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Magal Security Systems (MAGS) Message Board

valubyer 17 posts  |  Last Activity: Feb 19, 2015 7:21 AM Member since: Apr 14, 2003
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  • Reply to

    Ebix longs

    by bombaywala46 Feb 17, 2015 8:34 PM
    valubyer valubyer Feb 19, 2015 7:21 AM Flag

    I was in for a little while before the 3 for 1 split which was Jan 2010. Have 8,000 shares and have benefitted greatly from owning EBIX, as have family members. I might even go too!

  • valubyer by valubyer Feb 18, 2015 2:17 AM Flag

    Back on Jan 7, after the close, I was guilty of 'pumping" or maybe just offering EBIX to this board. I mentioned it partly because both RAS and EBIX were victims of very damaging though inaccurate Seeking Alpha articles. EBIX was then $20.23, being up 8.76% that day. Today it was up 11.51% to $26.54 (which is up 31% since 1/7) because of a leaked contract win. Its run is not yet over as there is still a huge short position, and no actual news is yet out on earnings or on any new contract wins. Just curious - did anyone out there check out EBIX?

    My post from 1/7 is below. With EBIX up 11.5% and RAS up 1.5% today, I had one of my best days in a long time. EBIX, RAS, and TA are my big three, and I believe all three have nice moves coming in the near term. None of the three has reported earnings yet. Good luck to all.

    VB

    Reply to SA Article - The dividend by buyvalu •Jan 7, 2015 1:52 PM
    valubyer • Jan 7, 2015 11:21 PM
    BV - Funny thing is the past two days that an SA article has been damaging RAS' price, an earlier victim of SA butcher stories (EBIX) has FINALLY had two of its strongest days in the past year or two. EBIX is still cheap, Check out this insurance software specialist that is trading at a trailing PE of 12.5, and which should grow earnings significantly this year. Market cap is just $740 million.

  • Reply to

    Still looking out towards 1Q

    by davisfoulger Jan 8, 2015 12:47 AM
    valubyer valubyer Jan 8, 2015 12:56 AM Flag

    davisfoulger - You da man. I have been reading your posts for years and you have been a great help to me.

    VB

  • Reply to

    SA Article - The dividend

    by buyvalu Jan 7, 2015 1:52 PM
    valubyer valubyer Jan 7, 2015 11:21 PM Flag

    BV - Funny thing is the past two days that an SA article has been damaging RAS' price, an earlier victim of SA butcher stories (EBIX) has FINALLY had two of its strongest days in the past year or two. EBIX is still cheap, Check out this insurance software specialist that is trading at a trailing PE of 12.5, and which should grow earnings significantly this year. Market cap is just $740 Million.

    VB

  • Reply to

    SA Article - The dividend

    by buyvalu Jan 7, 2015 1:52 PM
    valubyer valubyer Jan 7, 2015 7:43 PM Flag

    BV -

    Nice analysis. I just bought more.
    PS - Interesting moniker you have.

    VB

  • Reply to

    Really appreciate davisfoulger's comments

    by valubyer Jan 4, 2015 10:33 AM
    valubyer valubyer Jan 4, 2015 12:38 PM Flag

    Yes Yes Yes - Cost of capital is the key. See the text "Cost of Capital" by Shannon Pratt and Roger Grabowski. Incredible book. Just incredible. (My copy is autographed!) Bring it on Joel.

  • RAS has been one of my top 2 or 3 holdings for each of the past 4 years. The company did well in 2014 but the stock had a neg return. That almost guarantees a positive stock performance in 2015. Meanwhile we get to reap those fat dividends.

  • Reply to

    Down AH

    by parisclockman Dec 23, 2014 7:35 PM
    valubyer valubyer Dec 24, 2014 5:56 AM Flag

    You may be hoping for a big hit but I doubt it will happen. How many shares sold cheap after hours? a couple hundred maybe? TA is still cheap, certainly compared to PTRY, which is being acquired. TA should soon be trading in the lucky $13s.

  • 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.

    VB

  • 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?
    VB

  • 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.

    VB

  • 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.
    VB

  • 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.

    VB

  • 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.

    VB

MAGS
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