is... a buy and hold investor of dividend US and Canadian stocks
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I just looked at the Balance Sheet as at June 2012 and P&E was at $6.1 M. Not too far off my figure, which I clearly remember at some point in time in my photographic memory. I can remember things photographically like this sometimes. If you want I can tell you how much the top 5 economies in the world owe as a % of their GDP. It is quite fascinating. It is from an article I read maybe 2 years ago. I can still recite the figures off of the top of my head. The point was that Australia can build alot of roads if they decide to. Keep the whole population employed.
More to the point, how did JBI manage to spend 6.8M in SG&A with only 100k in Gross Margin? That being the case, Longs, how do you think they intend to get CFP (whatever that may mean)?
I figure they might lay everybody off, roll it all into the blending plant, get the blending plant to be CFP, and call it a success.
You are correct.. that will be the next barrier. However, it is meaningful because in the case of a capital-intensive company like JBI, cfp does not mean much. Companies like JBI carry alot of Plant & Equipment on the books and they must make sure it is producing for them. When I worked for that industrial gases company I worked in a group whose sole business was to earn an acceptable return on invested capital. That money was watched very closely, and since they were going to the banks to get financing for these projects, they had to be analyzed to death and validated every step along the way. Then all hell broke loose until it was on-stream (producing).
The problem with JBI is that none of that analysis has been conducted. Much money has been spent on Plant and Equipment, what is the return on that investment? I have treated this company like it was one of the internal projects I used to work on, with an expected ROI of 20-25% over 3 years, but how else shold one look at it? Investors should be given a similar return to that hurdle rate.
cfp for JBI is meaningless given the invested capital. Profitability is meaningless as well, for the same reason.
I have seen companies sit for years being cfp before making money... that is all that matters to the stock price. It is a meaningless milestone that companies use to claim success, it means nothing, especially in a capital-intensive business like P2O.
2 things about your post bueno:
In my view cfp means positive cash flow after operating revenues and costs directly incurred to gain those revenues. Usually that means a positive EBITDA (Earnings Before Interest Taxes Depreciation and Amortization). The rest is purely financial not related to operations.
In JBIs case this means EBT, and since they do not make money and pay no taxes, pretty much means the bottom line. There are some "unusual items" what ever that means... payouts to consultants? hmm..
The other thing is.. there is no way one would could become cfp just by playing games with stock. Double entry bookkeeping. Even if they did use stock, there would be a corresponding cash entry that would create the desired expense.
My definition of cfp is EBITDA. That includes SG&A, and everything in your post. Interest is related to debt, which is a financial issue in most companies. Depreciation and Amortization are accounting figments with zero relation to operations.
JBI has no debt, but they have invested money in those machines. Same thing. Most companies would go to a bank to get that money. JBI went to investors. The result is the same. A return is still expected.
As for how long it willt ake to get to cfp and make some serious money... there is no good way of knowing that. All I know is that many promises hae been made and deadlines set that have not been met. Seems as if there are continuing technical challenges.
On the basis of the numbers in financial statements... they are a long ways away... that is all. Seems as if they cannot run continuously.
"industrial machines undergo almost constant refinement/tweaking as new technologies become available/affordable, so there may never be a "final" design....."
I doubt that is true. Industrial machines have a capital value on the books that is depreciated for accounting purposes, probably at 40%. The whole purpose of a capital project (of which the P2O machines are) is to produce a revenue-producing asset on the books. There are other kinds of projects, like those that are just expenses (cleaning up an environmental mess), but most are capital.
Last time I looked, JBI P&E was worth 4.5 Million on The Balance Sheet.
As time goes by, the asset becomes worth less, which is a nice expense to have, but makes no practical sense. That is why in Business School we used to add the depreciation back on when doing Pro Forma statements on. An industrial machine, properly maintained, can operate far beyond what one would consider normal. Nuclear plants in Ontario have been operating since the 1960s and are still going. When built, they had a lifespan of maybe 20 years. With proper Preventive Maintenance, they simply do not degrade or wear out.
So the point is to build a machine, then use it until it is no longer profitable or not environmentally friendly.
Tweaking or modifying a machine is not part of the normal operating environment. That is why the point of a capital project is to get the asset on-line as quickly as possible. Schedule slippage is not tolerated.
That is not to say that enhancement projects do not exist. They do. They also add to the capital value of the asset.
The asset is taken down (inoperative) for periods of time to allow for preventive maintenance, and for the execution of projects to enhance their operations. That is normal. But, these are shutdown windows of a few weeks at the most.
