Archive for the ‘Equity Analysis’ Category


April 27, 2018

They call this planned robbery of Rite Aid shareholders a merger. They even manage to stay serious when speaking about it. In fact, this is the first case in the history of public companies when the acquirers get paid by the acquiree.

The only persons benefiting from this shenanigans on Rite Aid side is its management (so-called). The faithfulness of that management to Rite Aid shareholders you can judge for yourselves, reading this partial hall of shame compiled by a fellow shareholder.

They have now crowned their long disservice to the wealth entrusted to them with this deal. Even in the announcement and in the presentation of the merger, every single word has been thought to confuse and deceive the RAD shareholders.

This robbery (deal is not an appropriate name) values RAD shares at 2.5 $ just because it gives Albertsons’ equity a value of 23.2 $. That is nut! Albertsons is not publicly traded, so that value is made up of thin air. Can we ascertain an approximate value for Albertson? You bet we can!

I do not know the cash flow statements for that company, but just looking at the sector where it operates and the egregious amount of debt it has (7.8 times its EBITDA), I can assure you that its equity is not worth much more than 10 $ per shares (that means one buck and change for 1 Rite Aid share).

Rite Aid is worth, as it is now, with no operating improvements and with a BIP as CEO (plus some assorted nullities as directors), AT LEAST 4 $ per share.

The new Rite Aid (after the assets sale to Walgreen) has a present EV equal to 4.41 $ per share. Against this value you get 20.17 $ in revenue, with CASH EBT equal to 0.63 $, per share.

Net debt is now 2.73 per share, 4.33 times the annual CASH EBT (the projected EBT should not be much different than the present, with less interest expenses offset by the break-up fee received this year).

A real management could easily add 0.25 $ annually to the CASH EBT, just managing the company. Smart management could send its share price in the high double digits in three years time.

Do some easy back of envelope calculations, and it will be crystal clear that only two kind of shareholders can vote FOR this merger:

  • masochists;
  • those who have not bought with their money the shares they are voting (aka financial institutions).

Therefore, if the morons at the institutional holders of Rite Aid approve this robbery, run for the hills before getting Albertsons toxins in your account.



April 3, 2018

The drama queen subjected to a wide array of pimps and racketeers, which many still call Mr. Market, is valuing Game Stop (GME) at 1.76 times its CASH operating earnings (7 $ per share in 2017), with the company also boasting of a Net Cash position in its balance sheets (EV < Market Cap).

After expensing interest, taxes and net capital expenditures, owners are left with 4.54 $ per share in disposable CASH income.

Oh yes, I know it…. Game Stop  is going to disappear, fading business, Amazon, et yada yada…. This annoying refrain is going on since many years. Well, let’s see what GME has delivered in the past few years.

To start, revenues in 2017 are 91.06 $ per share compared to 86.31 $ in 2014. In 2014 CASH earnings from operation (CASH EBIT) were 7.74 $ per share. In 2015 they were 7.09 $ per share. In 2016 they were 8.06 $ per share.

Now, you can buy this company for 12.8 $ per share, a company which has got 29.89 $ in CASH earning from operations in the last four fiscal years.

But do not do it! Do not let these cheating facts darken your allegiance to whores’ chatting and fake news; didn’t you hear? Elon Musk has put a Tesla car in orbit around the earth…

All in CGI, of course, but come on….who needs reality, when you have Kubrik putting men on the moon? Keep on with your EYES WIDE SHUT, and buy Amazon! They will deliver your stuff the same day, even to Mars, should you take a break and concede you a space travel.


October 12, 2017

Amazon is not a company; Amazon is an advertising stunt!

Like NASA……


January 26, 2017

There are people who are willing to crawl so low for some bucks that they become an embarrassment to the very concept of shame!

And I’m not referring necessarily to the “analyst” here.

At 5.43 $ per share Genworth Financial is a steal, yet stealing is too little a shame for someone.


December 1, 2016

A steal in the making!


December 3, 2015

I wish to try to point out some facts about Kinder Morgan, in response to a concentrated and prolonged attack unleashed on it by a mix of innuendo artists camouflaged as financial analysts. I’ll take as reference this article published on Seeking Alpha, following the last spear hit on the company by Moody’s, which changed its debt outlook to negative from stable. Nothing personal, it’s just a starting point.

What I have already stated in the comments to the article about Richard Kinder are facts and facts cannot be countered by any sort of innuendos. Neither they can be neutered by plain nonsense, like lamenting his cashing dividends from his ownership in a company he started from scratch and built to the present dominance in its sector of business. Nor they can be hindered by sly half-truth, like pointing out that he chaired Enron. Yes, he chaired it and his leave saw the demise of that company after five years under the guidance of the people who substituted him.
At purpose, what was the rating of Enron up to its bankrupt? What was the rating of Lehman Brothers? And Bear Stearn?

No hero-worshipping on my part, as you can see. I worship only God (and therefore the truth). I hope there’s not a worshipping of something else on the other side.

Speaking of nonsense, could someone please be so kind to point out some FACTS that would show Richard Kinder interests not aligned with the rest of the shareholders in the company he manages?
I have stated mine, namely: no compensation, no options, bonus and all kind of legalized ways to milk a public company by its managers, no political meddling, all of his wealth concentrated pretty much in his company, regular buying at market prices of further ownership in the company, a stellar past performance, a perfect match of all forecasts but one.
In response, I have heard only innuendos, nonsense and cross-references to rating agencies and hit pieces, and a multiplication of articles published by people clearly subtracted to land plowing.

