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ITT Educational Services Inc. Message Board

thedeathrace 261 posts  |  Last Activity: Jul 15, 2014 11:33 AM Member since: Jan 10, 2013
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  • Reply to

    CLF to announce double revenue Q1+Q2

    by royengr Jul 15, 2014 10:44 AM
    thedeathrace thedeathrace Jul 15, 2014 11:33 AM Flag

    this is not correct as I see it. IF a company produces something or manufactures a product and expenses on the income statement all the cost for such in a prior period and then the product is held in inventory (at the cost of manufacture) for sale in a later period, when the product is sold the company reports revenue (the inventory amount ( =cost to manufacture) plus the markup (gross profit). There is no associated cost item to be booked as the costs were already expensed on the income statement. The total inventory amount and markup becomes profit. The prior period's expenses are extra large and profit is understated. The subsequent period's revenues are extra large and the profit is overstated. The combination of the two periods results is the normal picture.

  • Reply to

    CLF to announce double revenue Q1+Q2

    by royengr Jul 15, 2014 10:44 AM
    thedeathrace thedeathrace Jul 15, 2014 11:25 AM Flag

    Well, CLF's stock for the past couple of years has sunk just like the Edmund Fitzgerald. But like that ship, I think it has finally hit bottom.

  • I have read some posts here recently that indicate that CASA was short CLF shares. Some posts indicate that CASA Is covering their short position.

    How does anyone know this? Was there some SEC filing indicating that CASA had shorted CLF shares?

  • thedeathrace thedeathrace Jun 26, 2014 4:42 PM Flag

    No one is betting on Cassablanca being successful. CLF share price has gotten crushed, so who has been going along with Cassablanca? No one that I can tell or have read about. I don't hear a peep out of any other activists piling into CLF - like Paulson just did with Allergan. So if Cassablanca fails, it is a non-event. CLF share price is crushed enough that no one cares if Cassablanca sells their 5% stake. That 5% stake is basically a $100 million investment in a company with a $6.8 billion stockholder's equity (although I expect another write down to be coming, taking shareholder equity down by about $1 billion). Either way, Cassablanca's stake is peanuts. If Cassablanca bails, short sellers will use it to cover some of their massive short position.

  • Despite all the gnashing of teeth regarding the movement in CLF's stock price, CLF does have some "inherent value". This would be the Warren Buffett approach. If anyone here were to buy 100% of CLF, what price would you pay? We have the US iron ore biz, the US coal business, the Canadian Bloom Lake reserves, and the Asia iron ore business. Each of these are worth something for sure. Certainly what CLF paid for Bloom Lake was over the top (almost $5 bill, plus another $1.5 bill in cap expenditures, less the $1 billion write down the company took on it last year). But Bloom Lake is not worthless. It has huge reserves. CLF also has other assets, such as equipment and inventories. It also has $3 billion in debt. Funny thing is that if Bloom Lake had held a value of lets say $3.5 bill (which may be high), that alone would cover the value of the company debt. What the other stuff is worth is worthy of discussion here. Who has any thoughts. Cassablanca has clearly thought about it, but they have not thrown a number out there.

    Regarding iron ore prices, i see that in 2012 they fell into the $90's and then rose almost to $150. So here we are back in the $90's. Why shouldn't prices recover as before. Of course everyone thinks that China is falling off a the end of the earth, but we have all heard that story before and they just keep marching on. Commodity prices go up and down hugely all the time. So why is this downdraft no different. Why would anyone ever sell out of a natural resource asset with the commodity price at the low. CLF management has a point in their response to Cassablanca in this regard. I think selling out here at these depressed commodity price levels in probably a bad move. Some will say of course that commodity prices are going lower. But let's face it. Who has ever been able to correctly predict any future commodity price consistently. No one has. So listening to the commodity price bears is of no value in my opinion.

  • Why VLO and other refiner stocks are down is beyond me. This news from the morning was a total non-event. Now the news has been discredited.

    Looks to me like it is just the day traders pushing the stock around and the market makers being too scared to do anything to support the stock.

