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Based on conversations with management and recent acquisitions, I'd say that the pit is no more than 10% of NI and that they will be very happy when it's depleted and they can move on. It's a money maker, but the ROI for the effort is less than other avenues they have now.
IMO
My hope is that as worst we draw back to the 200MA and then re-establish the old pattern of bouncing off of it. Of course that means we will need to see an upturn in the 200MA as well which should be happening "very soon."
Ren
Great post Airdale. Thanks for being very conservative.
Great play Mick. I just wish I had the guts to do that. I just keep doing what Peter Lynch suggests...buy more as long as you feel it's undervalued.
HA! (sob) ((as in tears not that you're an sob) ;)
Calculations on the City of Laurent Project per http://www.pbls.biz/pressrelease_content.asp?prid=98:
(Note: Prices are based upon our experience in Florida pricing steel frame prefab construction. I don not claim to be an expert in Gulf Coast infrastructure or land expense, nor do I know if Phoenix would be receiving volume discounts for buying 600+ structures from the Prefab manufacturer. Neither of these scenarios takes into consideration the impact of “charitable” investors/celebrities who would want the publicity from giving to such a good cause.)
Scenario 1: Phoenix pays for land, builds infrastructure, takes out credit line per project, pays in-house sales agents, no charitable contributions, no government help
Set crew – $8K
Foundation crew – $8K
Electrician/Plumbing – $5K
Structure – $40K
Lot cost – $10K
Infrastructure per Lot - $15K
In-house Sales Expense – $5K
Administrative Expense - $5K
Debt Service – $10K
Total Expense – $106K
Sales Price/Revenue per House - $125K
Potential Profit per House for Phoenix - $19K
Potential Profit per House for Phoenix Construction Divisions - $2100 ((8K+8K+5K)*10%)
Potential Total Revenue for City of Laurel Project - $76.26M ((600*125K)+(600*2100))
Potential Total Profit for City of Laurel Project - $12.66M ((19K+2100)*600)
Total Profit Margin – 16.88% ((19K+2100)/125)
Scenario 2: Phoenix is provided land by government, Phoenix builds infrastructure, uses “in-house” cash for financing, Government provides pre-arranged “buyers” and back-end financing, Phoenix sells homes for lower price to “be charitable.”
Set crew – $8K
Foundation crew – $8K
Electrician/Plumbing – $5K
Structure – $40K
Lot cost – $0K
Infrastructure per Lot - $15K
In-house Sales Expense – $0K
Administrative Expense - $5K
Debt Service – $0K
Total Expense – $81K
Sales Price/Revenue per House - $100K
Potential Profit per House for Phoenix - $19K
Potential Profit per House for Phoenix Construction Divisions - $2100 ((8K+8K+5K)* 10%)
Potential Total Revenue for City of Laurel Project - $61.26M ((600*100K)+(600*2100))
Potential Total Profit for City of Laurel Project - $12.66M ((19K+2100))*600)
Total Profit Margin – 21.1% ((19K + 2100)/100K)
Either scenario, assuming they place 200 of these homes a year (very attainable if they have the systems in place), that would be a potential profit of $4.22M per year. Assuming an O/S of 815M, the eps would be $.0052 (4.22M/815M). A P/E of 10 from profits off this single project would give us a pps of $.052.
Now add the $.047 pps from the Pit contract (and I think I was WAY LOW on profits from the trucking on that), and the pps should be in the $.10 range just from the City of Laurent construction project and the renewable Cherokee pit contract.
All we need now is the 2 PR's that matter most...
Please feel free to check my math as I am sure there are mistakes in the numbers some where (there always are).
Ren
IMO
Yes, someone please explain: "62.5 million of these authorized shares of preferred stock to "voting" preferred stock, $10 par value, so as to have voting preferred shares available for this program."
