so so stupid to downgrade the stock here. this is the sweet spot in the margin curve and multiple curve. crain has been building up to this moment for years. this is where all the groundwork laid up in the last few years pays off. not the point to downgrade
crain says no margin expasion with new wheels deal. but the whole point of the deal was to get the $170M of Clipper wheels capacity on the Radiant line haul network and drive down the transportation cost. that's the point. so it's disingenuous to say that margin expansion/cost reductions aren't a part of the deal. Crain just doesn't want to answer the inevitable "so how are the cost reductions going" questions plus he needs a cookie jar for future deals. crain is already on the record saying that most of the gross margin of any acquired truck broker would fall to the bottom line that was the whole point of acquiring a truck broker and a LTL network. the whole point.
NMIH was a once in a generation thing. they have to make money the old fashioned way, ripping off clients.
it makes no sense to look at liquidation value because it won't be liquidating. the dta is fine there will be cap gains. so other than good will book is solid. look at what ISI went for FBR still has a decent franchise and would be valuable to cowen or piper jaffray once all the tax assets are burned off. i think this could go for $35 - $40 in a sale. I realize that Hendricks would be putting himself out of a good job but he has stock options too.
it went up on no volume. the stock seems stuck in a limbo between former growth stock and potential growth stock and people are kind of unsure what to make of it.
yeah looks good. I honestly don't know much about the company but I liked the way buyers soaked up all the shares after earnings and now I've got my fingers crossed and a tight stop
cowen generated $56m of incentive fees/investment gains. at the same time, very little of those fees/gains were captured as profits. Company posted just $18M of earnings. so what happened? is this going to happen every time there are trading gains? it seems like the incremental expenses on trading gains/fees is about 70%.
I'm not short but thanks for the advice. Maybe I am wrong . . . certainly wrong today. But this was an A+ quarter and still only made 18c or whatever it was. Don't think the buyers realize the extent that Cohen&Co are paying themselves first.
some ceo named barry said on cnbc that hiring is very tight in texas, hard to find good people. that's probably why it zoomed up ayesterday. the fact is that oil is spread out across us and texas has diversified. in any case I would bet few of these houses are bought by oil industry people, these are lower-income properties.
Even assuming XPO beats target and does $600M in 2017, that means it's already trading at 7x 2017 ebitda. But mature XPO won't trade at 12x multiple, it's a much higher capex business with higher working capital. More like an 8-10x instead of the 12x that logistics firms usually get. So it means that XPO is already trading pretty close to full 2017 valuation.
There are 105M shares outstanding fully diluted, now that might be as bad as it looks, depending on stuff, but that still a $4B+ valuation, so trading at more than revenue in an industry (truck brokerage) where XPO has made deals for less than 20% revenue (wasn't Kelron like 8% revenue?) So yeah, it's grossly overvalued. But a typical roll-up buys at low multiple and rolls up into a higher multiple. But that's not what Jacobs is doing. He's buying at full value and expecting magic to strike.
Here is Jacobs plan:
Buy at full muliple
Jacobs pretty much confirms the above. XPO has no way in to forwarding. too much concentration/competition in forwarding. little overlap in clients with brokerage. XPO is consuming ton of cash . . . new busineses are consuming far more working capital and requiring much more IT spend. "asset light" maybe but still huge capital hogs.