    What I don't often understand in the marketplace is who sells a stock like this with the price down 10% on such ridiculous news. But here we have it. Shares down 10% and there have been sellers. Why sell something for 10% less than what is was worth yesterday when the news is just so flimsy and of no effect.

  • Reply to

    What is CLF worth? A balance sheet analysis.

    by thedeathrace Jun 13, 2014 10:38 AM
    thedeathrace thedeathrace Jun 13, 2014 10:54 AM Flag

    Yahoo show CLF shares trading at $13 in 1987 and between $20 and $60 in 2002-2004. I am not even sure what the relevance of any of that is anyway. What's your point?

  • thedeathrace thedeathrace Jun 13, 2014 10:49 AM Flag

    This analysis is not fully developed at all and very misleading as it pertains to shareholders. Bankruptcy means that the company would not be able to pay its financial obligations, principally its interest payments on debt. That does not mean that CLF is not worth a great deal to shareholders. If I own a $50 million Picasso painting, but have debts of $25 million and have no cash to make interest payments, I am in effect bankrupt. But that does not mean that I do not have a positive net worth of $25 million. I am wealthy but bankrupt in legal terms.

    If CLF were to end up in bankruptcy (which I can not predict), I believe that like the Picasso example, shareholders will have a great deal of assets left in their name - At least $3 billion (about $21 per share) by my guesswork.

  • Everyone knows what iron ore prices are doing. It isn't any secret. With ore prices down, investors have sold CFL shares down relentlessly. Shares used to be $100 not too long ago and are now $13. So then, what is CLF worth? Day traders don't care as they are in and out fast and the "real value" of something is meaningless. But from a longer term perspective, CLF must have a "value" (maybe that value is zero!).

    To give this question a shot, I went to the balance sheet. CLF's market cap is $2.1 billion.

    Cash on hand is $364 million, inventories $815 million, property plant and equipment $11 billion. Total assets $13.2 billion.

    Accounts payable are $693 million, long term debt $3.2 billion and total liabilities $7.2 billion.

    Stockholder's equity is $6 billion.

    My guess is that some of CLF's assets need to be written down - possible some of the inventory value and some of the property plant and equipment. so let's take a guess at what I think would be the worst. If these assets were reduced by a massive 25% (and 25% would be a massive number), that would equate to $3 billion in writedowns. Remember however, CLF already took $300 million in writedowns in q4 last year and a large $1.1 billion in 2012. $3 billion writedown woulds reduce shareholder equity to $3 billion against a market cap of $2 billion.

    I have to think that what CLF owns (fully written down asset values) free and clear of any of its liabilities must be worth north of $3 billion. Yet the shares now trade at $2 billion valuation.

    And if CLF's true asset values are more like $4 billion (that means a $2 billion writedown), then share would be a double from here (ie $26 per share).

    My conclusion...value investors back up the truck. Load the boat on CLF shares on the long side. The bad news is more than priced in fully. This does not mean that the shares will not go to $10 or even lower. It only means that at current prices the bet you are making is a really really good one.

  • All the Chinese big gamblers/rollers that go to the Macau casinos go there through arrangements made buy the Junket operators, which are controlled by the Chinese triads, the Chinese mob. What does that say about the Macau casino business? Why is the Macau casino take 7 times what is done in all of Las Vegas? Everyone says that the Chinese like to gamble? Sure they do, but so do people everywhere. What the Chinese like to do more than gamble is to launder their bribery/graft/stolen money. This is where the casinos come in.

    I am not sure how an investor factors this into a valuation price for the casino stocks. How should one look at the growth rates in the Macau casino market against the huge amount of money laundering going on? These are tough questions and I do not have the answers. Anyone who does not have a viewpoint on this issue and who invests long or short in these stocks is a fool.

    At what p/e should one value money laundering gambling revenues? Can these types of revenues continue to grow so rapidly with the recent developments?

    One thing is for sure. No one here has any clue what is going on behind the scenes in Macau and China regarding money laundering. There is zero visibility into the Chinese Triads and the behind the scenes political activity in China.