If 4.8 million "voting" preferred" can wrap up 800M common at 167 to 1 conversion, that leaves 57.7M "voting" preferred available for...anyone? They wouldn't want to use "voting" preferred for future acquistions would they (the original reason PA said they were increased the preferred A/S from 3M to 250M)?
Ren
True. We have talked some subjects to death. But where's the DD on the oil & gas divisions and someone who can make sense of well permits, production etc? Where's the post that breaks down exactly what Best Jets does, what the margins there probably are, etc? I know the company will tell us eventually, but I want to understand it before they do and verify it before they do.
Sadly, I don't understand much that PBLS does except the RE stuff, and that, well I'm far from an expert. I just understand the terminology and have some experience there as it's where I work now. If I try to talk jets or oil wells, well I'll just look silly. But I do know that we have a few of those experts that have been here for a while who can help us understand. My problem is that I believe the company but don't believe the company, if that makes sense. I mean I believe what they tell us but like to verify it. Like all the "court updates" we just got. Already knew that about the MS&G pit b/c some good folks here dug up the info and we digested it, helping us make an informed decision and taking a bit of the risk out of holding this pretty penny.
Ren
Niko - Oh, I didn't agree with MrP at all and Midas could only see the July to Nov decline as dumping shares by the company. Sure it got tiring and I'm mostly glad the mods handled it correctly, but at least it made us really evaluate/think about why we invested in the company. Like another poster said, I think a lot of "pump" makes a board suspect to solid new buyers.
Gbb - Agreed on the Preferred. It's a steal of a deal if you believe the company. I do, but don't have a large enough position based on my strategy to participate. If I had a larger position, I would convert at least half to Preferred. My thing is I am in this for an absolute home run. I hit base hits with Real Estate all the time (praise the Lord) so I can afford to "let it ride" with PBLS.
To all, having a gagged TA does make you wonder what the true O/S is. One can draw 2 conclusions: it's higher than 815M because they sold into the Katrina spike and so they want to keep it hidden (irish's & seeclear's position) or it's 815M of lower and they don't want to "waste" that precious info on a PR before they are ready to PR audited numbers (FMI's and others position). I think I've drank too much cool aid now to not go with the later. Phoenix think NSS is real whether we do or not. So they hold the most valuable info until they are ready to move off this exchange IMO. My last conversation with RB left me feeling that they feel helpless sometimes to increase the pps with their PR's given the corruption in the market. I commented by stating that what the market needs is more transparency from teh company. I just don't think they understand that there is a breakdown between what they feel is being transparent and what we feel is being transparent. I don't know, but I continue to hold. I still am not ruling out a move to a foreign exchange where shorting of any kind is completely prohibited. Wouldn't bother me at all.
Okay, back to crunching numbers...
Ren
IMO
I just wish that more of the "old timers" would post more often as reading this rubbish gets old. They'll be gone with their 100% profit, which is fine by me and good for them, but in the mean time it clogs the board IMO.
Mod's, I had no problem with you guys banning Midas or MrP for taking over the board with the insistent negativity (though I often do miss the balance they brought). I know you guys have a tough job for no pay but can you please keep things in check on the "other end of the spectrum" so to speak. Question: do non-substantiated messages with absolutely no real information in them over and over and over constitute as a TOU? What is "spam" anyway?
Folks can flip and that's fine. Folks can take the Preferred deal and that's fine. Folks can follow Coy and that's fine. Folks like me can hold more for the home run than the base hit and that's fine. But this board is about sharing info too, right? About discussing the effects of PR's, theories etc.
Anyway, still grouchy. Guess it doesn't matter though as the new crew will be out soon anyway as we begin to consolidate after another brief upswing.
Gnulnx, Shiz, FMI, you guys do great. Just sharing an opinion though.
Ren
Working on numbers 1 & 2 you slave driver! Won't touch #3 as it's WAY too far out of my comfort zone industry-wise to do realistic calculations.
I still have channels that can move any RE product they have to investors as well and just don't know if I should call RB on it or leave it alone as they have other things seemingly in the works with the celebs...
