is...hopefully making money
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If you assume that, conservatively, they could get just 20% ROI on their money, every month that their cash sits in the bank idle is 2.8 million of net income that they could have been earning. That is an additional $8.4 million in net income per quarter. That is huge money.
As frustrating as it is that they don't seem to have any plan for what to do with their money - it is also a potentially earth shattering catalyst. So, I guess as dandude put it - patience. CCME seems to want to give very taxing quarterly lessons in that virtue.
Of course a healthy amount of consolidation was absolutely necessary, and in fact is desirable after such a run up. But shedding 25% from intra-day highs in 5 days is well beyond healthy consolidation IMO. Especially after gang buster earnings and a huge guidance raise. It's not like CCME suddenly jumped to valuation inline with its peers. We're back to 7x earnings already for crying out loud.
Today's action was particularly concerning. It was a massive, high volume selloff on a market green day- not normal profit taking. People are starting to run away from the technicals. I think the reason rests 100% upon the lack of cash management. No shares bought back plus a double down on stupidity with no dividend. And people are fed up with the same "Acquisition plans remain a top priority for management" line we have been getting for 9 months now.
Are they going to wait until they have their market cap in cash to do something with it? Why wait until 2011 for a dividend and what happens in January if they don't issue one? It is just nuts IMO.
True, but whoever was manipulating this stock back in the sub $10 range found an effective way to churn the float several times over while maintaining a depreciating share price. They obviously have very deep pockets and are obviously still very much dedicated to making CCME work their way - which is running it into the ground.
If last quarter’s numbers can't sustain at least an 8x multiple, then all of the pleasantries of the nice ride up we've had were nothing more than an adrenaline rush followed by an abrupt crash, which we have had every other earnings release to one degree or another. I'm not saying that is definitely the case, but it sure is starting to feel like the bad old days again. 1.2 million shares to the negative after already giving back 20%? Really?
As I write this FMCN, who has had a 100% run up in under a year, is up 3% and we are down 6% and we just had earnings that left them in the dust.
A dividend would have put an end to all of this nonsense. Period.
I hope it holds but the bid is getting hammered down there. Better be some deep pockets luring down there or we are going to break lower. Given the volume in the last week, almost everyone selling right now is selling for a huge loss - that or institutional ownership in CCME is as weak as retail and they are trading in and out. Where else are these shares coming from?
Healthy consolidation came and went $1.50 ago. We are back in the fear and manipulation trading range.
I really expected much more institutional support around $18, but we fell through that like an anvil on a wet napkin. This is beyond rational explanation.
HA! Yeah, as ridiculous as it seemed a month ago, this has been the most accurate tool for predicting price action. I'm waiting for them to add a picture of a yacht on the Y axis and have the trend line end at it :)
Agreed. It is when, not if, regarding squeeze 2.0. I think for all of the reasons that you specified in your post about the float being locked up, this next squeeze will be epic - landing us in the $30s. That is where we should be YESTERDAY and I would love to here any arguements to the contrary.
Agreed. It is when, not if regarding squeeze 2.0. I think for all of the reasons that you specified in your post about the float being locked up, this next squeeze will be epic - landing us in the $30s. That is where we should be YESTERDAY and I would love to here any arguements to the contrary.
It is clear that earnings does little to move CCME. The announce $.81 a share and it sells off the next day. The current valuation still has CCME in the little to no repect category (anything under 10 is IMO) and it is so clear to me that the respect is a function of their use of cash. They announced a buyback and we ran 100 percent, They announced huge earnings but no acquisition plans or divi and we've retraced 20 percent.
If I have to sit through one more Quarterly CC and listen to Jacky say "acquisitions remain a top priority for us" I'm going to pull my hair out.
If there are really that few acquisition prospects out there then get on the ball with new product lines and the divi. At some point the amount of money they have idle becomes absurd.
Still very bullish, but in case you can't tell very frustrated about how they manage their cash and the lack of expectations and transparency about what they are going to do with it.
I definitely think that we are heading for squeeze #2, but it is going to take a major catalyst to make it happen. Whoever this big short is seems very inclined to double down and try to close CCME under $15 to make up for some heavy losses. Exactly why I wanted a divi announcement ASAP. I know some here wanted to spread out the major good news but a dvidend would have forced that squeeze right away and kept the shorts from trying their TA manipulation to turn the momentum of the stock.
IMO A dvi would have let us run to $30 and stabalized the trading so that we weren't caught in a pattern of huge swings. It still needs to happen and sooner rather than later.
Glowing indeed. It makes me scratch my head wondering "If that is all that you could drum up as negatives for the company, why the hell did you go short?" It really puts the final kibosh on the whole "shorts are really, really smart guys" concept, doesn't it?
I can find more significant negatives than that for all of my favorite US, European and Chinese companies. He might as well just wrote that CCME is one of the most immaculate companies he has ever seen and that he was stone drunk when he shorted it. Anything would be worlds above "a little birdie on Yahoo! told me it was a scam."