  • Reply to

    Just listened to conference call replay..

    by thedeathrace Jun 5, 2014 2:44 PM
    thedeathrace thedeathrace Jun 10, 2014 2:21 PM Flag

    I believe him because he has never lied about anything. The company has always been straightforward as to what the challenges and risks are. Things often turn out better or worse than what one may expect. That happens all the time in business.

  • Reply to

    The price (or cost) of education

    by thedeathrace Jun 6, 2014 10:26 AM
    thedeathrace thedeathrace Jun 10, 2014 2:15 PM Flag

    $40k for an associates degree could be a fabulous investment. My daughter is going to college this year. 4 years all in cost will probably be well north of $200,000. Is that a good investment? I would say without question it is a good investment as if she doesn't get educated, her life will be one of flipping hamburgers for the rest of her life. If I had a choice, flipping burgers or paying $200,000 so I could get a good job and have a career, I would do the latter every time. It is a no-brainer decision.

  • There is a nasty hidden US politcal agenda going on behind the scenes against the Macau Casinos and Steve Wynn and Adelson are #$%$. The Macau Casinos are money laundering venues and the largest such in the world. This is all well known and since the Chinese politicians are the beneficiaries, there is only a ingrained interest there to increase the activity. However, step in the US government. Wynn and Adelson are huge supporters of the Republican party and dole out large amounts of political cash. The democrats are #$%$ off abuot this and with a Presidential election coming up (ie Hillary), the democrats are going to go to the source of Wynn's and Adelson's money and shut it down. That means an attack on the money laundering in Macau. Do a google search on the US activity along these lines there. See for yourself. The Chinese have already made one of their own a sacrificial lamb (the political hack got 6 years hard labor and probably all his massive wealth taken away). But this is not the end of it. More to follow. Wait till the press really gets a hold of this story and exposes the US casino operators as major players in the money laundering business. It is going to be ugly.

  • As a matter of fact, I just posted this below in early May. And there has hardly been anyone who supported my view. Now everyone is coming out of the woodwork because the Ackman deal re Allergan is a joke and VRX just handed Ackman $1 billion of stock market gains for nothing. The Wall Street crowd does not like this at all. Ackman is a snake and the smart crowd knows it. VRX showed its true colors by getting into bed with Ackman. They are all sleazeballs.

    My previous post (one of many)...."VRX shares are up from nothing to $140 all on the back of a debt fueled, balance sheet destroying acquisition program with all sorts of funny accounting. Go read the balance sheet and then come back to everyone. Make sure you check out the company's stockholder equity and all the massive earnings they generate (or should I say losses). This think is just some massive pump job. VRX buys all these #$%$ companies that no one want and that would sell at ten times earnings, but then through accounting gimmicks makes it seem like they are growing 40-50% a year. So the market gives a 40 p/e to something that should get a p/e of 10."

  • Reply to

    Fraud at Macau Casino

    by thedeathrace Jun 9, 2014 4:30 PM
    thedeathrace thedeathrace Jun 9, 2014 4:56 PM Flag

    With an eps estimate on the order of $10 per share for 2015, WYNN shares are really dangerous if the anti-money laundering crackdown bites. That eps estimate (p/e = 20) will disappear fast and with a declining earnings figure, the p/e ratio will drop to 15 or lower.

    If the eps estimate falls to $9 and the p/e goes to 15, the shares will trade at $135 (not their current $200). If the eps drops to $8 per share and the p/e falls to 13, then the shares trade at $104.

    Remember, all the eps growth in these stock is from Macau. If Macau fails, it is lights out.

  • Reply to

    Fraud at Macau Casino

    by thedeathrace Jun 9, 2014 4:30 PM
    thedeathrace thedeathrace Jun 9, 2014 4:49 PM Flag

    The recent analyst downgrades of the Macau Casinos based on the expectation of upcoming comp numbers declining is a sign that analysts are thinking April 2014 was the bubble money-laundering top and the rest is downhill for the Macau gaming market. Smart money is already out of these stocks and the shorts are taking positions. If the money laundering crackdown has teeth, watch out. The stocks could go significantly lower.