Ren
Can't wait for another 100M volume multi-week run..."Oh where are the snowdens of yesteryear..."
...wait, they are up there with all those poor saps in the Midwest and NE who can't get to the mailbox to send out their certed shares to PA.
Sorry. Bored, board.
Ren
No prob and besides I'm just a bit grouchy today. Just trying to keep it real with all the new eyes watching. There's a few pennies I own but this is really the only board I post on b/c it lacks that real hard pump aspect. The mods here to a great job IMO.
Ren
PLEASE don't encourage the "BIG NEWS but can't tell you what it is or where I heard it and it's my second post here and I just created my account yesterday and as soon as this goes up 3.414% I'm going to sell" type posters. Everyone is entitled to their own trading strategy, positive or negative opinions, T.A. vs F.A. slant but that stuff just plain drives me crazy! I try to be more of a "just the facts, ma'am" kind of guy.
Would it help if I said pretty please?
Ren
Very true. I am personally T-minus 3 months and counting for long term capital gains so I have somewhat of a vested interest in being patient. After all, some have been much more patient than me...
Ren
Some DD/thoughts on this latest PR..
Now I don't know if Industrial Silica is the same as construction aggregate, but that's the numbers I will run with...
An average ton of Industrial Silica (sand, gravel etc) sold in Louisiana in 2004 for $31.09 per ton (http://minerals.usgs.gov/minerals/pubs/commodity/silica/silcamyb04.pdf - page 10). Increasing prices for post-Katrina effects and then being extremely conservative by assuming that Cherokee Environmental gets a large discount for buying bulk, so they might be paying Phoenix $25.00 per ton now. Then a $20M contract would represent 800,000 metric tons of aggregate. 1 cubic yard is approximately equal to 1 metric ton (2200lbs), and each truck holds approx. 25 metric tons (http://www.cclcc.com/pdf/vol10no2.pdf). So, then to ship $20M worth of aggregate, it would take approx. 32,000 truck loads per year (800,000 tons/25 tons per truck), or 88 truck loads per day not counting for any holidays or days off (32,000/365). This type of production would put the Murphy Pit in the top 10% of all pits in the Nation, which is a bit tough to swallow (http://minerals.usgs.gov/minerals/pubs/commodity/silica/silcamyb04.pdf - page 11). Company wide, Texas Industries, Phoenix’s neighbor across the street, is currently at a Gross Profit of 22.8% for Fiscal Year 2006/2007 (http://www.answers.com/main/ntquery?dsid=2541&dekey=1&company_name=Texas+Industries%2C+Inc&a.... – Gross Profit/Net Sales).
Assuming that Phoenix only fulfills $10M of this contract, that would be a Gross Profit of $2.3M for sales of the sand and gravel, or an EPS of .0028 per share (2.3M/815M O.S.). If they have a profit of only $100 per truck load that Bayou/Phoenix ships, that would be an additional $1.6M in gross profit, or an EPS of .0019 per share (16,000 truck loads *$100 proft per load = 1.6M/815M O.S.) A P/E of 10 would put the pps from the earnings generated by this single contract at $.047!
Which goes to show you two things: a Phoenix is extremely undervalued and b, the market doesn’t believe what they say until they ungag the TA and release the audited financials.
Sorry to rain on the parade of some of our newer posters, but IMO, this was just more good news wasted. I agree with CC...how's the audit coming Paul (ie please quit wasting good news to pat our heads until you are ready to release the news that matters most)?!??
Ren
DYODD IMO
IMO the flippers that bought at .005/.006 sold at .012/.014. The flippers that bought at .012/.014 have been selling around .019/.02. I'd think our next consolidation comes around .025/.028 if the pattern since November holds true. The question for me now is what is serving as our lower resistance? Is it the 50DMA or the 200DMA since we have closed above the 200DMA?
Ren
The pattern for the past few trading days has been some 7 figure share buys coming in during that last trading hour...I like this slow incline. Should move up for another week or so before it consolidates again (Just a gut feel opinion with no technicals to back it).
