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Nintendo Co. Ltd. Message Board

tambourine_man_43326 23 posts  |  Last Activity: Aug 7, 2015 11:27 AM Member since: Mar 20, 2002
  • Reply to

    equity per share

    by tr01742 Aug 5, 2015 1:53 PM
    tambourine_man_43326 tambourine_man_43326 Aug 7, 2015 11:27 AM Flag

    Right I guess thats my point is the upside seems largley capped, granted that is about 4x current levels so I would take that upside.

  • Reply to

    equity per share

    by tr01742 Aug 5, 2015 1:53 PM
    tambourine_man_43326 tambourine_man_43326 Aug 6, 2015 3:07 PM Flag

    Oh and the fact that RMCF can exchange 26,000,000 shares for less than $7,000,000 in debt is not helping either.

  • Reply to

    equity per share

    by tr01742 Aug 5, 2015 1:53 PM
    tambourine_man_43326 tambourine_man_43326 Aug 6, 2015 3:03 PM Flag

    You are correct they did generate some cash flow in the latest quarter. I know I sound gloomy, but keep in mind I have no reason to be gloomy. I am not a short seller, I started looking at this company because I have followed RMCF for over 15 years now. I have no reason to root for these companies to fail. I think it would be cool if they succeeded, but you are doing yourself a disservice if you ignore what some of us are saying because we are just "bashers". As Grant already stated the liability on the Cherry Berry shares alone nearly wipes out your "equity". You say I am speculating, but the only thing that has set the value of the goodwill is the price SWRL was willing to pay. You don't amortize goodwill, because in theory the actual value of the acquirer increases the more successful the merger if they allowed companies to amortize it then they would get a double bonus as far as taxes goes. Yes goodwill has been decreasing! You know why? They are already writing down some of the goodwill! Look at your cash flow statement on the last 10-k (on edgar) it shows $376M in "asset impairment" this means they essentially admitted that their acquisitions were $376M less valuable than what they paid for them. Its funny you were the one that was clamoring for the glory days when 95 degree weather would lift this stock new highs. Instead the lackluster performance seems to have the market worried about big markdowns on intangibles, and contingent liabilities relating to options.

  • Reply to

    equity per share

    by tr01742 Aug 5, 2015 1:53 PM
    tambourine_man_43326 tambourine_man_43326 Aug 6, 2015 8:41 AM Flag

    Tangible equity is the amount of hard assets vs. liabilities, about $7M of this company's assets are intangible, i.e. the amounts paid for acquisitions in excess of hard assets that were required. So to break it down, SWRL buys Bob's Yogurt Depot for $5M, but Bob's only has $1M in assets, the acquisition adds $1M in reall assets and $4M in intangible assets (gooodwill in this case). When an acquisition works out there is hidden value in intangibles as. For instance lets say Bob's starts throwing off $2M a year in cash flow. Well at 8x cash flow Bob's is probably worth $16M, but they get to keep the goodwill at $4M. The problems come when the acquired company does not perform, this leads to charging off goodwill to adjust for fair market value. I would say that there is a VERY good chance that in the next year they will charge of a significant amount of goodwill, which will likely wipe out all of the equity they show today.

  • Reply to

    equity per share

    by tr01742 Aug 5, 2015 1:53 PM
    tambourine_man_43326 tambourine_man_43326 Aug 5, 2015 2:29 PM Flag

    Well including intangible equity it is right about the same as the market cap and the market cap is still about double that if you think about RMCF's options on the debt being exercised. Net tangible equity is ($5.9M) and I would say the market is saying that some that intangible equity is going to be written off now or in the future.

  • Reply to

    Holy #$%$!

    by tambourine_man_43326 Jul 28, 2015 2:48 PM
    tambourine_man_43326 tambourine_man_43326 Jul 31, 2015 2:14 PM Flag

    Well the low share price is good for one thing, this is from RMCF's 10-k (this pretty much disproves the theory that RMCF wants the price low so they can buy this thing cheap): a"As of February 28, 2015, we held a 39% interest in U-Swirl. Additionally, we have the right to acquire approximately 26,271,000 shares of common stock of U-Swirl through the conversion of convertible debt owed by U-Swirl to our company. If the Company exercised this conversion right, we believe we would hold approximately 72% of U-Swirl’s common stock." So as much as the shares have already been diluted you might as well tack another 26,271,000 shares on to that count. This stock is like a girl that looks doable from 30ft away, but when you look close you just want to run.

    Sentiment: Strong Sell

  • Reply to

    Holy #$%$!

    by tambourine_man_43326 Jul 28, 2015 2:48 PM
    tambourine_man_43326 tambourine_man_43326 Jul 31, 2015 12:50 PM Flag

    Oh I will not be shorting it, as I have said I have never shorted a stock, but mark my words RMCF will have to reduce or eliminate its dividend in the next 12 months.

