pretty much nailed the call for a little rebound today but looks like it wants to go to support at 90 and if that fails, 80 like he says
I actually don't mind- I've got some shares of meli in my "income" account, rolling long dated ITM calls forward, generating annualized returns almost 5x that of treasuries- and i am willing to take the risk of shares tumbling in short/medium term because long term MELI is still poised to deliver solid long-term growth, even in the face of rising competition (MELI has a decent moat with payments, delivery services, web hosting, first mover advantage, geographical reach, ads and now real estate ugh) and political/currency headwinds. IMO!
shutdown was only a fraction of Q3... CVRR margin and thus distribution depends on the 2-1-1 crackspread and for the QTD as of 12-18-13, the chicago 2-1-1 (WTI) crackspread is essentially same as last Q. And last Q, CVRR had no cash flow available for distribution (the dist was paid from reserves) so I expect a distribution at low end of management forecast (which is 0.04-0.29).
although reuters reported today that the world cup and a late carnival is likely to crimp brazilian growth, by lowering productivity as people are off partying and watching soccer instead of working. If so, disposable income likely will go down possibly leading to reduced consumer spending at places like MELI
I'm still concerned PAGO only grew 34% last Q, by far its lowest quarterly growth rate to date
if meli growth continues to fall, its P/E will likely contract
the real inundation could be the permits to export LNG (2 approved so far, but nearly 2 dozen more export project applications in the works) which will shoot energy independence in the foot. If not the foot of the boat
since Baird upgraded LNCO 2 weeks ago, LNCO stock price has appreciated significantly so I presume Baird's feels the runup is over (Baird price target is 34, and it touched 33 on friday)
BofA could well downgrade LNCO now price reached their price target of 32
I'd be curious about what Baird and BofA think of the likelihood of the BRY deal going through (with LNCO at 32 and 1.25 sh LNCO/Sh BRY, this values BRY at ~40/sh which is where BRY price was before the merger announcement was made), especially in light of their price targets for LNCO
it does contribute to negative sentiment that could snowball the effect of a "miss" (if it happens) which promotes the position of short hedgies like Off Wall Street
reminds me of some of the ploys described in "reminiscences of a stock operator" first published ninety years ago
beyond that, looking at the fundamentals- meli's current Q EPS growth estimated by analysts at 10%, same as the sp500 whereas SP500 PEG is 1.6 vs meli's 1.3- meli looks cheap relative to the mkt, at least for long term investors
well, at least IBD said Forbes said that although my other news feed is reporting that Barron's is citing the opinion of a short-selling hedge fund research company, Off Wall Street, who said meli could fall to 50 because they are over-reporting revenue in Vz and Arg at the official rate which, if reported at the market rate, would have cut earnigns 20% and lead to a much lower growth rate
well could see a 'sell now ask questions later" knee jerk from the market, althoguh yesterday's voluemof 750,000 only 1.5 x normal
anybody read the piece "questioning" meli rewvenue in Vz and Arg? I didn't but starting to regard Forbes as mouthpiece for shorts (look at LINE) altho I note short interest has dropped 25% from the march highs but still 20% of the float, almost 12 days to cover
we shall see if forbes article spearhead of new short attack in which case expect retest of recent low of 102?
Spanish language ecommerce site mercadomagico- which targets the US hispanic community-was bought by neomagic corp, a pinksheet under ticker nmgc with no earnings, in Nov 2012. Since mercadomagico's ecommerce prowess sucks, it is trying to grow its business by advertising (like through NYC-based radio station La Mega 97.9), partnerships. Last price: 0.012
so as to "whats next": if NMGC ticks up to 0.013, it will be soundly outperforming MELI
I continue think they remain low, in agreement with interst_in_stocks, given the multinational and multiindustry (health stuff) aspect of EBIX is not an easy fit for many potential buyers in the insurance industry that ebix mainly serves. I'm more interested in when the deal is likely to close, I know they indicated "third quarter" but in this kind of situation how likely is it to be closer to oct 1 than July 1? I've now got some idle cash to consider selling a few more puts but the premiums have come down considerably since after the deal was first announced, arbitrage opportunity dwindling
in absence of competing bid
1.15 a good price for those which is mostly what i been selling too- the sep 19 strikes me as good combo of low risk if deal does not go through and high return if it does. did sell some dec 20's though as those will maximize return via options if deal goes through quickly
all he needs is 51% voting yes, right? Which is 40% of the shares he does not own. You think 60% of the investor base will vote no? And given the polyglot nature of ebix (it has all the varied medical exposure, all the international exposure, in addition to the US insurance exchanges- that will not be a good fit for some "likely" bidders) I think the odds that another bidder emerges are likewise not high
a huge chunk of shorts have likely exited their positions, and we will know that before the go-shop period has ended. Assuming shorts are "smart" money then, looking at the drop in short interest will give a gauge of how likely the "street" thinks a "no" vote is, because for sure price will drop if shareholders refuse the buyout, even with its very low 7.5% premium over price at the time of announcement
some say the surge over 20 day of announcement meant street things another bid will come in, but that just have been a rush for the door by panicky shorts
and realistically, how high do you expect a buyout for? 20-30% premium would be reasonable and 20% premium means sale price of 22, a gain of $2. The share price could drop by that much upon a "no" vote.
my investment thesis is therefore that the deal goes through. I've been selling long-dated puts to maximize my return based on that thesis
the 12 m shares SOLD since offer is most likely by institutional investors moving on (institutions own ~90% of shares)
its more likely the BUYING was by shorts buying back their 10.6 m shares short, institutional arbitrageurs. Although its an interesting idea that GS is buying (every share they buy for under $20 saves them cash, although given they have already arranged for financing etc. is it even legal for them to buy shares now?
GS probably sees EBIX as a cash flow cow ( 51 m levered free cash flow ttm vs. buyout price of 820 m) which, given the leverage of the buyout, will generate a ROE in neighborhood of what , ~24%?. If so pretty great deal for GS
there is a 45 day shop around clause, so I doubt it will take only 3 months to close although i confess I was thinking like september, but if you are right that 2% becomes an annualized 8% if it closes aug 1. And, if you believe the sell in may correction is looming, then a relatively low risk 2% return sitting in EBIX is probably attractive, relative to the potential risk and reward of any other alternative investment. Better than parking in cash
be that as it may, it is normal for to-be acquired companies to trade a little under the acquisition price (like EBIX is now) up until closing (because of the risk of the deal following through- for example if shareholders do not approve) so holders who see more potentially rewarding investments will sell and move on
EBIX still a publicly traded company they have to comply with SEC regulations. Otherwise, they may get investigated :)