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Interesting. I don't normally follow all this day to day, but what do you think the reasons are for this "wall".
Looking forward to Thurs/Fri.
New closing highs? Bring out the pom poms!
NHC.TO - I have started looking into this opportunity by listening to the 2Q call. Looks really interesting now that they have resolved the dispute and develop a revenue stream from the Palladium center. Looks like it will start 12/1, so by the time the year end report comes out we'll have 1 month of revs built into the numbers. As Wed looks to be an important day to get more info on the company's future and the numbers on the dispute. Once we get a clearer picture of the resolution, than we get a baseline for what the stock is worth. Than the revival of the revenue stream will be the juice to lift this a little more. I like the varied catalysts here. Very nice potential. Thanks to you and cl001 for perking my interest.
TMI: I took a cursory look at VISN yesterday. The ad rate was something I still have to dig into. From a valuation perspective, I liked what I saw using this as a comparable.
I'm only talking about 2Q to 3Q, so I would like to see some revenue increase in the coming 3Q report.
Yeah, I read about that potential growth in the network. I'd like to know where they are adding that network. In existing cities where they already have a dominant share? Or in new cities?
Don't know much about the ad-rates in China, though I did notice the large discrepancy in their ad rates and traditional TV ad rates on a cost per eye basis. It would be interesting to note where their competitors fall for ad rates. I'm not sure tv ads sellers are a direct comparison, since the cost structure is different.
Overall quite satisfied w/ TMI and the nice pop its getting today. Only problem was that I didn't double up like I planned to. Missed my opportunity on the recent downswing, cash already got redeployed.
I've been waiting for that higher net income. Certainly did not get it last quarter. Still waiting...
I'll disagree. If the higher end of expectations are met, this thing will bring in a lot of new investors. Based on the fact that EGMI is getting a 12x PE multiple to their 2009 guidance, I think expectations are fairly low. High expectations for me would be 30% revenue growth quarter to quarter.
TMI: Thanks for your thoughts. The current pace of 2009 earnings seemed to fall short for mgmt to get the 1mm share earn out, but did not go far enough back to confirm if there is seasonality to their numbers. Will look at it some more this weekend. The 7mm share earn out for 2010 though seems to be a significant jump, especially given their dominance in their current markets. They would have to expand into other bus markets, find new ad revenue stream, or increase ad rates significantly to hit almost a 100% growth in earnings for 2010. 100% would be an astronomical number and management would deserve the earn out if they get there. As a shareholder I would be happy with 95% earnings growth and less dilution. :)
TMI: Less dilution is good. In regards to the dilution, the management of the company will have a tough time meeting it's earn out, so they may not be getting additional shares, as well. For 2009 the earn out bonus was 1mm shares, for 2010 the earn out bonus was 7mm shares. Given the revenues and income for 1H09, they will have difficulty getting that bonus. So from a dilution basis, less is better. From an earning's basis, less is not good, however it almost seems like the earn outs were pie in the sky numbers to start. Anyone do a recalc on the 1H09 fully diluted earnings? I'll have to take a look at it this weekend. I was reading over the proxy yesterday, will have to do so again after this news.
The anticipation is killing me. I want to see something that will perk other's interest and confirm our long term interest in EGMI.
Tried to buy more at 1.41 earlier for a trade. Didn't get as much as I wanted.
EGMI buying back stock is a possibility. They have announced a potential for share repurchase in the past, I believe. They also have the cash to do it.
You're right about past history w/ the SARS. Not sure how this will affect their numbers. Since this is a kit, does ResQVAC increase sales and the associated kit? This is added benefit that is not factored into my growth scenario. Probably good for a short term pop.
In issues with estate transfer, I'm sure it will take some time to make any decisions like selling holdings. In the meanwhile we've got some good things over the short term horizon that could support this stock. To start would be the 3Q. Hope we see the expected growth.
I added a small bit too. Less than two weeks to see if it was the right decision.
From my vantage point it depends on how much you like the company. I got into the situation quickly because of the intrinic value of the warrants. Lo and behold the company has a pretty good business model and I'm getting comfortable with a long term hold situation. I bought all of this in my retirement account, so my only options are 1 & 2.
You're right. Faulty memory. I just reread the section. It's a redemption feature on the warrant when stock trades above 11.50 for twenty out of thirty days.
Lesson number one. Never try to recover salient facts with a hangover.
One factor for the discount is due to warrants only being exercisable after stock trades above $11 for 20-30 days. I assume that is a closing price, but will have to check. Almost there since yesterday it went as high as 11.32, but closed at 10.65. Too bad I didn't double my warrant position like I wanted back when it was below 1.80.
A 13D filing will confirm our suspicions.
With top line growth this quarter anywhere near Roth projections and the overall market staying firm, I would look forward to at least $3. Maybe Roth will even join us at the $3 party.
EDS vs. TMI:
Pricing for EDS is very similar, discount to intrinsic value. Haven't really gone in depth on the company analysis for EDS, however not crazy about the business model so didn't dig too much yet. TMI is advertising space directed internally to Chinese consumers. I like that. EDS is about retail. No idea what the income statement or balance sheet looks like yet. Will look more later.
Seriously considered doubling my position yesterday, but didn't break the 1.70's like I wanted. Timing the market is not my strength.
TMI: Stock Up $1.08, Warrants up $.30. The discount to intrinsic value just got larger.
Don't over think it.
Keynes once said "The market can stay irrational longer than you can stay solvent"
TMI: Lucky profit takers. I wasn't paying attention to get in that early. Just sitting on small gains.
