libertee4all Sep 22, 2014 11:42 AM
    puzzled48 puzzled48 Sep 22, 2014 4:29 PM Flag

    I think Alibaba will shock us all, and very soon. The company will not permit audits by U.S. accounting firms, is sponsored by the PRC, insiders are permitted to sell shares from the first day, and margins improved by leaps and bounds in the last quarter before the IPO. The marketing by the NYSE was unprecedented and continues to this day. Favorable mentions in nearly all trusted news outlets.

    What could go wrong?.

  • Reply to

    They're heeeeer

    by captainwho2 Sep 10, 2014 12:20 PM
    puzzled48 puzzled48 Sep 11, 2014 4:09 PM Flag

    I think you're right....management buys back shares whenever the price falls to $49, for the last week or so. They have $47 million cash, and a $100 million repurchase authorization, which means they might be able to repurchase about 2 million shares @$50 each.

    However, I have capitulated, sold all my Ruger, and bought Apple, Microsoft, and Google. They have huge gross margins and operating margins, and don't pay taxes at 36% like U.S. manufacturing companies, and are truly able to move profits offshore and out of reach of the revenooers. That's why their market caps are all $400 billion and increasing daily.

    Here's my spreadsheet:

    Trailing 12 months revenue & income, $ billions
    Microsoft Google Apple
    Revenue-------86.8------59.8------171
    Income pretax-27.8----14.5-------50.1
    Income posttax-22.1---12.2--------37

  • Reply to

    They're heeeeer

    by captainwho2 Sep 10, 2014 12:20 PM
    puzzled48 puzzled48 Sep 11, 2014 4:09 PM Flag

    I think you're right....management buys back shares whenever the price falls to $49, for the last week or so. They have $47 million cash, and a $100 million repurchase authorization, which means they might be able to repurchase about 2 million shares @$50 each.

    However, I have capitulated, sold all my Ruger, and bought Apple, Microsoft, and Google. They have huge gross margins and operating margins, and don't pay taxes at 36% like U.S. manufacturing companies, and are truly able to move profits offshore and out of reach of the revenooers. That's why their market caps are all $400 billion and increasing daily.

    Here's my spreadsheet:

    Trailing 12 months revenue & income, $ billions
    Microsoft Google Apple
    Revenue-------86.8------59.8------171
    Income pretax-27.8----14.5-------50.1
    Income posttax-22.1---12.2--------37

  • puzzled48 puzzled48 Aug 29, 2014 10:56 AM Flag

    Fourth quarter will be a loss, according to second quarter 8-K, because of huge charges to terminate the defined benefit pension plan. Not too many people thinking about that.

  • puzzled48 puzzled48 Aug 28, 2014 10:40 PM Flag

    FY2014 earnings are estimated $4.24/share. Company has $47.4 million cash, and $40.4 mn in inventories (firearms). The total of these liquid assets is $87.4 million, or $4.52/share. Shares trade at $49.24 each. Subtracting cash and inventories from share price results in P/E ratio of $44.7/$4.24=10.5x. Share price is getting into deep value territory, but it needs a catalyst. Maybe September NICS will do the job..

  • puzzled48 by puzzled48 Aug 26, 2014 10:27 PM Flag

    Mr. Debney said that Smith Wesson products are not being held in inventory by distributors, only 139,000 units, in sufficient quantities, because competitors are crowding them off the shelves. He also said SWHC has a direct business and sells directly to big box stores, and also to two distributors. It sounded as though the direct business was 28% of sales.

    He anticipates the second quarter will be pretty terrible, as production is dialed down, but third and fourth quarter will be much better. Handguns were the top seller, and rifles were the worst. There is still a shortage of rimfire 22 caliber ammo, but not of centerfire.

    Share repurchase authorization has been exhausted. Smith will have $122 million cash at year's end.

    I did not hear any extraordinary news in the conference call. Unfortunately, the revenue and earnings guidance for the year was lowered significantly.

  • puzzled48 puzzled48 Aug 16, 2014 2:08 PM Flag

    Ruger's borrowing rate Is not really zero. On their line of credit, the rate is about 2.55%.

