Humble pie is so much better with a little double down gravy. I do wish I had never heard of this stock, but usually those types end up being profitable in the end. It's going to be a slog, though still not a very big position because 1) too much debt, 2) I don't like resource related businesses.
Nice that LG is back. Guidance is there. Missed the chance to swing trade that move above $11 the other day, but the drop to $9.5 doesn't change anything.
Thanks for this thorough assessment. Maybe add that the risk to revenue collection has abated due to the 1) state of Illinois paying its bills in a more timely manner AND 2) the shift to managed care.
Energy efficiency is inversely related to the price of oil to some extent. IMO, we're okay above $85/bbl. Brisbin says $60/bbl.
In regards to Wedbush's low ball $10 target, Brisbin blames a lack of management credibility due to the decline of the business and various bunglings post-IPO. IMO, Wedbush is intentionally under-targeting to make future results appear more impressive. It's a neat trick.
Brisbin stated in the last CC that a bolt on acquisition would be in the energy efficiency division. There is an article on Ft Alphaville titled "The Dark Side of Data Centers" that describes the current state of data center efficiency. The data center efficiency sector is still pretty fragmented. So I think WLDN can pick up a regional data center project management company for around $9 million. One I like a lot is Evolve Data Center Solutions in Houston. Might cost more than $9, but I think this is the kind of bolt on Brisbin is considering. It combines both infrastructure and efficiency.
There is a lot to like about ADUS. Steadily growing impressive cash flow (DCF NPV around $26). Excellent business model -- hitting the home care sweet spot where hospitals need it most, which pretty much guarantees growth. Considering the huge stock appreciation, insider sale has been negligible. No debt. I have a small starter position because it may dip into the teens for a short time, but I am somewhat enamored.
I think management's credibility will be resolved in their favor as they announce new projects and maintain 6% margins. The 2012 goodwill write-off was required due to the doubtful transition from subcontract to self-perform. That transition was successful, thus the goodwill in the true sense of the word as opposed to the accounting sense, appears now to have been validated by the new ConEd modification. The idea that they could have repurchased 40% of the company in 2012 is pretty outlandish since they were in technical breach of Wells Fargo revolver at that time. But I agree that the stock now should be range bound for a while $10-12, pending further catalysts per previous CCs.
I look at cash flow and earnings out ten years. Assume 86 cents and 12,000,000 growing 15% next 2 years then 5 % for 4 years then 2% the next 4, then 0% in perpetuity. Assume shares grow .75% per year. All of these look like reasonable assumptions considering current earnings and recent management statements. This NPV calculation is $17.95. Take a 20% margin of error off that at you get a minimum valuation of $14.36. However, I figure it will take the market a few quarters for WLDN to actually validate this valuation because management has somewhat of a credibility issue. That's why I say $11. I'll reassess sometime before next earnings.
Isn't it funny how things turn out when you listen to reason rather than half-baked ideas? I plan to sell a quarter of my holdings this morning at ... wait a sec... that's a 25% return since Mar 23rd! I'll hold the rest till I see how next earnings pan out. Good luck.