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HOM... I am wary of the CEO there, Frank Fradella. He used to be a CEO/COO of American Eco and USIS. AmEco went bankrupt and USIS is gone as well although I'm not sure what happened to them.
Fradella's Bonus and option plan with HOM is based on meeting thresholds of EBITDA. If he continues to acquire profitable companies by issuing more high interest debt and stock, EBITDA will surely rise but EPS could well go nowhere. In the acquisition of Cornerstone, I calculated that the APR of the financing they arranged was 20.75% (includes the market value of the warrants the lender was given). It will be even higher if the note is paid off before its due date in 2010.
HOME does seem cheap based on the booming FL market they are in and their projections. I had bought some stock earlier this year but as my reservations grew about the CEO, I had been trying to close out my position for some time. I finally closed it out on the small pop earlier this week. Good luck to you guys.
I took a looksie at the financials for both AMRE and NAUC.
The market valuation of both and NAUC in particular is incredible based on its financials. NAUC currently has a $170 Million market cap based on 50 mil shares outstanding. In the first quarter ending 3/05 it had total assets of $42,000 and total liabilities of $130,000. Sales totalled $2,600 with a net loss of $68,000.
And no, the balance sheet and income statement items are not in "000s", they are in actual dollars. Btw, both companies have the same CEO.
Thanks msgi, but I think I'll probably pass on this one.
BWLRF...I missed their 1st qrtr earnings report till now. They went back to profitability with $4.1 Mil in earnings which works out to a little over 1c/ sh....Not too shabby for a 30c stock. But not nearly what I thought they could do when I bought in either. Mining for metals has definitely not been a good place to be invested in this year (to now anyway).
http://www.breakwater.ca/news/050510.htm
Oil stocks...Rogue, Kurt Wulff at www.mcdep.com has some good info on oil stocks. He believes that current stock prices are fair value based on oil averaging $37/bbl, still well below the current market. Personally, I'm not selling here but I don't expect much upward movement until late summer to fall when winter usage and inventory drawdowns starts to become the buzzword again.
VPHM...Steve, This one looks very attractive in spite of its recent run-up. You project $1 in earnings but are you accounting for the new conv debs? They are convertible at $2.50 so already well into the money. They basically double the share count. Based on current co rev and exp projections it looks like 50c/ diluted share, for a forward PE of 8. Although, that is still cheap especially considering their other products.
ERS....It had a terrific qrtr but I also noticed that aluminum prices went up all qrtr and peaked at the end of the qrtr. They have been in a dramatic decline since. Like the steels last year, I wonder how much of ERS 1Q profit was due to profits from cheaper inventories? And how much of a negative factor that will be in the coming qrtr..
http://www.kitcometals.com/charts/aluminum_historical.html
Buc, MUSA. Yeehah...One of those classic value stocks trading at a PE of 3 and under bookvalue. I couldn't bring myself to dump it at such low prices either. Also heavily shorted, it should be a wake up call as to one of the risks of shorting. I see the steels are up handsomely today
Char secured a new credit facility with BNP which they say will meet all of its capital needs in the coming year.
1st qrtr oil production average 8,660 bopd vs 8,224 bopd in the year ago qrtr. They also note that current oil production exceeds 10,000 bopd, so the coming qrtr should be terrific. They also estimate production of 12-13,000 bopd by year's end.
I can't confirm it but I have read that the BOD of Nelson Resources (which owns a majority of CHAR) reads like a who's who of Kazakhstan. This should be a big help in wading the political waters there. I'd be buying more here if I wasn't already loaded up.
AE
Nuts, I had thought the earnings were pretty good. The stock actually went up after the announcement, then fell off at days end with alot of other oils. No analysts follow it so it is difficult to know what expectations were. At 68c for the qrtr they were well over double a year ago and up 1/3 from the previous qrtr. Not bad at all for a $17 stock.
Re: options for execs
I recently read a book titled Blind Faith by Ed Winslow. It deals with the ways that the system short changes the public stockholders.
The proliferation of executive options in recent years is one method. Lots of advantages to options for execs and mgmt. Stockholders don't focus on options as they do huge salaries...The corporation is not out any cashflow with options....Options are not expensed on the P & L (although that is changing now). As an example, Microsoft showed a profit in 1998 of $4.5Billion. Had they expensed option costs, they would have shown a loss of $2.3 billion that year.
The book also covers shortfalls in pension accounting which is in the news of late, mutual fund and analysts dismal performance records, the lack of oversight by the SEC and other subjects. It is a pretty good read.
>>>The ratio that Thomson reports as being particularly bearish is a ratio of 20/1....i.e. 20 sales to every 1 buy......interestingly for the past decade the ratio has averaged 24/1.......I didn't know that......brace yourselves........the current ratio is 60/1.........<<<
It could also be a reflection of today's world where company execs no longer need to go out and buy shares on the open market anymore. They just hold out their hands for more and more cheap stock in the form of options, then sell them, and out comes still another new option plan for them again. On and on goes the cycle.
