Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
TYC-UPDATE - Tyco plans $3.25 bln convertible securities sale
Monday January 6, 6:11 pm ET
BOSTON, Jan 6 (Reuters) - Tyco International Ltd. (NYSE:TYC - News), which faces a funding shortfall at the end of this year, said on Monday it plans to sell $3.25 billion worth of securities convertible into company stock to help repay debt.
The convertible offering announcement was expected, and some Wall Street analysts have estimated it could dilute Tyco's fiscal 2003 earnings up to several cents a share.
Tyco's convertibles, a stock-bond hybrid, might appeal to long-term investors who believe in the company but don't want direct stock exposure. Hedge funds that buy the convertibles, however, will borrow Tyco shares and sell them "short" to cut risk, putting downward pressure on Tyco shares.
Banc of America Securities LLC, Morgan Stanley and Salomon Smith Barney are arranging the convertible sale, a convertible market source said on Monday.
Standard & Poor's Ratings Services said Bermuda-based Tyco also may obtain a new $1.5 billion unsecured bank facility. Tyco was expected to announce the new bank line as early as on Monday, according to people familiar with the situation. S&P said it has assigned its 'BBB-' senior unsecured debt rating to Tyco's $3.25 billion convertible debentures.
Tyco faces up to $11.3 billion of debt coming due in 2003, with nearly $6 billion of that total due in February.
Tyco has $6.2 billion worth of cash on hand, and could pay the February maturities with that money.
But proceeds from the planned convertible sale are needed because Tyco said last month it faces a $3.6 billion funding shortfall at the end of 2003.
Tyco shares closed down 82 cents, or 4.73 percent, to $16.52 in Monday trade on the New York Stock Exchange.
George, I'm wondering if we could se a surge in some of these dividend paying stocks. The elimination of tax on dividends in essense raises the return. I'm looking at the utilities and wondering if they may get some extra buying. Looking some it looks like it may have already happened.
Joe
>>Do you guys have room for another trader?<<<
There's a desk open next to mine. Poor guy was long ROOM Friday and didn't show up today. gggg
Joe
Rich, Is that you of AOL's Experienced Investors fame? Welcome to the board. If you are not Rich, welcome to the board anyway. LOL! I would be interested ina list of stocks you are currently trading or watching.
TIA,
Joe
HD- Just thinking. I did not see a top line figure in HD's press release. If same store sales are to be down 10%, isn't it possible that total quarter sales will be less than last year. If so, that would be a first and would add additional pressure on the selling of the stock. Just think, open 200 some more stores and still be down for the year. Could get interesting.
Joe
ROOM now down 19%, EXPE down 10%. eom
I'm sorry but you will have to tell me which one is abby. LOL!
To post. Right click on the image. Click on properties. Copy the url link without the "http://" and then paste like you would a chart putting the url between "chart" with brackets ([ ]) on each side and "/chart" with brackets on each side on the other end. Then you can post dumb stuff like this....
>>>Do you want to keep your depreciating dollar, or would you feel a little more comfortable with some hard assets, say commodities?<<
If you are asking me I would go for the gold! I was simply trying to point out that I think we will not have any problems finding buyers of gold at $500 an ounce. By then the fever could be intense.
Joe
Here ya go MaineHiker.
>>>but, who will continue to buy gold once it reaches $400 or $500 or higher.<<<
All the decendents of those that bought tulips years ago. The relatives of those that rushed to California to pan gold. Those folks that couldn't fine enough beenie babies to buy. That guy that paid $100 for Amazon. That couple that took out the equity in their house to buy the Nas when it was over 5000.Human nature will have many more buying at $400-500 than what are buying now at $350. Mania!
Joe
George, Thanks for doing the math for me. Wonder how long it takes before you would own everything! LOL!
Joe
>>I know a few traders who did 10-15% in a day, repeatedly. <<
How much is that compounded per annum?
>>>What I'm saying is that there are many ways to trade; gold is but one.<<
I read basserdan's messages. I don't think he or any of us think gold is the only story worth talking about in 2002. On the otherhand, looking at the top five performing mutual funds one might walk away thinking that as an industry gold was the only real story to talk about in 2002. Personally I for one am getting more and more interested reading these articles that basserdan post. I'm long GG, GFI and GLG and have been sitting on my position as I want to be there when they move.
Joe
Mortgage Survey headlines this week read that applications had rebounded. It appears that refi's were only up.
