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Cumulus Media Inc. (CMLS) Message Board

valubyer 16 posts  |  Last Activity: Dec 17, 2014 7:32 AM Member since: Apr 14, 2003
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  • valubyer valubyer Dec 17, 2014 7:32 AM Flag

    sfvip - it is obvious. They don't issue equity because dilution is the enemy. The 8% coupon is high, but the way I calculate ROE, TA has an extremely high ROE. Not sure, but I think Yahoo is dividing net income by book value of equity.

    I divide cash flow after debt service by market value of equity. If 2015 EBITDA is $125 Mil, interest expense will be about $25 Mil with the new debt. If income tax is $20 Mil, and Maintenance Capex is also $20 Mil, then remaining cash flow to equity is $60 Mil. Market cap is now about $400 Mil. So ROE by my count is 15%. It should be higher because the new debt is now returning zip in a money market account earning 1% or so. That cash will be deployed in cap improvements and acquisitions, which should grow EBITDA in years to come. Estimating maintenance CAPEX is also very inexact. CAPEX will far exceed $20 Mil for the next few years, but these CAPEX exceed the maintenance level.

    Had management issued shares instead, ROE gets crushed. 8% is not cheap for debt, but it is still cheap compared to the cost of equity capital. They are right to use the cheapest capital that is available.


  • Reply to

    Sell at $11.50 or keep longer?

    by happytradersometimes Dec 12, 2014 2:10 PM
    valubyer valubyer Dec 15, 2014 7:31 AM Flag

    See my more recent post. The answer is hold longer.

  • Happytrader questioned whether the aggressive strategy of TA's management is wise, borrowing money at 8% to buy stores and fund capex to improve stores. Their 3rd quarter report says it is working. The stores they bought over the past three years have seen their store operating income double from $8 Mil to $16 Mil from the quarterly pace when purchased to the most recent quarter. (These numbers are before corporate admin and overhead.).

    TA was trading at a trailing EV to EBITDA multiplier of around 6.7X before taking on the new debt. The cost of the new debt aint cheap, but I am confident this leverage will benefit shareholders. If EBITDA inches up to $125 MIL, from about $115 Mil currently, and you put a 8X multiplier on it, EV becomes $1 Billion even. Debt is now near $625 Mil with the new debt, but you have to subtract the $125 Mil cash on hand at 9/30. The new debt is deployed in the form of cash right now, but lets assume it gets spent quickly, then net debt would be about $500 Mil. The equity value would also be $500 Mil, which pushes the stock up to about $13.50, on its way to still higher prices.

    TA is a solid buy.

  • Reply to

    New debt

    by sfvip2319 Dec 10, 2014 12:32 AM
    valubyer valubyer Dec 12, 2014 7:02 AM Flag

    MBA, Canisius College, Also have earned designations CBA, CVA, MRICS. Appraisal Practices Board invited me and 9 others to be members of a roundtable to discuss tangible and intangible asset valuation in October. Investors like large EPS not small EPS. More shares will shrink EPS, and investors will run for the hills if more shares are issued.

    Where did you get YOUR education?

  • Reply to

    New debt

    by sfvip2319 Dec 10, 2014 12:32 AM
    valubyer valubyer Dec 11, 2014 5:10 AM Flag

    Do you understand the term "cost of capital"? If you want to make money in the market, you need to earn a high return on equity. TA has only moderate leverage. Use of debt enhances the return to shareholders. Issuance of new shares just kills return on equity. Its simple math. You are really an amazing idiot.

    Look at PSEC. Their earnings have exploded over the past three years but they just cut their dividend because the number of shares outstanding grew even faster than earnings. In that case management is incented to issue more shares cuz its a fast way to get more capital, and their pay is tied to a management fee tied to asset size. So their motivation is contrary to shareholders.


  • Reply to

    New debt

    by sfvip2319 Dec 10, 2014 12:32 AM
    valubyer valubyer Dec 10, 2014 10:00 PM Flag

    Schwartzberg- Please learn to read before you embarrass yourself with inane comments. Duh.... its a debt offering, and so yes now that are receiving $120 Mil cash. (They dont have plenty of cash??? I think $120 Mil on top of what they already had is quite a bit). The genius at the top of this message was wishing it had been a stock issuance instead, so I said that he was making a dumb wish wanting dilution. And yes, the debt issuance is a good thing, though 8% is a pretty high cost in this environment. So I am long and happy to own TA.