Endless tweaking or modifying is R&D work.
below a buck!!! The Pig Flies!!!!!
seems as if there was some deliberate stock price manipulation in order to get the PPS above $1.00 in order to stay on the TSX. Any opinions? Didn't seem to be any real justification for it.
no. watching... there seems to be a glimmer of hope here.. anybody else?
OK you are on! I am not a shareholder, but I will gladly debate JB on the mike. Can you get me in?
I am not setting a moving target. My targets have never changed. JBI has spent maybe $10 Million on P&E and have not made a dime. I am deeply involved in ROI analysis on projects like this and would never invest my money in a stock where large capital investment was necessary unless the analysis had been done. Period. Who cares about run tickets? I never did. And no I have not seen this kind of information publicly released. My advice: don't invest in it unless you know. As for the AGM, it is a great question for JBI: has an ROI analysis been done to justify the $10 per barrel figure? For existing plant? For the proposed Rockten plant? For anything? Btw, the acceptable return should nbe 20 - 30 % over 3 years.
Seems to me that JBI is only now trying to fudge their way around the basic fact that "cost" includes the cost of invested capital. Their P&E is worth 4.5 Million on the books and they must have spent double that. In other words, they need to do a proper ROI ana lysis. I have been posting that for years. One last little tidbit: the "uplift cost" for conventional oil is $5 per barrel. Therefore, at best JBI is twice the cost of conventional oil.
To make a statement about profitability requires a statement about ROI or profits or Cost vs. Revenue. Who cares about throughput? What did they provide?
In reading this discussion, people may be missing the point. In the PR, there was a summary of the report as you say. There was then a glib assumption in the form of a quote from JB that the report validated the commercial viability of JBI. Investors should not make assumptions. Your post is making assumptions about what was in the report and about what the PIPE investors knew before investing. You are making assumptions simply because threse individuals invested. If I were an investor, I would not make assumptions. I would want to see the report itself, and to not share it with all investors is unnecessary, unless there is something to hide.
How exactly do we know that JBI can make fuel for less than $10 per barrel? Please show us the numbers.
Let me know where/ when. I can meet everybody there and we can have a real conversation.
It certainly puts an and to the myth of the "Arab Financier" being involved with JBI however. If that were even remotely possible, JBI would have been front and center at that conference. Every potential financier in the world would have been there.
If JBII is such a big deal how come they did not make an appearance at the Global Petroleum Show in Calgary last week?
http://globalpetroleumshow.com/
slight modification to what you are saying. We used to use a figure of $100/hour for a professional person. I think we are both right. Y ou are talking about salary, but salary is nto COst. COst is what is used internally for any kind of analysis.
A person being paid 70k may Cost the company $150/hour when you add burden (vacation, benefits, etc) and Overhead. You can roughly double the salary figure.
SO if the average professional's salary + benefits = 120k (what you are saying),I would up that to about 150k/year to get a true Cost figure. Cost is what shows up on the Income Statement and is what is of concern to investors.
The $100/hour figure equates to abotu 200k/yedar in Cost.
I can't believe that everybody is so excited about getting $10 Million... if the process is not vastly more successful than it has been to-date... it won't matter. THa tis just another $10 Million to BURN through.
I suspect it would be a private meeting, as per usual. Last thing they would want is open discussion.
June 1 2012 - 1.40
December 31, 2012 - 0.20
Progress on a court case. Some of the defendants or witneses or whatever have been successfully served. THe SEC court case moves forward.
maybe they just can't make money...EOM
if you look at the financials they are at a tipping point. It is just like Global Warming... the arctic ice.. all of that.
One potential outcome of this new investment and management changge is that the company is liquidated. It makes sense if these people are professional managers. In looking at their last financials, their ST debt and A/P is about equal to their assets. Basically, if they sold off their P&E or the company, the investors could recoup their money and all is well...
excellent post..
well, I don't think so... personally, I don't think that the stock is worth .80. These investors do. I think it must be the new management, his credibility is on the line.
Under other circumstances (same-old JB doing the sales thing... ) I can't imagine this kind of financing being succcessful.
As for 1.31... even riskier.. that is riding momentum.
I would pay maybe .20 for a few thousand JBI shares.
does that explain my position on JBI?
depends on your perspective.. buyer or not. cheap stocks look very attractive, but are usually worthless. I am talking about in the .01 - .20 range.
I would suggest that now is not the best time to buy JBI. It is riskier for the investor right now, as it has just had a considerable upsurge based on this news.