>>>>>>>>>>>>>>>>
WASHINGTON, D.C. (January 2, 2003) - The Market Composite Index of mortgage loan applications -- a measure of mortgage loan applications for purchases and refinancings -- for the week ending December 27 increased 4.7 percent to 950.9 on a seasonally-adjusted basis from 908.3 the previous week, according to the Weekly Mortgage Applications Survey of the Mortgage Bankers Association of America (MBA), which was released today. On an unadjusted basis, the Index decreased 36.4 percent but was up 134.0 percent compared to the same week a year earlier.
The MBA seasonally adjusted Purchase Index decreased to 332.4 from 359.4 the previous week. The seasonally adjusted Refinance Index increased to 4548.8 from 4101.0 the previous week. Other seasonally adjusted index activity included the Conventional Index, which increased to 1361.8 from 1297.6 the previous week. The Government Index increased to 265.3 from 258.7 the previous week.
Since the Christmas holiday fell in the middle of the week, the seasonally-adjusted indexes were adjusted upward by 66.7 percent to allow for a two-day holiday effect.
Refinancing activity represented 75.9 percent of total applications, increasing from 72.5 percent the previous week. The share of ARM activity decreased to 11.2 percent from 13.3 percent the previous week.
>>Amazingly, total third quarter Mortgage Credit growth of $941 billion was 88% of total non-finance/non-federal Credit growth, while averaging 82% over the first three quarters. This compares to 39% during 1997, 49% during 2000, and 63% during 2001. Annualized 2002 non-financial Corporate debt growth collapsed to 3.8% of total non-financial/non-federal debt growth. This compares to 1997’s 37% and 2000’s 34.8%. These ratios help to illuminate an extremely unbalanced Credit system, and one need look no further for an explanation of the extraordinarily imbalanced U.S. economy.<<
Another good essay put out by Doug Noland this week. A real eye opener. http://www.prudentbear.com/creditbubblebulletin.asp
Reading through this piece one must ponder how we are going to beat these numbers in 2003 and add even more debt.
Joe
Link for Max Pain (although I find it practically useless IMO)Wonder is any back testing studies have been done the last two years.
http://www.iqauto.com/cgi-bin/pain.pl
Joe
What's interesting is that open interest is less than today's volume. I don't know what quite to make of that other than when big money was holding their collective noses buying tech today that they hedged with QQQ puts. Who knows...
Joe
>>do you\have you short KSS?<<<
No, I covered about last week looking for bounce on the weak holiday volume. I had a good profit as I started building my position near 70 and thought I would take some profits and maybe get back in at a better price. Funny, I was looking at the KSS chart right before I read your post. Who would have thunk that HD would warn for the quarter when they haven't seen hardly any of January yet!
Joe
>>added 10 Buy Put to Open 10 QAV-OA <<<
Look at the volume on the OY's (March 25 qqq) ...over 96,000
HD- Down 9% from the close. May not bode well for the Dow in the am.
Joe
HD- What was it... October when they came out and said that they saw 15% revenue growth and 18% earnings growth ahead?? What bullcrap! All one had to do is run the numbers and see that was nearly impossible.
They'll do about $59 bil this year. 15% revenue growth is about $8.9 bil. Their stores average about $40 mil a year. That's 223 stores. But, That's 223 stores if they opened each one on the first day of the year and got a full year's worth of sales. They only had planned 200 stores to open so where did they expect to get the extra sales to meet their goals? Also, this industry is growing at only about 4-5%. They have taken all the low hanging fruit- where do they expect to take the additional revenues from.
BTW, picking up that $8.9 billion in revenues for their 15% increase would be like doing over a third of what the whole Lowes chain did the last 4 quarters. Surely the analyst tracking this company got their heads up their rears not to see this coming.
Oh yeah, if you go over to the SI boards you will find where I did the same analysis when they came out with their forecast a few months ago. Did I get flamed by the HD hopefuls!
FWIW, watch KSS. I think they will have problems too.
JMO, Joe
RYL- I don't think anyone has still figured out that they warned for the next quarter a few weeks ago.
Joe
>>>Net tangible assets $115 M; cash on hand $23 M Definitely non-competitive with CI and AET IMO.<<<
For what FHCC does and is, I don't see why your points above would be issues - especially as a comparison to a situation like CNC.
JMO, JOe
CPN- Look at CPN fly. Up 16%. Just missed my tax loss selling list as it was 6th on my list of 5. I do have a long position but did not add like I did the others last week. I like this one further out. Nice collection of new efficient power plants. Nice juicy contract with the almost bankrupt Socialist State of Californika. LOL!
Joe
>>This is my most likely candidate to become next CNC.>>
I don't follow this stock but a quick look has me wondering why you think the above. It appears to have low debt and a decent growth rate in a industry that has some pricing power. Insiders selling appear to still have good size positions. Strong return on equity and selling for a pEG near 1.0 Looks like a better long to me. I don't see the connection to CNC. TIA for you thoughts.