Ren
OT - LowFloatGoat - I just might be full of hot air on some things, but not on that. I'm taking a team of 6 to work at 7 orphanages in West Bengal, India from March 18 to April 1. This will be my fourth trip and the first time my wife gets to go. Want to join me so you can be full of hot air about orphans to? I'm sure they'd love a goat...
Ren
Yes, basing is good. It especially makes me feel like a savvy trader for once since I did buy a few of those .006's to average down my aggrevating .03's...SOOOOO CLOOOSEEE TOOO BRREEEAAKK EVEEEN!
Can't wait to see those .05's to .08's for those who had the "misfortune" of buying into the Katrina spike. Of course that's good for me too!
Ren
Problem with searching for info on Capital Growth is that they use as many legal names as Cherokee does. Makes it real tricky to follow the money. I guess that's just the M.O. with these capital investment groups and trying to limit their liability in each deal they do.
BTW...am I still a useless pumper as implied by some of your earlier posts or can I be an old goat's friend...wait, what's that I hear, is that War singing "Why can't we be friends..." Just kidding! Wait, that's another joke isn't it? :)
Ren
Does L2 show enough steam for us to close above .0205?
Wow, thanks Paul. This gives me a ton of "new leads" so to speak. I'll see what I come up with and will post what I find as I dig.
Ren
Hey Paul,
Have any idea what the company's name was they settled with? My hunch is Capital Growth simply because they were responsible for setting up the private placements (I think that's the correct term) in Phoenix's early days before insolvency. I assume that they or someone they represent would want a settlement that would require them to file at a certain point for obvious reasons (ie they were the original shareholders and most bought for in excess of $1 per share).
Ren
I have searched for it in every place I know how online and almost daily for 2 to 3 months. I even queried their lawyers who would not disclose. Unless the name of the party they settled with is found, we are SOL on finding out if there is any truth to the 27 month need to file. Right now, for me, this is the most important DD that any of us could do. I don't want to lock the company into a specific day to file, but for the sake of nerves and patience, I want to know that a line in the sand for AF's does indeed exist. I will only believe it exists if someone finds this legally recorded and in writing. Sorry, but to many "very soons" for me to take the company's word on filing AF's. The info is out there, but we need a clue as to where to start looking. If you haven't had a response to your email, perhaps amend it to just ask for the name of the company they settled with. My only guess (and it's more than a strong hunch) is that it was with Capital Growth Planning, but the San Diego County websites offer up nothing useful to confirm that fact.
Ren
Hey Pnew...
I have an extremely successful client in Los Angeles who turned me on to investing primarily in HUD Section 8 properties all over the country as rentals. Essentially, it's a "guaranteed" cash flow situation, where your debt service might be $600 a unit but the government sends you $800 a unit each month. Plus, your tenents are more apt to take care of the property so they don't lose their Section 8 priveleges. Anyway, I never got involved because of the feeling of being a "slum lord" etc. I'd personally rather see people be able to buy than rent, which is why I like what PBLS announced yesterday.
Anyway, it seems these new mod homes would qualify price-wise for Section 8 especially since they are in an area with a huge affordable housing shortage. What would be amazing IMO is that if PBLS built these for an modest profit (10%), sold them through some REI groups and made an additional modest profit (3-5%), and then offered the financing as you suggest at very reasonable rates. Then you bring in a celebrity or two who contributes some of the down payment/closing cost money. It all ends up looking and being very charitable and PBLS, while not gouging, still makes money and even better for a developer, has that "locked in buyer" effect of having the Fed involved. PLUS, they get the hopefully NATIONAL attention of being part of a real, long-term solution of helping Katrina victims.