  • Reply to

    Holy #$%$!

    by tambourine_man_43326 Jul 28, 2015 2:48 PM
    tambourine_man_43326 tambourine_man_43326 Jul 30, 2015 3:52 PM Flag

    You are right about this. Though I have never shorted a stock in my life, I believe more an more that a short on RMCF which is still trading around 20 PE, is a slam dunk at this point.

  • Reply to

    yogurt mistake

    by nhojrekoj Jul 13, 2015 3:58 PM
    tambourine_man_43326 tambourine_man_43326 Jul 29, 2015 3:17 PM Flag

    I have never ever shorted a stock, but I do not understand how this stock remains at a 20x PE while they keep racking up losses and lending money to a "subsidiary" that floundering. It seems this stock is ripe for a short sale.

  • Reply to

    This stock was at a low of $0.25 two years ago

    by tr01742 Jul 16, 2015 9:42 AM
    tambourine_man_43326 tambourine_man_43326 Jul 29, 2015 9:30 AM Flag

    Have I? I assume you are talking about my comment about the "smart" money and "dumb" money. This was not to insinuate that I was in the "smart" money. That term, when talking about stocks, generally refers to institutional and professional investors which I am not. I have no additional knowledge other than what is made available to the public. Based on your comments and lack of knowledge of the stock you own, I would say that I am more familiar with this company's financials than you, I mean as you say, "I didn't know the share count went up so much" that tells me you hear "acquisition" and instantly think that it adds value without even analyzing the terms of the deal. Did you read in the SA article that the LARGEST Cherry Berry franchisor told Milwalkee Wealth Management that he plans to close ALL of his Cherry Berry locations because they are not economically viable.

    More and more this seems to me to be a series of mistakes orchestrated by RMCF, each one making the situation worse, while the intention is to mask previous mistakes.

  • tambourine_man_43326 by tambourine_man_43326 Jul 28, 2015 2:48 PM Flag

    This is from one of the seeking alpha articles: "…in the event that the per share proceeds from the sale of any Sale Shares is less than fifty cents ($.50) per share before payment of any commissions or selling expenses, Buyer will pay to the applicable Seller an amount equal to (i) the number of Sale Shares sold by such Seller, multiplied by (ii) the difference between (X) fifty cents ($.50) and (Y) the per share proceeds prior to payment of any commissions or selling expenses"

    As a condition of the sale, Cherry Berry owners agreed to a twelve-month common stock lock-up period and in roughly a month the one-year lock-up period expires. At that time Cherry Berry's prior owners will have the option to sell all of their shares. Over the past three months, SWRL common stock has traded between $.25 and $.43 per share. Should Cherry Berry's previous owners elect to sell all 4,000,000 of their shares, the liability to SWRL, and through consolidation, RMCF, could be in excess of $1,000,000.

    At .15 a share the liability is $1,400M!!!! Jesus this company has issues.

  • Reply to

    This stock was at a low of $0.25 two years ago

    by tr01742 Jul 16, 2015 9:42 AM
    tambourine_man_43326 tambourine_man_43326 Jul 28, 2015 2:14 PM Flag

    At any point do you question yourself, or do just keep on thinking that everyone else is missing something that you are not? Looks like we will see .10 a share soon.

  • tambourine_man_43326 tambourine_man_43326 Jul 15, 2015 8:40 AM Flag

    I had thought the same thing about RMCF, but I have listed to a few of their conference calls since the SWRL merger, and their shareholders are #$%$! They want them to divest not buy the whole thing. Not that would necessarily stop them. It seems right now RMCF could use a big quarter from SWRL as much as TR.

  • tambourine_man_43326 tambourine_man_43326 Jul 15, 2015 8:38 AM Flag

    I did not mean to call you dumb, sorry if it came across that way. All I will say is that my expectations for this company have so far been much closer to actual results than yours.

  • tambourine_man_43326 tambourine_man_43326 Jul 14, 2015 9:49 AM Flag

    I do think the market has priced in a loss for the year. With how this stock keeps sinking. I mean even earnings of .03 for the year comes to a PE of less than 10. So yes, I think the market is questioning this company's profitability now and in the future. It seems to me that the current stock price values current cash flow at $0 or at least very very little, but the possibility of increased cash flow from streamlined operations gives a moderate of value to the stock. This is just how I perceive the market's pricing of this stock, of course there are people like tr who have drank the kool-aid and think this thing is going to make over a million in profit this year. So yeah when you factor how much "dumb" money is in this thing out of the $6M total, weighed against how many intelligent, fundamental investors are in this stock, I think most of the smart money values this turd at close to $0. This is probably why it still has my interest. The "smart" money is wrong sometimes, and it has been my experience that when all of the "smart money is on one side, it is at least taking a look at.