It should be clear to anyone with half a brain that rating agencies (yes, all of them) are just gate-keepers and policemen to control the financial landscape for those selected fews “more-equal-than-anyone-else”, to make sure that nobody can access capital at fair price without their consent and therefore to make all participants to behave.
Time and again, FACTS have proven beyond any reasonable doubt that they are one of the most dangerous factor of instability for the financial system.
They can be compared to fire inspectors who fill the house they are inspecting with all sort of flammable materials, make sure that there are plenty of things able to give a spark nearby and finally pour very solemnly gasoline on the first timid flames.
I hope I will be excused if I don’t give a damn about their regurgitations!

Yet the author, in a supreme characterization of innuendo, spills fears of Kinder Morgan going bust (no less!) following the last from Moody’s.
I beg pardon, but exactly….. HOW?

We have a company with vital assets in a most sensitive economic field (it transports one third of all natural gas moved in the US, among other things), which is able to earn yearly 4.8 billions $ in free cash flow, that is after interest expense and maintenance capex. How is it going bust? Inquiring minds wish to know…..

Is it going to be shut out of capital markets, if the rating agencies keeps on barking? I would beg to differ, but anyway…. let’s be it! A very quick look at the company’s website would make you know that its policy is to give all the free cash it produces back to shareholders, leaving the decision about expansion to the investors. It means a very simple thing: Kinder Morgan needs access to capital market only to expand its business or make new acquisitions. Now, if investors are not willing or too demanding, the company will just keep on cashing around 5 billions every year until they change their mind. That’s not exactly the definition of “going bust” last time I checked the dictionary.

In fact, I could even make a case for that free cash flow to go slightly higher without expanding assets, but it would be redundant.
Yes, I know…. oil is going to 20$, so says Goldman Sachs. I know also that in July 2008, with oil at 150$, they said it was going to 200$.

Of course, there is debt which must be repaid, but also here facts are missing. How much debt comes due in the next few years? Deafening silence!

Well, there are maturities for 1.6 billions next year and 3 billions in 2017. On the other side, there are 10 billions of free cash flow and 3.5 billions of available revolver borrowing, plus capital markets closed only in the wild dreams of innuendo artists. If they go with equity issue reserved exclusively to existing shareholders, I think they could even not decrease the dividend.
In any case, a couple of billions of dollars can be raised without excessive hindrance in two years time, even paying a few basis points more.

No growth? Well, sign me in for life at 9% yield!
That will not be the case, however. The financial banners will change direction in a short while, after the current raids are over.
There is an illogical thought habit in economic reasoning today which sees the finance as a branch of economy, a derivative one furthermore. That is, the belief that financial outcome depends on the economic choice made or undergone by the economic agent, that what happens in the financial markets is the direct consequence of underlying economic interactions. Nothing can be further from the truth!
It does not follow, it leads economic upheaval. It’s designed above all to cause fictive perceptions as a mean to impose alien choices and agenda on the economic agents targeted, or to force them out of the arena, with the juicy corollary to create for a selected fews enormous profits exploiting the wild fluctuation of “prices”.
In short, post-modern finance is the ultimate price fixing scheme!

It seems that they will be successful in forcing Kinder to do what they want (that is, to lose completely its credibility),  after pocketing juicy profit on the skin of little ones and retirees, selling what they do not own.

I hope that company management does not bow to this despicable blackmail. Stay the course with the dividend increase, pay it in shares with rates of conversion at the average price of the week BEFORE DECLARATION (dilutive but to excusive benefit of shareholders, with fractions paid in cash) and use cash flow to fund growth and reduce leverage! Or use a mix, according to necessity, in relation to financing availability at satisfying rates. Even just announcing it would make them retreat. And after listen to the gnashing of teeth…..


September 10, 2013

SPLUNK Inc                    June 2012      December 2012    June 2013

Margine Operativo Lordo -10.95 mln $   -17.24 mln $   -34.78 mln $

Price per share                   28.1 $                                        59.4 $


Margine Operativo Lordo 116.24 mln $    83.58 mln $    72.43 mln $

Price per share                   34.56 $                                     49.63 $


Margine Operativo Lordo    6.8 mld $        7.25 mld $     7.45 mld $

Price per share                   37.6 $                                       30.5 $


Margine Operativo Lordo 402.6 mln $     383.6 mln $   419.3 mln $

Price per share                   53.9 $                                    39.9 $


August 24, 2012

In the last six months, CRM had 1,427 mln $ in sales, 294.14 mln in cash earnings from operations (before changes in the working capital) and 78.13 mln in capital expenditures.

In the same period, DELL had 28,905 mln $ in sales, 2,313 mln in cash earnings from operations (before changes in working capital) and 262 mln in capital expenditures.

Yet, the market value the CRM enterprise 4 bln $ more than DELL!
47 times the annualized free cash flow against 4!!!

I guess it’s because of that famous market efficiency.

Only government is more efficient than modern financial market in misallocating capital.

P.S. – I did forget….

Of those 294 mln $ CRM cash earnings from operations, 166 mln came from options exercise.
Go figure!


June 4, 2012

Ma non vi sembra un tantino esagerato?


May 30, 2012

On the positive side, we expect to further increase our cash position in Q1 from the approximately $2.1 billion we had at the end of fiscal 2012.” ======================

So, the operating loss looks to be due to some cashless write down or write off or provision, as the company will be free cash flow positive (i.e. operating cash flow huge enough to cover completely big capital expenditures and then more). All of that in a dismal quarter.

Maybe the media and financial whores should devote some minutes thinking of this, before uttering their usual crap.

I’d note also that their subscribers base did actually increase, but I fear to shock all the simple souls who believe US to be the only place on Earth.