Couple of questions though to bounce off of you and the board...if these are HUD properties, the mortgage program would almost certainly have to be an FHA program, so does that eliminate PBLS from underwriting the loans because it has to go through an FHA approved lender? If they had a couple million in liquid, they could easily set up a mortgage services company and write the loans as you suggest. And anyone who ever has bought a home knows that's where the real money is in the interest made over the life of the loan as you suggest. But would they/should they/could they write loans on such high-risk buyers at this stage in their business development?
I'm open to thoughts from anyone as we continue to wait for the BIG PR that matters most...
Anyone, anyone, Bueller...Bueller...?
Ren
FWIW - best article is the first article to me and of course the one about Warren Buffet buying companies associated with Modular/Manufactured homes (anything with Berkshire buying anything even closing related to stock I own gets me a but excited...)
Mod Moves Up – “Keep an eye on the Gulf of Mexico — not because another hurricane is headed our way, but because the future of American home building may be emerging there.”
http://www.housingzone.com/probuilder/article/CA6377012.html
Great Article on Growth of Prefab Market Drawing in Big Investors:
http://www.businessweek.com/magazine/content/06_23/b3987045.htm
Fast Facts: Modular Homes:
http://www.nahb.org/generic.aspx?genericContentID=10280
-The building blocks of modular homes - individual modules - are housing componenets constructed in a controlled factory environment.
- Individual modules are up to 90% complete and shipped from the factory to the home site. All walls, flooring, ceilings, stairs, carpeting, and even wall finish are completed in the factory before shipment.
- Once all building materials arrive at the factory, some manufacturers can assemble modules in a single day. Typically, a two-story, 2,500 sq. ft. home can be constructed in a factory in under a week.
- Aside from any cost savings, modular homebuyers benefit from the short assembly time of their home – reducing any amount of weather damage or home site vandalism. Over the life of the home, modular homes save money because they are incredibly efficient.
- In 2004, 42,700 modular homes were constructed in the United States
- From 1992-2002, modular housing production increased 48%
- One of every ten homes built in the northeast is a modular home. That region accounted for 29% of the nation’s modular activity in 2001. The South Atlantic region was a close second with 26%, and the Great Lakes region third, accounting for 24%.
- The most popular states for modular construction are North Carolina, Michigan, and New York.
Barriers to Affordable Housing: http://www.nahb.org/generic.aspx?sectionID=204&genericContentID=3516
http://www.healthybuilding.net/news/060123manuhousing.html
“Hurricanes Katrina and Rita created an unprecedented challenge: over 310,000 new single family homes must be built from scratch, and fast.”
Growth in Modular Home Industry
http://www.buildingsystems.com/Modular%20Home%20Stats%20%20Core%20Pages.html
http://www.myrtlebeachonline.com/mld/myrtlebeachonline/classifieds/real_estate/16408288.htm
Value:
My partner and I just spent time in late 2006 evaluating the pro's/con's of going modular and found that at first glance, costs seem much lower, but there are more hidden costs associated with this kind of building. We build only "starter homes" and need to build them cheaply and quickly to stay profitable and keep them affordable for our market segment. We determined that the biggest pro for the builder is not cost but the fact that the time it takes for construction is dramatically decreased. For now, we will stay with stick frame construction until some of the back end costs of modular come down. The biggest pro for the buyer is just how energy efficient and structurally sound these homes are. In fact, Europe is WAY ahead of the US when it comes to modular housing as there it is quickly outpacing traditional stick frame construction. Check out my next post for some specific articles. Apparently, right now "stick frame" contruction in some areas of the gulf coast is going for as high as $300 a square. Where I'm at, we build for around $70. Cost per sq. ft. all depends on where you are, what kind of slope you are dealing with, local cost of subs and materials etc.
Ren
Seems that public opinion is split on Cherokee's way of doing clean-up, and as for me, I don't know enough about brownfields to comment. In my business, environmentally stigmatized properties are taboo, a headache to let someone else with really deep pockets to deal with.
Ren
It definitely has the right name, but is too small, too far away and most importantly, out of business. We were all just guessing based on the PR (pretty typical, huh?) and I happened to be lucky enough to nail it this time.