This year really has been a tale of two CCMEs. I'm glad people are seeing the true colors now. Truly amazing to me that it took this long but I'm glad to be long.
This China inflation news is the same BS that they drum up every time that big money wants to shake out the retail sector. That's all today is IMO, one big shake out.
Does anyone really believe that the market is surpised by the G-20 not backing the US? Please, everyone knew that as soon as they started talking about it.
I won't be surprised at all if the entire market gaps up Monday morning.
Get ready for a rough ride today. Shanghai down 5% and DOW is sure to take a pounding today as well.
If you assume that for any acquisitions they were going to pay, say, 7 times net income, they already have enough cash on hand to generate an additional $25 million in net income for 2011. That doesn't even take into account cash flow from operations that they can leverage throughout the year.
Penetrating a new market such as tourism buses or sky mall should cost considerably less than the cost of acquisitions, so that will be an excellent ROI vehicle as well. We all know how inexpensively they can feed their organic growth in the current airport and inter-city buses.
There is definitely a lot of opportunity with the assets that they have available to them. The beautiful thing is that they have enough cash and cash flow to fund a healthy dividend program AND grow the business like crazy. 2011 should be a fantastic year for CCME.
I don't see that happening either. What would their increased costs be? There is no competition in their space at this time, so it would have to be sales driven or they would have to be increasing their concessions to the bus companies.
As far as sales are concerned, I just don't see how they would suddenly have to spend more money to find companies to advertise when demand for advertising is growing. Even if they are spending more on sales to increase their % of direct advertising, those expenses should be offset by the increased margin from going direct.
As per concessions to the bus companies, that is negotiated at the time that the contract is signed, is it not? I haven't read or heard anything from management indicating that they have recently had to start spending more to acquire new contracts.
Also, I've heard a lot of talk about Q4 like it is going to be some sort of let down. It is surpising to me how many people that have followed this company still don't understand that their sequential growth is very predictable. They are a recurring revenue model bases upon multi-year contracts. I would love to hear anyone's rationale as to why Q4 would be less than Q3?
Such a claim would have to assume that one of the following was true:
1) CCME will be reducing ad rates (management has actually indicated that they will continue to increas ad rates, by as much as 15%)
2) CCME has lost contracts between Q3 and Q4 (CCME has added several significant contracts since Q3 and has lost none)
3) There will be insufficient customers to utilize all of the ad time in Q4 (there has been no indication from management that there has been any difficulty finding customers to fill the ad slots. In fact, Q4 is historically strong. Further, macro trends point to consistently strong growth in ad spending)
4) There will be some significant expenses in Q4 driving down margin (again, no indication that this will be the case)
The fact is, as long as they are signing new contracts and not losing old ones, as well as increasing their ad rates and not decreasing them, the sequential growth will be significant and consistent - therefore it is very safe to assume that Q4 will be at least as profitable as Q3 unless there are considerable unforseen expenses incurred during the quarter. Am I missing something?
Joe said he tried to go short yesterday but there were no shares available to short. That was probably a good thing for him since we rallied off of intraday lows. I think anyone going short because they think that this stock is over extended and simply "has to come down" is playing a dangerous game.
Recognition of CCME by reputable investors is growing each day and they have created a new floor in the high teens that has held up very well.
I'm still holding all of my shares.
Agreed. The shorts must be discouraged that each time they run out of shares to short, we rally - even on a day when the DOW is down nearly 100 points.
When you consider that in all likelyhood the short position is back at its highest levels and we've been able to hold most of the recent gains, one can help but be incredibly encouraged. Dispite the fact that I am a little frustrated that management hasn't begun to leverage their cash on hand, I get warm and fuzzy thinking about the next short squeeze coming when a significant acquisition or a dividend is finally announced.
This stinks of a short attack. Shorts pile it on, weak retail hands that looking to protect their gains panic sell. Same old song and dance. This is why I said Jacky needed to get the damn dividend plan in place, to put an end to this BS.
Short interest will be back over 4 million before week's end IMO.
Quote from an article at the Fool -
CAPS member throwerw postulated that if the market values it similarly to Focus Media based on next year's earnings, China MediaExpress would have to triple in value. In short, the squeeze is not over.
Every kind of investor is jumping in now, even value investors who might have been late to the game. The stock looks perfect in all technical aspects, and the fundamentals are very solid. The stock would have to almost triple to trade at a similar multiple to its peer, [Focus Media].
That about sums it up. Plenty of room left to move. I really don't see things cooling off much until the high $20's or low $30s. The strenght today has been extraordinarily bullish IMO. Almost 4 millions shares traded at these levels. What price do you suppose someone who bought today is expecting to get? I believe many buying today see a double inside of 6 months. I sure do.
Joe talked to Cramer about CCME again recently and Cramer said it was not an expensive stock and gave it a buy rating. It was on the OT Lightning Round.
http://www.cnbc.com/id/39686935?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
These analysts are not likely to be the same as those working for firms that initiate public coverage on a stock. My point was simply to illustrate that even companies that provide investment reports seem to be allocating more resources to CCME. It is becoming a larger blip on many radars.