  • Reply to

    Fraud at Macau Casino

    by thedeathrace Jun 9, 2014 4:30 PM
    thedeathrace thedeathrace Jun 9, 2014 4:45 PM Flag

    I read today that 75% of the Macau gambling is done through high end gambler VIP rooms. These gamblers are in effect the people laundering money. I am not saying that all of this would disappear, but an anti-money laundering effort could really put the hurt on things. Some people say that April gambling revenues in Macau were up strongly despite the money laundering crackdown. I am of a different opinion. The casino facilitated money laundering activity may (but not definitely) be coming to a close. As such, the window is closing, so the crooks have to use the system while the window is still open. Thus a huge rush in April to get even more money out. The next couple of months will be important to watch at WYNN and LVS. If things taper off, it looks like the game is over in Macau.

    The wild card remains that the Chinese political crooks all want to still get there money out. The pressure to keep the gravy train going is enormous and I am uncertain as to what in the Chinese government is driving the crackdown when so many politicians have a hand in the game. I suspect that some politicians want the game changed as they themselves want a bigger slice of it and are not in the correct position to get it (so they have to change the rules and displace the existing players) or there is a new set of politicians seeking power and they must use the money laundering crackdown to displace those politicians who are ahead of them in the power chain structure. The incumbent political crooks must be displaced so that the new breed of political criminals can take their place. This then will be followed by some new money laundering angle.

    It is amazing that this whole structure of graft has supported so much wealth - the money stolen by the Chinese politicians, the middle men between China and Macau, the Macau Casinos, the stock prices of the publicly traded Macau casino operators (ie Wynn, Adelson), the ramped up high end housing prices in New York and London.

  • thedeathrace by thedeathrace Jun 9, 2014 4:30 PM Flag

    The Macau Casinos are all being used for money laundering. This is all a well known scam by insiders and Chinese officials (as they are the criminals). It actually has been well reported on for several years now. The reason why China expanded the Macau gaming licenses to Wynn and other foreign companies was so that they could increase the amount of money being laundered. This is why there are no major gaming licenses issued to domestic Chinese companies. A domestic Chinese gaming company would have no where overseas to send your money.

    The loophole in the laundering is that a Chinese person can buy chips and casino credit with chinese currency, but then redeem those same chips for US$ and Hong Kong $. The foreign dollars then get deposited and transferred overseas to places like Switzerland, London, and the US (a bit more difficult here). The money laundered is usually from a criminal activity, like political kickbacks, theft, and so on. The money then goes into buying various overseas assets in owner-hidden accounts. The most noticeable assets are the ridiculous homes that these criminals are paying for in both London and New York. Parking $50 to $100 million in a home purchase in one fell swoop works better than having to make 50 separate $1 million investments. As such, a byproduct of this is distorted high end real estate values in these cities, followed by the trickle down effect to lower priced properties.

    The casinos are enablers of this activity, but they are not the perpetrators. The perpetrators are a different set of local Chinese mobsters, politicians, and criminals. The casinos do know very well what is going on. No one can tell me the Steve Wynn and Adelson do not know exactly what the game is.

    So what is the impact to the casinos and their stock prices. I would argue that earnings from the gambling related to the money laundering activity is an exceeding low p/e business. It is of dubious value at best.

  • Reply to

    The Brand

    by illinigraduate4677 Jun 7, 2014 11:49 AM
    thedeathrace thedeathrace Jun 9, 2014 10:24 AM Flag

    You make a good point, but your point is not a "fact". Question is whether there is any impact on future enrollment. I would say that there are probably potential students that decide not to go with ITT because of the bad PR. I am not sure how widespread or large this is though.

  • I think the answer is that the shareholder's buying APPL know that AMZN has no mojo in the smartphone market. AMZN shareholders are a different group. They are used to revenues with no profits and a lot of hype. Mysterious 7 years late smartphone from AMZN with no apps fits the bill.

    And who uses a Kindle anymore. My wife got one and it just collects dust. She has much prefers her iPad.

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