Hitting the $11 hurdle for 20 of 30 days would also be necessary to get closer to fair value. Probably another rationale for market price being below fair value. $11 is certainly attainable with this stock given the approx. 7 PE. At $11 we'll have made plenty on the intrinsic value and if we get additional increase in warrant price from recognition of time value than that would be gravy.
That's a fairly clear crystal ball you have, may I borrow it? I have been disappointed one too many times by the FDA. I discount any hypothesis that relies on governmental approval.
TMI: Good point about the market makers, probably a potential source of mispricing. On the other hand, given the large number of hedgies in this stock, I'm surprised the warrants are so mispriced. I see some big names in the stock (Pine River, HBK, Baupost, GLG to name a few) and would think they would be all over the warrants. Its not like they have as many restrictions on investments as a mutual fund, so can take on issues like TMI that have some hair on it. In the end, I'm just happy to find something that has a bit of value to it that has not been realized.
Now in regards to TMI, the business... I really like their business. They have a dominant firm position in delivering the advertising space. They are already established in the largest markets. They have a captive audience. They are very much what advertisers look for in a marketing campaign for a delivery mechanism. They are also relatively undervalued. Not huge, but relative to growth prospects I thought it was very compelling. Long term this company has legs.
Let's not confuse fair value (time+intrinsic) to just intrinsic value. I agree that at expiration the intrinsic value will ultimately be realized, but i'm not sure if i buy the argument that illiquidity causes it to trade below intrinisic value. Your example with PRIM is interesting and I wonder if these are just cases of misvaluation, or if the warrant market behaves typically in this fashion. A warrant is very much like an option and should trade with some time value. Pure stock options are not the most liquid contracts either and have time value built in. That is just the way option and I'd imagine warrant prices are valued. The handful of times I have entered into warrants, I don't remember seeing such a discount to intrinisic value. I'm hoping that proves the case with TMI as well.
Something I will have to look into. Thanks for your thoughts.
Let's not confuse fair value (time+intrinsic) to just intrinsic value. I agree that at expiration the intrinsic value will ultimately be realized, but i'm not sure if i buy the argument that illiquidity causes it to trade below intrinisic value. Your example with PRIM is interesting and I wonder if these are just cases of misvaluation, or if the warrant market behaves typically in this fashion. A warrant is very much like an option and should trade with some time value. Pure stock options are not the most liquid contracts either and have time value built in. That is just the way option and I'd imagine warrant prices are valued. The handful of times I have entered into warrants, I don't remember seeing such a discount to intrinisic value. I'm hoping that proves the case with TMI as well.
Something I will have to look into. Thanks for your thoughts.
I'm not very active in warrants, but just assumed they would trade very similar to plain options. I guess that is not entirely the case from your experience. I'm surprised some institutions don't try to take advantage of those issues, unless there is a reason for some of these discounts for warrants.
CEO buying the warrants? I would imagine the institutions are fairly savvy about option pricing and would be reluctant to sell, though I could be wrong. The warrants are cheap enough in the open market. So he actually purchased their stake in existing warrants?
Hard to value this using any sort of historic vol, given the trading for TMI is probably not indicative of how it will trade in the future now that the acquisition has gone through. From an intuitive standpoint, $0.50 is probably extremely low, $1.0 would be conservative and $2.0 would be if this had no hair and the stock was actively traded. In the end since TMI can't be shorted right now the only way for the warrant to reach fair value is for people to recognize the undervaluation and buy more of the warrants. I think that's what we're seeing and hopefully it will continue. If I was a owner of stock already, like mgmt, if I really liked my company I would sell all my stock and buy up warrants like crazy. The undervaluation in the warrants will be corrected. This is a great short term misvaluation.
Also found the 6/30/09 financials. I opened up an earlier version of the proxy that had only the 3/30/09.
Averaging up is fine, as long as the risk profile is improving. Another hurdle will be getting the warrant registration completed, than we should at least see fair value (intrinsic + time value) on the warrants.
As a standalone investment the idea has legs. They've got a nice little moat and they are growing. I'm just getting up to speed on their overall market, but I really like how they have a captive audience and they have the necessary licenses to operate the advertising business. You must be ecstatic about discovering the warrants at .13 with the quick runup. I didn't see the messages about TMI until it was well above $1. Are the most current financials only from 3/31/09? I'm still in the middle of digesting the proxy. I jumped in w/ very little dd just from the pure standpoint that the warrants are not trading at intrinsic value. Could burn me in the end, but trying to parse through all this info soon. Started a 2% position in this so far, may increase as I finish reading the info. I tend to be concentrated, so 2% is actually a small position. If I really like something I go in at 10-15%. For warrants, given the leverage, maybe 2% will be enough.
TMI Warrant Registration.
I've been going through the proxy. From experience are there any instances where warrants will not be registered? Or is this issue just a formality?
Overall this is a compelling opportunity. I generally like to be there before the big boys, especially some of these hedge funds, but TMI might be a big enough fish where we all can get a nice piece of sushi.
Just expressing some frustration akin to my young adult days from being lead on by the ladies. I had no time for games and innuendos.
This MLB card subliminal message thing is getting kind of annoying. That's the second time they've done that. Did people see the MLB screens pop up in the presentation really quickly? If they are working w/ MLB just announce it when they get the contract. None of this teasing flashing sequences of NY Yankees cards. I've got enough to get me excited about EGMI without having to take into account the MLB cards.
EGMI has been delivering, but there are some big expectations for these next few quarters. A letdown would be painful.
Thanks for the idea. Just wanted to say there are some major hedgies involved in this one. Pine River, Baupost, GLG, HBK and Millenium to name a few. I'm worried I will get screwed somehow, but excited at the same time.