ABOUT THE JAYWALK CONSENSUS (SM)
The Jaywalk Consensus (SM) metrics service provides an average of all of the independent research providers’ ratings on the given security. By averaging these ratings, investors are given insight into the independent research community’s perspective on individual securities. The research providers who participate in the Jaywalk Consensus (SM) are professional firms that attest to having no investment banking or other potential conflicts that might impact the integrity of their research.
TD Ameritrade has the Jaywalk Consensus report. They use a 1-5 rating scale where 1 is very strong buy and 5 is very strong sell. In July, they had 4 analysts covering CCME with an average rating of 2.25. Today there are 8 analysts covering CCME with an average rating of 1.63.
My personal favorites Yahoo! handle is CCME_Bagholder. Classic. Someone should write a book about what it was like to hold CCME from 2009-present; as it's been one heck of an interesting experience. It has drawn out the finest value investors as well as the lowest life forms on the planet, and the commentary has been nothing short of spectacular.
That is their last shred of hope. In poker terms, they're drawing dead IMO.
This is what I have been saying all along. The shorts fell in love with shorting this stock and I think they are very much still in it heavy and very much still in denial. Just like many of us rode the stock down, accumulating all the way down to $8, these poor bastards are doing the same thing in reverse, adding to their short positions all the way up to $20, praying that their fraud dreams are answered.
They are seriously delusional and very much out of their league at this point as the new institutional money behind us is proving each day to be staggering.
OT: Strong jobs report out. Should have the markets working in our favor today.
If we're going to be idealistic, my preference would be:
1. Dividend announcement tomorrow pre-market. Let's roast the remaining shorts going into earnings and draw even more institutional interest to the Q3 announcement.
2. Blowout Q3 earnings con call with raised guidance on Monday
3. IBD top 10 the following Monday.
By the end of the second week we'd be above $30, I'd bet the farm on it.
systrader, I can't PM so here is my reply- I see your point, however I think you may be underestimating how much we can move in the short term and still maintain great performance going forward. Consider this - buying at these levels is a bet that CCME will trade above 30% of the valuation of its peers (which is where we are at right now). I'm willing to make that bet and many more will be too IMO. I think CCME will ultimately trade at a premium to its peers, which means that we could triple from this current price and still be a better buy than peer companies.
You may get a strong close today and tomorrow AND a $3 day on Monday.
I agree with you on buying the dips today, but I don't agree with the brighter the star the faster it burns out, not in this case anyway. What we are experiencing right now is a frantic influx of capital brought about by massive exposure that is bringing a disgustingly undervalued stock more inline with its peers. And in that respect, we still have a long way to go.
The only reason that we ever traded sub $10 was because of fraud fears brought about by the short attack and rumors. All that time that it was trading in the $8-12 range the story was growing stronger and stronger, further growing the divide between what the stock was trading at vs what it should have been trading at.
It wouldn't make any sense for this rally to slow down at all until we are well into the $20s and from there I suspect that it will still maintain a trajectory that will outpace the indices by a considerable margin.
I'm holding with a pretty loose trailing stop loss. We are only at 8.5x ttm earnings, and after Monday the TTM earnings will likely be increasing handily. I think there is still plenty of room to move here. Again, I'll start mulling things over when we get to the mid $20s. Even then it will only likely be to moderately decrease my exposure, since I am severely, severely, severely bloated in CCME.
Is it too early in the day to be drunk?
Everyone, get your shot glasses ready - today very well could be the day we break $20.
That is a difficult question to answer without having heard the Q3 numbers yet, nor any other potential news bits. If Q3 is another record quarter I am expecting to be at least in the low to mid $20's. We are setup very nicely, now it will be up to Jacky to knock it out of the park.
A boat works too. I've had more than one person on the Yahoo! board call me a bagholder, so I just want them to know that they were right, but that I'm holding more than one bag now :)
C'mon $19! We're going to need more bags for all this money :)
Don't forget about that toast, Gentlemen, when we hit $20. I'll have mine ready.
I agree on all accounts. I'm sleeping very well these days and don't plan to start mulling over what to do with my shares until we are well into the $20's. Even then I think it is likely that my analysis will lead me to conclude that a sizeable position in CCME is still warranted a those levels.
I'm with you Ryan. I love a company with a lot of cash on hand, but at some point the amount of cash and the time that it remains idle becomes a liability. Not in the traditional sense, but in the sense that that money could, and in a timely manner should, be out earning ROI. Your options are to buyback shares, which they may or may not have already done (I think they have), invest in growing the business (invest in new product lines or acquire other businesses) or provide a dividend. Or some mix of all three.
A dividend will attract more high class investors with deep pockets, accelerating capital appreciation. It will also, in turn, hasten more analyst coverage by reputable investment firms with higher price targets. If we get a dividend announcement as well as strong sequential growth, you can forget 15-20x earnings. We'll be looking at more like 25+ times earnings for appropriate valuation.
So my question is, why not?