    So read before you spout next time.

  • Reply to

    New debt

    by sfvip2319 Dec 10, 2014 12:32 AM
    valubyer valubyer Dec 10, 2014 6:47 AM Flag

    What an idiotic comment. Dilution is the number one enemy, and you are wishing for it ?!? You need to retake finance 101. They now have plenty of cash, so the last thing they need is more shares.

  • valubyer • Aug 31, 2014 11:14 AM:

    "Good post. But, a few pennies below NAV is still dilution. Since 6/30/2010, book value (or total NAV) has gone from $711 mil at 6/2010 to $1,114 mil, @ 6/2011 to $1,512 mil @ 6/2012 to $2,656 mil at 6/2013 to $3,618 Mil most recently. Almost all of the increase to equity has been from issuing shares, diluting. I have been in as a long since 6/2010, and have been amazed how well they kept the internal rate of return so high. But there are limits, and I think they have hit the limit. I believe they cut the dividend to $.08 or $.09, and then the stock will drop, and then I will re-enter.

    In spite of the recent insider buy, I think they will have to cut. JMHO."

    So today, 12/8, I bought quite a few shares.


  • Reply to

    News flash: ATM machines don't give free money

    by valubyer Aug 31, 2014 7:19 AM
    valubyer valubyer Dec 8, 2014 7:53 PM Flag

    Not a bad prdiction on my part. I said they would cut to between $0,08 to $0.09. I wasnt smart enough to estimate $.08333. Anyway, true to my word, I was a buyer today.


  • Reply to


    by bfjoll9000 Dec 2, 2014 11:05 AM
    valubyer valubyer Dec 3, 2014 6:56 AM Flag

    If you are going to reference an EBITDA multiple, you really have to add the debt and subtract cash from market cap, The result is the EV, and for TA, EV approximates $715 Mil. I estimate forward EBITDA around $125 Mil, making the multiple about 5.7X. And yes, that is a cheap EV.

  • Reply to

    How does price of oil effect PTRY?

    by whodontnothat Nov 28, 2014 10:16 AM
    valubyer valubyer Dec 2, 2014 6:25 AM Flag

    Should be very good news. It tends to help gas margins and leaves more disposable income to spend on snacks!

  • I loaded quite a few more shares after earnings, and particularly after the drop below $9. Everything in the earnings report was excellent except that gallons sold were down a tad. With the acquistions, total gallons sold will grow alot, and meanwhile there is great sales and profit improvement as the acquired properties are brought up to the TA brands.

    With 3rd qtr EBITDA of $42 Mil, and Enterprise Value of about $650 Mil, TA is cheap indeed. I would guess that we will be seeing annual EBITDA around $140 Mil over the next 12 months, which is a multiple of around 4.6X. If EBITDA is only $125 Mil, the multiplier is still only 5.2X.

    If TA does $140 MM EBITDA and trades at a 7.5 X mult., EV would be $1,050, and stock price would have to double.


  • How is it possible that the 3rd quarter charge has been increased by $300 Mil since the earnings announcement to the filing of the 10Q and it seems to be a secret. Other than the 10Q itself not a word has come from FNFG announcing the change. Buffalo News and another upstate paper got the story cuz I guess they read the 10Q.

    I sold my FNFG stock cuz I think there will be an opportunity to buy it lower when this news filters it way out.


  • Reply to

    by stjudeprayer Oct 30, 2014 7:50 PM
    valubyer valubyer Oct 31, 2014 7:59 AM Flag

    I am here too. Don't forget they have about $100 Mil cash and no debt, so enterprise value of the business is just $420 Mil or about 4.5 times EBITDA.

  • valubyer valubyer Oct 17, 2014 3:01 AM Flag

    PSEC failed to cover its dividends through 6/30 with earnings and I suspect they will fail again thru 9/30. Dividends are announced thru January, but my guess is that they will soon announce a cut. The company has great management and pulls off more great investments every month. The problem is the massive increase in shares outstanding. I am looking forward to the dividend cut, because it will be my signal to get back in.

  • valubyer valubyer Oct 15, 2014 9:59 PM Flag

    I owned several thousand shares PSEC until about 6 weeks ago. I dont think they can sustain the dividend quite. It goes to maybe $0.09/ month IMHO. Then I will buy back, but am hoping to buy in the low $8s or high $7s.

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