I don't know who Mike King is. Is he a pump and dumper?
Can you direct me to his press release?

Be cautious about extrapolating the last Q sales across all 4Q. This last quarter is usually their strongest with the next quarter the weakest. (trying to line up dates since they changed their reporting periods to a more traditional calendar).

I'm more comfortable with a $0.04-$0.06 range than the $.06-$.08 range but that is really splitting hairs. If that is all this business was/could be we both wouldn't be here.

We're here for a stable business which limits downside risk with a moonshot attempt.

Does anyone here really understand the sales cycle? Like who do they sell to and do they have concentration risk?

absolutely agree on where and what the upside potential is. If it was back at $0.40 I'd buy as I can see they are making $0.02/year right now and if they can continue to grow they can maybe make what $0.04/share in 2 years if they can grow revenues and not grow expenses. I started following this in last 2013 and 2014 and they did the same thing growing sales while generally maintaining margins but they could never keep the SG&A expenses in line growing faster than revenue gains.

This feels like a step up in revenue after flatlining for 2 years which is good but I want them to show that they can grow revenues without growing expense. I was excited by Q2 when expenses were down sequentially by quite a bit becuase I felt if they could do that they could be a good story even if the growth doesn't come.

If I buy today I am buying in to the upside story and I'm probably early. I've been burned by that too many times. Now, I'll wait. If they get business for other drug applications thene a new release will push it up 50% overnight and most people will say damn I missed my chance. That is when I will buy. Sure I may have missed the first 100% but my odds of it being right are much better.

Revs were up 44%
COGS were up 51% (not 60%)
Operating expenses were up 14%

I'm disappointed to see if this is the best they can do.

Gross Margins seem relatively stable at 60%. Historically been 62-65%.
Happy to see both the Q/Q revenue growth and the sequential revenue growth. That said Q3 historically is their best quarter.

I had been optimistic that they were able to cut their operating expenses in Q2 but it appears that may have been a one-time benefit. Its good to see that they have swung to slight profits from slight losses but I don't see the upside at $1.00/share.

They can be positive on new opportunities but there is no spend this year in R&D which doesn't make sense.

Still watching. no position.

What did you find?

The 10K will not be out until early March.

I agree with Bernard - they will use the public price as the tier 1 value. Damnit.

I don't understand why they would need any capital. If this is just a filing to potentially have the flexibility to do something in the future- great. But as Directors their fiduciary duty has to be toward bondholders & shareholders. Since this is an equity transaction - the bondholders don't care but at the current price any offering would be dilutive.

Note that it states that "is this offering being made in connection with a business combination transaction, such as a merger, acquisition or exchange offer?" - Answer No.

My guess is that they will then issue a compensation package to themselves in the value of stock options that will make them rich upon change of control or some sale.

if the quarterly filings show they have been buying and retiring shares that would be very positive.

where are you seeing any buying/ownership?

If you are still around - which case on PACER were you able to find this?

Wondering if I am missing the master where most of the updates are?

I had bids out at $0.007 and $0.006 and $0.005. 160k of those shares that went at $.007 are mine. The rest I have no idea.

I am a bagholder. I owned shares at $0.04 and at $0.02 and $0.01.
I now own 500k shares at an average of just over $0.01. The risk/reward is worth it for me.

I think they are still going to sell. The CEO is a former lawyer who doesn't have experience running a business line.

The moves they are making are simplifying their structure which makes it easier for someone to understand and acquire the core business.

VR is a Bermuda based reinsurer and is being bought by AIG, hence my reply to the previous post. They are effectively out of the game. Most reinsurer are based in the Caribbean for tax and some other reasons and not what you should be looking for when looking at suitors.

I would agree that AGO or MBIA would be the most liklely suitors. However there are lots of buyers if Syncora wanted to sell itself.

I don't worry about who the potential suitors of Syncora are. I worry that deals are still happening, financing is available, and that Syncora doesn't seem to be doing anything that shows they want to get back into writing new business.
As long as Frederick Hnat is in charge I don't see that changing.

Last year they filed their financials to their website on 2/24/2017. The year before was 2/25. Expect the same this time.

2 very different animals.

VR is Insurance reinsurer who is actively writing new business and the mgmt team is often cited around as some of the best in the business. (FD - this was 2% of my portfolio - now 3% which will probably be split between buy more SYCRF and some others. BTW, it was originally a 5% position but my gains in SYCRF have dwarfed the rest of the portfolio - a good issue to have!)

If you go back and read the annual reports you will see that the CEO reports for several years are that they are both willing to buy in sign of opportunity but also willing to sell if they got the right price. It appears that 1.5 BV was that right price. Refreshing to see a mgmt team do the right thing even if it puts them out of a job.


Syncora is primarily a company that guarantees munibonds (and the type of large infrastructure products, hospitals, utilities) and is currently in runoff with a complicated structure, opaque information about its future (to the public/outside).

As an investor this is good news that the market is open and deals are occuring. If people are interested and willing to pay up for assets that is great. The simplification of our structure plus hopeful cleanup of the lawsuits would make us an asset heavy company that would be an easy tuck in opportunity for someone to hopefully pay 1.0-1.2x book for + something for the optionality of the NOLs.




Full disclosure - addendum:
About 8 years ago I got involved in a subsidiary at the company that I was working at ended up doing a reinsurance deal with VR. 2 years later when we sold the division (due to underperformance) the guys at VR called and were upset that we didn't include them on the list of companies to shop it to. They were not included as they are a reinsurer and not a traditional shop. They viewed themselves as opportunistic and wanting to buy good assets at a fair price. (they knew we were idiots).