Joe
RSTO- I guess everyone has seen that they warned. I have serious doubts that this comapny is going to make it. Core short of mine that I have been in through thick and thin since about 11.00.(many months) I'm holding out for a tax free gain if you know what I mean.
Joe
TYC looks weak in the knees here. Dow up 200+ points and TYC is up 8 cents.
Joe
RRI- George, I'm probably the wrong person to ask for a target price at the moment. I bought this stock early because of the fundamentals. I plan on holding until at least half of book value or around 10. The reason being is that there are certain events that I believe will move it higher. First we get the refinacne out of the way in Feb. Then I'm looking for a ferc settlement. These and other events could hit at anytime. I want to be in the stock when they happen and not temporarily out on some technical profit taking. Not saying I do this on all stocks but for this one I am. It's my best bet for 2003.
One other thing. Most of the shares outstanding are newly issued. If you bought the old REI (now CNP) for $20 the cost basis is 3.98 a share for RRI. What that says to me that very soon we should get to a area of little overhead supply. I'm not going to play this on technicals. Pure fundamentals for me. I may even hold out for 1 times book. I don't see any reason why this one can not get there in the next two years. I guess this is the closest thing to a buy and hold stock that I own. I guess everyone needs one. LOL!
Joe
Homebuilders- Comparison last 90 days.
RRI- a comparison chart with some of the others in the industry.
hamvestor, RRI is right at it's August low of 3.21 which now acting as resistance. RRI gains the lastview weeks came will the market and the sector were showing weakness. My bias is showing I'm sure but I would not be surprised to see RRI break out here- especially if we see some strength in the overall market and now that tax selling is over. Of course ytake this in consideration that I have been buying RRI on the fundies for several months.
Joe
SI has a new RRI board. Found this.
>>>>>>>>>>>>>>>>>>>>>
Help for New investors DD - PART1
by: vanammstrdm (33/M/Cambridge, MA) 12/30/02 05:55 pm
Msg: 18665 of 18734
I am posting this for new potential investors to help them start with their dd. The analyst presentation of November 25 2002 and the last 10Q are a must and will help you get a solid understanding of the company. This is updated and includes some comments from some people in this board. Good luck.
RRI Pros:
-During the last conf call (Earnings realease Q3 2002) management provided guidance for Full Year Earnings for 2003. EPS guidance is 0.9 to 1.1 per share in 2003. The earnings are sensitive to the coming refinancing to the tune of 0.08 per 100 basis points. The recent refinancing of AES provides a close comparable for RRI coming refinancing. AES, despite having debt to equity ratio of 9+ (vs rri’s 1+), succesfully complted its refinancing at 6%. Check also TXU as it also recently complted a ref package and txu is a closer comp to rri. If you take that as an indication, rri earnings are now likely to be revised upwards. Per my calculations, if RRI refinances its short term debt at 6%, its 2003 eps would come around 1.36. This is consistent with statements by RRI during the Q3 conf call
If you want to see the effects of the terms on the coming refinancing, I run a sensitivity analysis on a range of interest. Read posts:
15852 Re: Newbies Series PART 7
15847 Re: Newbies Series PART 6
15843 Newbies Series PART 5
-2003 Operating Cash Flows 800 million. This too could be revised upward if financing terms are around 6%. There is a double effect here, not only they pay less in interest expense but the extra cash can be used to retire debt faster
-Strong and stable cash flows from retail division (Guidance for this division for 2003 is for an EBIT of 650-680 million in 2002 and 640 million for 2003). The retail division of RRI serves 1.7 million retail customers and is the reason why the business model and risk profile of rri is fundamentally different from that of other ipps. At times like this, when the wholesale electricity markets are so depresed, the retail division benefits from lower electricity prices in the wholesale market and its cashflows compensates for the underperformance of the wholesale division until the electricity prices recover. It is important to note that during the last analyst presentation of November 25, mgmt disclosed that 60% of forecasted (shaped) load was already purchased at an expected price of $37.78mwh. This gives you comfort in the projection of 640 million ebit for 2003 from this division in light of the increase of natural gas prices.
-This means that RRI is naturally hedged though the retail operation in Texas, something that puts them in a unique position relative to the other IPPs as this gives a visibility and stability of earnings that I believe investors are not realizing
-Energy mix.ie 22% coal, 42% gas, 30% dual, 3% hydro, 3% oil. (Updated from the last anlalyst presentation) With a substantial portion of generating capacity being fueled by non-natural gas, RRI in the long term benefit from energy prices being increasingly dictated by natural gas fueled enargy at the margin as an underlying trend in the energy markets. As natural gas prices increase, RRI’s non-nat gas fueled plants are more and more valuable. For next year, RRI can benefit handsomely for the portion that has not been hedged for next year, as natural gas prices have recently increased to around $5.1 per cubic feet.