Ren
Now can I get my secret decoder ring that some of the posters here seem to have about dark, back room PBLS deals that no one knows about because of you evil mods? ;)
BTW, Cherokee is HUGE! Billion dollar company who has a heart for India (which is a BIG thing for me)...http://www.cherokeefund.com/bhopal.html. Bhopal is the Chernobyl no one knows about here in the West with the effects of the Union Carbide disaster killing and contaminating hundreds of thousands over the long term. I've visited there once on a train ride from A.P. to Rajasthan. Desolate, nasty place that once was the center for one of India's greatest civilizations. There are walls there left over from castles and cities that rival things out of the Lord of the Rings. Its a very surreal place and I'm glad to see such a profitable company like Cherokee giving back the way they are there.
Please feel free to mail that decoder ring "very soon. (man, I never get tired of using that joke...it is a joke, right?)
Ren
http://www.lasc.org/news_releases/2007/2007-13.asp
On the 16th day of February, 2007, the following action was taken by the Supreme Court of Louisiana in the cases listed below:
WRIT APPLICATIONS GRANTED:
2006-CC-2195 FIRST NATIONAL BANK OF PICAYUNE v. PEARL RIVER FABRICATORS, INC. (Parish of St. Tammany)
Thank you Brent and blockman. Bless you for your efforts for the few of us out here who do care to know the truth but can't afford to travel across the country to check out a penny stock "investment." I know I certainly can't right now.
Ren
OT - Whirl...can't wait to "get back East." Making my fourth trip to India in March and absolutely excited about it. My wife is coming with me for the first time and it will be a life changer for her for sure. Enjoy the beach but beware the pirates! :)
http://www.investorshub.com/boards/read_msg.asp?message_id=17225773
Same company. I agree with you Caged but hard to tell for sure. Check out page 6 of the pdf link that shows where they have projects...
Ren
Cherokee Construction in Shrevport is too small IMO. I came across their website but can't find it now. There also seems to be Cherokee Construction's in TN, AL, GA, KY, PA, FL etc, but none of them "fit the bill" for me so to speak. Oh well, I'll keep digging on this and the other info they have given us recently (thankfully!).
Looks like we investors have served out PA's punishment by standing in the corner since the Best Jets acquisition. Looks like "quiet time" is over and it's back to, well, I don't know what we are going back to, b/c "business as usual" changes every 180 days or so...
I did buy a tiny more today though. Just couldn't resist it.
Ren
That completes your cup and handle right?
Thoughts on Cherokee Environmental Construction...
Saw all the links you guys posted as well in my search but they all seemed either too small to pull off a $20M contract or only operating in states too far away to make buying MS&G product financially feasible.
I don't have Edgar resources right now, but these guys fit the bill for size (buying power) and location (36 states) but the name is different for the parent company. If it is them, they probably run different LLC's for each project to reduce liability and so Cherokee Environmental Construction could be one of the LLC's under the parent.
Check them out at:
http://www.cherokeeinvestmentpartners.com/
Cherokee Investment Partners is the same company as Cherokee Environmental Risk Management and several other variations of the parent name. They buy brownfields, mitigate the environmental liabilities, and then sometimes sell them to other developers and do the land planning, or sometimes partner with a developer to develop the brownfield themselves. GREAT business model by the way if you have the financing in place to underwrite clean up of the initial site and do the land planning.
I know they are/were near St Tammany Parish based on page 6 of http://www.ncbrownfields.org/pdf/Cherokee_Public_Private_Sector.pdf, but I can't be certain that they are our guys. Actually, they'd probably be the guys that Mitchell would sell the pit to after Phoenix depletes it in a few years.
Anyway, could definitely be wrong, but just kicking up my heels on a beautiful sunny day at the beach after surfing and thought I'd pitch in my two cents.
Ren
6. Technically should help the pps of the common shares you hold on to (ie lower O/S).