1.31 = More risky as a price to buy in at... as it has gone up from hovering around a dollar..
I always like to be ahead (in poisitive territory) on any stock that I am into at any one time.
not an easy question. the problem is, the "cheaper" a stock is, the more risky it is, and it is hard to take that into acccount. If you believe that JBI will perform according to the highest expectations voiced on this board, then go ahead and invest and good luck to you. But, every investment has odds much like a roll of the dice at the casino. At least in the stock market an investor has a chance bnased on their intuition, experience, and knowledge level...
Basic statistics says that the overall return for 5 risky bets as opposed to one hugely risky bet is much higher.
I would classify JBI as hugely risky at this point, just based on their earnings history... which means it is worth much less than 0.80 in my view at thsi point... but to each their own.
I have found these kinds of plays much less attractive as time goes on, winners are few and far between. I am more of a dividends guy now.
Taking into account Risk, they value it at .80... any other approach is wishful thinking.
well that is the paradox here. The numbers to-date simply do not back up the claims that JB has made. So, we have a new manager at the helm. It must be that he has been brought in to restore credibility in the company. His reputation is on the line now. Hence, the new investors have faith. Most likely the invo9lvement of a seasoned executive is directly linked to the involvement of the new investors. Without the new executive involvement, the new investment simply would not have happened.
This is similar to the situation I was involved in back in the 90's, when an Oracle executive was brought in to lead a struggling software company. He was instant credibility.
But, events will not unfo9ld as they have been, in other words lots of promises and no follow-through... we will know within months whether or not this is an economically viable business.
If the catalyst worked as claimed, they would have far better production numbers. So we do not "know" outside of lab testing... which proves nothing. I will believe it when I see it...
it is not total nonsense, just maybe a bit tangential. JBI continually demonstrates a poor knowledge of safety practices both in their use of PPE and in basic construction techniques. I have seen it time and time again. That causes it to not be taken seriously in serious construction circles.
However, that is not the reason why it is losing 1 Million a month.
What I donèt understand is why this group of investors and the new CEO would buy into it at this time, unless there is something that we don't know.
New management is not going to be able to change the basic operating parameters here. Either there is something that we do not know (the catalyst works and the process is actually much beter than production figures have shown), or these investors and this seasoned manager have made a mistake. A large one at that.
And I think we will know the answer to that within a couple of months. It won't take long..
I disagree. From an investor standpoint, would it not stand to reason that they prefer to get in at a price that they consider "cheap"? I would.
That is why the fall in price from 4.00 to less than 2.00 after the restatement and financing is so critical to the SEC case. I know that JBII threw in more shares after it passed 2.00, but just sayin..
I don't think that dilution is on anybody's mind when they are investing. Dilution occurs over several PIPEs and a long period of time. What attracts investors about this particular PIPE is the price.
Just disagreein'
Interesting news.... I think that investors will know very soon which of the extreme views on this board are true. A large capital injection and a seasoned executive being hired? Along with a loss of control by JB. Obviously there are expectations by the new investors. And the seasoned executive is not going to waste his time on a scam. He will find that out very quickly. I would give it 2 months.
Reminds me of a situation in a software company that I worked for back in the 90's... guy from Oracle came in. This was a seasoned pro. He lasted about 2 months, then he was suddenly gone. This company was a scam company. In the ERP business. With any skill you could guess who they were.
They used to do things like ram their sales pipeline with product and call it sales, also used to basically promise anything to make a sale. Most software companies have a degree of unscrupulousless to them, but this company is extreme.
They are still around somewhat, I think, but nothing like they were. Did the whole dot-com boom bust thing too.
Anyway, this is an interesting stock to watch.... the next few months should see all questions be answered.
A couple of items in your post do not make much sense...
"Drive the price of the stock price so low the funds necessary to complete the development the funds necessary are effectively denied to the company"
How would driving the price low accomplish that? Driving the price low makes it more attractive for investors, and PIPE investors. Basic microeconomics.
so that is the theory behind "Naked" Short Selling? that it effectively alters the number of shares in the float...? indefinitely?
well, i am not an expert in this area, but i would think that if it were long-term or indefinite it would put those guys in a Loss position. interesting theiory. One would think that NSS would not impact the effective float over the long haul.
add to that... companies with tiny floats (# of shares outstanding) so that the share price can be easily manipulated. JBI falls in that category, although that is changing as shares come off restriction.
that is Marketing BS frrom JBI... sorry, just orchestratin'