Talk about having a bad day on Friday the 13th. Apparently, a guy placed a market order to buy 400 sh of QUIP, a thinly traded microcap (I don't know if it is a value micro but that is not the point of this story)
The stock was trading below $20/sh but the guy's order was filled at $950/sh. He paid $380,000 for $8000 worth of stock. I would sure hate to be him (or his stockbroker).
Moral of this story: Never, ever place a market order on aything other than a large cap, high volume stock.
Happy friday the 13th to all. I'm sure we'll all have a much better day than that poor soul!
Whai.ob
I'm surprised a brilliant former banker bought into WHAI on the earnings report. They had preannounced 1st qrtr earnings at 8-10c in a recent CC. They hit the low end of that AND one-third of that was due to a one-time item. Current liabilities exceed current assets by a large margin. Toss out the goodwill and intangibles and they have negative stockholder equity of $35 Mil.
Medical staffing seems like it would be a great industry to be in but others are having a difficult time at turning a profit. Take a look at MRN. With a huge shortage of qualified people, it is difficult to hold onto good people.
Maybe I am missing something but other than the promises of an unproven management team, I don't see much to hang my hat on here.
Thanks for sharing your insights, Hank. JMIH's sales have been strong according to their PR's. FPB also reports strong sales in FL. It seems that many people still want their playtoys (boats) no matter what the cost. Many boats were badly damaged or destroyed in the hurricanes last summer and I suspect that many are now looking to spend their insurance money at least as long as new boats are insurable. I would also assume that JMIH's expansion of their mfg facilities is based more on demand rather than hope.
And Good luck with the new stocks you will buy.
Steve, re: PDGE
It doesn't make sense for Barrons to exercise their warrants when they are convertible at above the current market price. It appears that for now they just own the warrants and they are exercisable to 2009. I see they continue to sell stock though. Here's a link to the filing you mentioned:
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001210052%2D05%2D000036%2Etxt&FilePath...
Guy, Thanks for sharing on ARD. I didn't realize they had such an active drilling program lined up for this year. I like the OGs at a substantial discount to PV10 valuation (as CHAR also is) plus ARD is a domestic OG and has topnotch management. Wouldn't ARD's reserves also likely increase substantially as they drill more wells?
TREK- I sold shortly after the "going private" news. Problem is they will be non-reporting and public will be in the dark. CEO could suck up all the profits by paying himself $1Million/year in salary, and then don't forget his mother and kids too. Public stockholders would likely be left with little or nothing.
Re AMLJ, Thanks for pointing out my mistake, gilead and others. I saw the new SEC filing and focused on the numbers rather than the date.
Another day and another new lesson.......
Hweb, you made me do a doubletake this morning with AMLJ. From what I read in the 10Q, they reported nil earnings last quarter (actually a small fraction of a penny). I was disappointed and sold this morning.
I doubt that anyone who is invested escaped last week's carnage in the market. I was well up there in the misery index. The big money question is which way do we go from here? One very interesting index is the AAII sentiment index ratio. That is a weekly survey of a large group of individual investors. It lists the percentage who are bullish, neutral and bearish. Interesting that the % who are currently bullish is only 16.5%. This is the lowest percentage of bulls seen since 1992.
A contrarion indicator using these numbers is the bullish sentiment index ratio. That is the % of bulls divided by the % of bulls and bears. As a contrarion market indicator, it is very bullish when the ratio drops below 30%, and very bearish at a ratio above 70%. As of friday, that ratio stands at 28%, indicating that the investing public is filled with doom and gloom and a bottom is either here or near.
The last time the index was in this range was 2/20/03. The index dropped to 27%. The market started a huge bull run within a couple of weeks of that low.
I have never been much of a believer in trying to "time the markets". Rather I seek out stocks that I believe are currently undervalued, particularly in the small cap arena, which is what this board is all about. But one thing that does seem to repeat itself over and over again is that the best time to buy is when the market outlook is the gloomiest. The best time to sell is when euphoria is rampant. Based on that, this is likely a good time to be buying, not selling.
CHAR.OB:As others have noted their 10K was out today. While I was somewhat underwhelmed by their earnings for the quarter, they were not bad at all especially considering that they came in at 8c and that was fully taxed unlike many of the micros. That indicates a current annualized PE of less than 8.
What wasn't mentioned by others here but what I see as a huge positive is that they refinanced their debt. Their accounting firm had issued a "going concern" statement but that is gone now. Further their old 14% debt was refinanced at less than half that rate (3 1/4% over libor). This will substantially reduce their interest expense and also tells me that a bank must really like their prospects as well, in spite of the region inherent with the region that they operate in.