  • tambourine_man_43326 tambourine_man_43326 Jul 14, 2015 8:58 AM Flag

    Its not like a put a ton of time into this prediction, but with earnings out today, it looks like I was off by .01, or by 100% depending on how you want to look at it.

    I don't think RMCF has provided anything of value to the companies operations. $50 would be too much $500k a year is robbery.

    You say "IMO a franchisor with hundreds of franchisees should never be operating a loss in any period." I wouldn't totaly disagree with this. I would say that you are maybe not looking at this company in the same light as me if you just look at them as a franchisor. Yes most of their stores are franchises, but as of this most recently reported quarter company owend stores still make up about 50% of revenues.

  • tambourine_man_43326 tambourine_man_43326 Jul 8, 2015 10:23 AM Flag

    Ok Mr. Uswirl long what is your anticipation for the earnings. What will make you happy what will make you sad? Are you trying to set any expectations for this company with operating profits? I am going to say a net profit of .02 this quarter and a net profit of .05 for next quarter with a loss of .05 in the fourth for breakeven for the year. That would be my guess, and I would say if it plays out like that it would be a good thing for the stock, but certainly wouldn't push this up near the $1 range.

  • Reply to

    Dilution !

    by sherrylsvgs Jun 19, 2015 7:11 PM
    tambourine_man_43326 tambourine_man_43326 Jun 29, 2015 12:59 PM Flag

    "growing small companies are normally not looking for operating income".... what is this 1999 .dotcom craziness. I have looked at hundreds of small companies from $100k in revenue to $1B in revenue (from both a lending and investing prospective) and everyone of them was worried about operating profits in some way. Operating profits are important for all companies. It might get a pass from some investors in the short term if they think there is potential for growth or margin expansion, but still you have tol sell items for more than the cost to produce them, or with this company sell food for more than it costs to make at that specific store. If they cant turn an operating profit you can spread the overhead over an infinitely large base and it still comes out unprofitable. I have heard your line of thinking called the I love Lucy Effect. In an episode of I love lucy, lucy begins selling salad dressing. When Rickie asks how much she sells them for she says .10, how much does it cost to make them? he asks. Lucy responds .12. Ricki: How will you make any money? Lucy: Volume!

  • Reply to

    Dilution !

    by sherrylsvgs Jun 19, 2015 7:11 PM
    tambourine_man_43326 tambourine_man_43326 Jun 23, 2015 10:53 AM Flag

    I think you might have missed something in finance 101? Debt is cheaper than equity. Using equity to finance acquisitions and growth is a very risky proposition. You probably don't mind now because that $2.8MM loss last quarter is only a loss of .27 a share while the $1,6MM loss in the quarter a year ago was only .24 per share (so loss increased, but share count went up 60% how is that?). I would not have a problem if they were acquiring businesses that are accretive to earnings, but are they? It looks to me like the restaurants essentially break even at the store level, how do you ever spread the overhead enough with virtually zero operating profits?

    The simple fact is most of these small companies that acquire with equity do it because they do not have access to other forms of capital. When I look at the share count over the last couple of years I see big growth in shares, and still no earnings. The earnings may be down the road, but the point is that they are paying an extremely high price for those future earnings. You have to think about it, if they make an acquisition for $3M and it is debt the most they can lose on the transaction (not in operations) is $3M, but if you pay with equity and give them say 1.25M shares and the company ends up being worthless you didn't just lose $3M, but you lost all of the future earnings that those 1.25M shares are entitled to.

    I am not a bear on this stock and I am not a short seller. I have had my eye on this stock for a while now because I think it is an interesting situation. I am not a fan of this acquisition through equity though.

  • Reply to

    SWRL

    by dorig4x May 21, 2015 8:55 PM
    tambourine_man_43326 tambourine_man_43326 Jun 11, 2015 11:24 AM Flag

    A discounted cash flow model is very simple to calculate, and very complex to get 100% correct (might be impossible), but the two things that are most important is 1. Knowing what its current earnings capacity are and 2. what is a reasonable growth rate to apply to cash flow over the next few years and then also into perpetuity. You don't have to know exactly, you can do a weighted average with like "best case" weighted 10%, "worst case" weighted 20% (I like to be conservative), "average case" 30%, and "Anticipated" 40% this should build in some margin for error. Then you have to choose a discount rate, for a stock like this I would use a very high discount rate, like 10% or something due to the speculative nature of the stock. The problem is I would have no clue what to plug into for 1 and 2? What is best case 5 years from now? $20M in revenue and $5M in cash flow, more? Less? Worst case is easy, its $0 and I would probably give that about a 40% chance (my total BS guess) of happening to this stock at this moment.

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