    "The Company has a $40 million revolving line of credit with a bank. This facility is renewable annually and terminates on June 15, 2015. Borrowings under this facility bear interest at LIBOR (0.555% at June 28, 2014) plus 200 basis points."

    This means the borrowing rate is about 2.55%, which admittedly is rather low. The question is, what is the normalized EPS for Ruger? Is it $4/share? How much of this is free cash flow, and how much needs to be reinvested as CAPEX? Are gun sales about to skyrocket, after the events in Ferguson, Missouri, where police stopped providing security?

    The next question is, are their any shareholders who would be willing to sell a large block of shares at today's depressed price?

    Finally, it is my personal belief that a corporate inversion would be achievable and would boost EPS more significantly than any other maneuver. Never see this discussed, except dismissively.

  • ATK might be worth a second look--down 4% on low volume and no news. Strong earnings last week. Sells bullets to the feds. Also aerospace biz.

  • puzzled48 puzzled48 Aug 2, 2014 6:52 PM Flag

    It appears that there are three buildings which are not used for manufacturing. From the 10-K:

    The Company’s manufacturing operations are carried out at three facilities. The following table sets forth certain information regarding each of these facilities:
    Approximate
    Aggregate Usable
    Square Feet
    Status
    Segment
    Newport, New Hampshire
    350,000
    Owned
    Firearms/Castings
    Prescott, Arizona
    230,000
    Leased
    Firearms
    Mayodan, North Carolina
    220,000
    Owned
    Firearms
    Each facility contains enclosed ranges for testing firearms. The lease of the Prescott facility provides for rental payments, which are approximately equivalent to estimated rates for real property taxes.

    The Company has three other facilities that were not used in its manufacturing operations in 2013:
    Approximate
    Aggregate Usable
    Square Feet
    Status
    Segment
    Southport, Connecticut
    25,000
    Owned
    Corporate
    Newport, New Hampshire
    (Dorr Woolen Building)
    45,000
    Owned
    Firearms
    Enfield, Connecticut
    10,000
    Leased
    Firearms
    There are no mortgages or any other major encumbrance on any of the real estate owned by the Company.
    The Company’s principal executive offices are located in Southport, Connecticut

  • puzzled48 puzzled48 Aug 2, 2014 3:19 PM Flag

    OK. Maybe Ruger should stop reporting the backlog, since it has no implications for sales. My underlying question is, when is this stock fairly priced, compared with its prospects? Is it a buy, today, based on "normal" earnings of $3.32, and a share price of $50? Or is my estimate of "normal" earnings too low, as you have suggested?

    Should the company cut costs by closing the HQ building in CT, and moving management into the partially occupied NC facility?

  • puzzled48 puzzled48 Aug 2, 2014 12:17 PM Flag

    Maybe. Perhaps you could answer the two questions I presented with your explication. For example, when will the backlog of orders be satisfied?

  • Suppose a "normal" level of firearms sales from distributors to retailers is 400,000 units per quarter. If units sell for $300 each, this corresponds to "normal" revenues of $120 million per quarter. If the operating margin remains at 21%, this implies $25.2 million of pretax income per quarter, or about $16.6 million after-tax, or about $0.83 EPS per quarter, or about $3.32/year. Ruger's market cap is $1.0 billion at $50/share. A $100 million share repurchase would reduce the share count by 10%, assuming the shares remain at $50. Earnings would rise by about 10%, less interest expense. Presently Ruger is spending about $10 million per quarter stockpiling inventory of firearms, When this inventory replenishment is completed, in October, Ruger will have an additional $10 million per quarter to repurchase shares without borrowing. Whether it makes sense to borrow to repurchase shares earning $3.32 per year depends on whether money can be borrowed at less than 6.64% per annum. Not too exciting. Our only hope is that "normal" earnings are greater than $3.32 per year--this is not inconceivable.

    If the backlog is 1 million units, and "normal" units shipped are 400,000 per quarter, and if production continues at 500,000 units per quarter, it will take 10 quarters to deplete the backlog. I mention this fact because I see that there is some confusion about this number.

    If we scrutinized Ruger carefully when it was at $75 per share, and now it's at $50, our eyes should be bulging out of our heads. The shares appear to be in the bargain bin......

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