CHAR also expect their production of oil to increase from 8000bpd to over 13,000 bpd by the end of the year. Their current market cap is a fraction of the PV10 value of their proven reserves and their unproven reserves are 4x what those are.
This one looks very cheap to me at current prices and I was buying more as soon as I had a chance to look at the new 10K.
GEXA buyout
Per the SEC filing, the buyout is in stock but it is based on the average price of FPL in the 10 days prior to closing. The lower that price is, the more shares of FPL each GEXA holder will recieve. A drop in the price of FPL from now to closing will not reduce its value to GEXA stockholders. Which still leaves me also wondering, why the big discount?
JMIH's loan guarantee expense is because of the CEO personally guarantees a bank line of credit of $500,000 (also $200,000 in inventories).
This is the kind of funny stuff that has kept me from taking a larger position in this one. Just recently, the CEO was granted another 500,000 shares for this loan guarantee. This has been an ongoing expense for some time. Perhaps it was a valid expense at one time, but when the average loan balance has been running about $250,000 (based on recent filings) and the company has $600,000 cash in the bank it seems more of a rip-off to the stockholders at this point. The actual cost of the CEO's loan guarantee raises the equivalent interest rate of the loan from 6 1/4% to about 40%.
Maybe if we all write the CEO and complain he'll get the message. Without this kind of stuff, I think the SP would be much higher.
bwlrf mine closures soon...or maybe not..
It was noted that while a couple of zinc mines are projected to close down this year, that company issued projections for zinc output show only a 10% decline in production this year and back up to '04 levels next year. These mine closures were projected last Sept when zinc prices were much lower. I wonder if they might now keep those mines open with profit margins up 400% from last year? If so, that might mean substantial increases in output over 9/04 estimates. Does anyone know if zinc ores typically peter out over long distances or the veins stop suddenly?
Earnings should be out in the next week or so. Numbers and particularly forward guidance (if offered) should be impressive. There seems to have been a big seller last week, maybe he is done now??
BWLRF- mine closures- Last September, Breakwater put out the following estimates of production which takes into account the two mine closures this year and adding the Myrna Falls production (in millionlbs of Zinc):
2003A 365
2004E 403
2005E 360
2006E 404
IMO, a 10%drop in production this year and then back up to 2004 levels next year should not have a substantial effect on profit outlook.
Breakwater Rescources-bwlrf-Follow up on Bobwins excellent DD post.
I agree that bwlrf, a major zinc mining company,looks like a strong buy here. In their last reported qrtr, they earned 1c, when inc averaged 46c/lb. Since then, prices have been on a steady rise, now at 62c/lb. With overhead, BWR's cost to get zinc out of the ground is 42c. Each 1c rise in the avg. price of Zinc, is worth about 1c in annual earnings. At today's price, BWR should be earning about 20c annually. Let's be conservative and reduce that by 25% (currency fluctuations, shipping cost increases etc, BWR is still at a PE of 4. Big money question is where do prices go from here? Price is a function of supply and demand. Until the last year there was a glut of Zinc and prices were low so no new mines were started. It takes about 2 years to get a new mine going. The next big new mine won't start until 2007. Also remember that existing mines are using up their reserves. 1/2 of the current zinc mines, will be exhausted within 10 years.
On the demand side, the world economy is growing so usage will only increase. China has changed from an exporter to an importer. 50% of zinc output is used for galvanizing steel for corrosion protection. 50% of all zinc is used in the construction industry. I'm a homebuilder, and recent new rules require a change in the production process of treated lumber. Most mills use copper sulfate to treat lumber, which requires galvanizing of all metal in contact with it to prevent corrosion. Bottom line is that demand for zinc in the construction trades isincreasing substantially. Also everytime there is a hurricane in FL, they tighten up the codes and require more metal straps, holddowns, and fasteners, not only in FL but throughout the country. FL had 4 hurricanes last summer. Usage will only increase.
Prices have been on a steady increase for the last 6 months. I see higher prices going forward. I would not be surprised to see an 80c/ib zinc price by the end of summer. Conservatively, BWRLF could be earning 30c/share in that scenario. Current price is 60c. all IMo of course and do your own DD.
Great board and thanks to Bobwins for pointing this one out.
FPWR- This one is showing good strength and volume today. I expect we will see a strong earnings report in the next couple of weeks. Fountain Powerboats manufactures high end speed/ race/ fishing boats and continues to report record backlog #s in recent PRs. This should translate to higher sales and substantially higher eps in the coming year. There are also rumors of a possible buyout by Brunswick. Could be something to that as Brunswick has guaranteed an $18 million loan FPWR in return for FPWR using Mercury engines in its boats. (Mercury is a subsidiary of Brunswick). The founder, CEO, and majority stockholder, Reggie Fountain, is also at the age he may be looking at retiring (if the price is right).
FPWR remains cheap selling at a trailing PE of 14 and a low Price/Sales ratio of .4.