>>>>>>>>>>>
And this from Kyros;
Here is the complete "newbie" DD series of posts from vanammstrdm of Yahoo. It's pretty comprehensive and I recommend it as an introduction to RRI.
http://messages.yahoo.com/bbs?.mm=FN&action=m&board=16042432...
http://messages.yahoo.com/bbs?.mm=FN&action=m&board=16042432...
http://messages.yahoo.com/bbs?.mm=FN&action=m&board=16042432...
Other posters on Yahoo that usually post good fundamental information and ideas include: lasvegasfreddie, hwilson41, ariescaz, paulinskus, adesa2s, xazp. However, as in many Yahoo threads, now that RRI is showing signs of taking off, the thread starts getting overwhelmed by traders pumping or bashing it.
Kyros
Tax sale long ideas. Bought some that I have mentioned the last couple of weeks. Could not get very far away from the utilities.
Of cousre the thinking is that these issues fell a good bit the last year and may have been sold off at the end of the year. I'll track them using closing prices as of last night as I did not post entries real time. My buys were from December 26 till yesterday. My average cost, FWIW, is in brackets.
ILA 1.77 [1.68]
EP 6.96 [6.92]
THC 16.40 [15.38]
MIR 1.87 [1.67] Sold interest in China power plant yesterday helped.
RRI 3.20 {did not buy any additional shares as feel I got more than enough already.
10% stop loss in stocks over $5 and 15% on those under. All position plays.
I'm still very bearish but thought if I was going to be long anything for a position play I would choose these for now.
Joe
TYC- My Dow Jones news feed had a nice little negative article that popped up but when I went back to copy it it had been pulled. Wonder why? Would not be surprised if Barron's doesn't come out with something bearish this weekend. Amazed it acted so well on a $400 mil additional loss and also that they gave the plantiffs lawyers some ammo to go after them full bore. I agree we could see some more upside but the news was starting turn more to their debt obligations as the day wore on. When are they ever going to deal with all the goodwill? I got to think there is a good sized impairment charge in there somewhere. Of course any decent reduction in goodwill will give them negative shareholder equity. I'm sure they want to avoid that.
Joe
Basserdan, Good read. Thanks for posting. I like the author's style.
Joe
TYC- Hung on to my shorts and added some today. Interesting excerpt below.
>>>>>>>>>>>>>>>>+While the findings will no doubt spur more class action suits against Tyco by former shareholders of its acquired companies, like a current case representing holders of medical device company Mallinckrodt, the real damage done by the Kozlowski era shows on Tyco's balance sheet. As of September 30, Tyco had $26.1 billion of goodwill, more than the company's $24.2 billion in current and long-term debt, and $24.8 billion in shareholder equity.
But potential SEC fines and shareholder lawsuits could be flea-bites compared to the company's still lingering financing concerns. The company currently has $6.2 billion in cash and is looking at $7.8 billion in short-term debt. On a conference call, Tyco's new finance chief, David FitzPatrick, said the company will face a $3.6 billion funding gap by the end of 2003. The culprits: $3.8 billion in unsecured debt due in February and two zero-coupon convertible issues with 2003 put options. The first amounts to $1.9 billion, which can be exchanged for cash and/or stock in February, and the second is roughly $3.5 billion, with a November put option.
Sykes, It appears that you had a very good year. Can you post some of trading strategy and ideas here? What kind of things do you trade and what do you look for? Do you mainly daytrade or do you position or swing trade?
TIA, Joe
>>>OT - Per our earlier discussion, weren't we supposed to get the best prices on RRI in the last few weeks of the year?<<<
Just looked at your post and my response. RRI wasn't mentioned. You mentioned AYE and MIR. Both can be bought cheaper today than on December 9th, the date of your post. Of course if you would have mentioned RRI I would have said the same thing. Guess you got me there.
Anyway, I'm looking to buy some EP and ILA tomorrow. ILA is cheaper than on the 9th and EP is higher FWIW.
Another tax sale idea...THC. Bot some Friday and look to add some tomorrow. Much cheaper today than on the 9th. I would have to still say that it is better to wait to the end of the month on these tax strategy plays.
>>>I can say I told ya so <<<
Whatever floats your boat.
RRI- ended up 13% on volume. Bumping up against past support in July and August. Will be interesting to see what it does here.