The problem is that one case was $29M and one was $4M.
If the other 6 are all $29M + $75M in legal fees leaves about $.08-$.10 as a return. Its still very good from these levels.

Additionally, I spent some time looking at the volumes of other QuiTam suits since at the bottom of the article it shows that the Feds have collected $1.25B overall as part of these QuiTam suits to see if I could build an estimate or range or potential outcomes. The ranges for each suit vary wildly and I have been unable to find even any initial filings claims as it appears the details of these cases are sealed (even after the fact).

CHS (who bought HMA) settled multiple Quitam suits of their own for this period.
$98M in 2014 for one location in Laredo, TX (for 2005-2010)
$75M in 2015 for 1 location in New Mexico (for period of 2000-2010)
$6.5M in 2017 for 1 location in NC upcharging urine tests (2011-2015)
Again, these are outside the scope of this CVR but if one of these 6 remaining is for $75M or $95M its a zero.

Frankly, I need my wife to look into this. As a PT she doesn't see the billings but patients often complain of all the extraneous stuff that they get billed for (towels, etc).

I have to apologize. You were correct, I was wrong. I looked up the other cases on PACER but nothing is unsealed.

absolutely correct.

Denny's point about it being valued at $0 is that whatever value it has, and it has some, is worth more than $0.

Its unlike when you sometimes look at a bank stock or AMBC or MBIA and people say "Its trading at 50% of book. The problem for AMBC, MBIA and to the outside world is that book is too high.

My guess is that these monoline insurers will ultimately get rerated higher just like community banks did in 2012-2016. Many were trading at 25-40% off (some justifiably) because people feared what they could not know. The same is with much. I know (reasonably believe) that the book value of Syncora is pretty solid and it doesn't deserve a haircut for 50% off. It will correct over time just like the banks did.

With regards to my earlier comment in regards to the lawsuit I want to take back what I said about Syncora being in the wrong. Frankly I don't know and I have always assumed a small settlement but expect to proven wrong.

John-

I appreciate the research but I don't think either of those cases were part of the 8 that make up the QuiTam lawsuit. (I'm not a lawyer)

I'd love to see your outcome but I don't think those are 2. That said their quarterly filings at the end of Q3 2017 seemed to imply that there was a settlement amount for $14M for 1 case which would be in the range of one of these agreements.

At this point this is the best information we have to estimate a settlement.

Denny-

Thanks for sharing the timing is absolutely not coincidental.
Based on what I had read of the original complaint and then Syncora's response - I honestly believe that Syncora is in the wrong. How much I do not know.

However I have been wrong before on these cases. See Washington Mutual, JP Morgan and DIME litigation trusts. That case still bothers me to no end.

Syncora is in run-off. There is no need to spend $500k annually to uplist. Their financials are already reviewed by the various insurance entities.

Until the NYIB releases them fully and they start writing business there is no need as the story is not that good anyway.

Yikes $10M for $900NOL. That would put the value of our $2.5B NOL at $50M- ish. Way less than I had assumed.

I had assume $100-$150M. An old rule of thumb I had was 30% of the Tax avoided but I had looked at some other empty box NOLs which are worth fractions of that.

$2.5B @ 35% tax rate = $875M of tax avoided @ 30% = $262M value

$2.5B @ 20% tax rate = $500M of tax avoided @ 30% = $150M value

Real = $900M loss @ 20% tax rate = $10M equity for 49% stake = value of $20M for $180M in tax savings or 11%.

Weren't you the guy who a few months ago said that you knew somebody and it was a done deal and then came back a week later and said to sell as it was all over.

Yeesh.

If one reads the status updates there are in negotiated settlement talks. I bought this a long time ago at a higher price and have accepted my fate.

Each period this drags out means the probable outcome is lower as the legal fees reduce the pool of money. There is no chart noise or magic until you will wake up one morning and it will have moved on either an update from the company or settlement talks.

That is true.
In the end I try to be conservative and $25M won't really matter.

Good News/Bad News - There isn't really much to move the needle going forward outside of some releases of reserves which this merger should allow.

American Roads will be the one big needle mover which should move the book value from $6ish to $9 hopefully + $1 for the NOLs gets me to $10. We are sitting at 50% of book similar to MBIA and Ambac but I think a sale would get us around book where MBIA and Ambac have a ton of junk still on their books which is why they deserve to trade at that level of book value.

What is frustrating is Macquarie/American Roads. I had built in $100M for Macquarie settlement but I thought it could be up to $200M - (Syncora's loss was $250M). But if you sell American Roads for say $400M vs a book value of $145(?) that you earn a gain of $255M - the courts would be hard pressed to say that Syncora has really been harmed.

I just thought the conversation on the quarterly call that they were happy with the initial bids and were moving forward was surprising. I would have assumed there would be no talk of any of that until settlement with Macquarie.

My last update to my model was this summer:
GreenPoint $250M($3/share)
Detroit $50M ($0.60 share)
Macquarie settlement $100 - $200M ($1.20-2.35/share)
American Roads $400-$145 = $255 ($3/share)
NOL - $150 ($1.75/share)
less losses (Puerto Rico, others) - ($1)
Total - Additional $8.55- $9.70
+ Current - $4.00 =$13-$14ish

Now:
I put Macquarie at $0
Greenpoint better $1
NOL down to $100M ($1.15/share)
and I am now at $6 ABV + only $3.75 = $9.75.

What do other people get?

little help to make sure I have this.

If I wanted to spend $10k worth to buy some of these bonds and they last traded at 19.50 I would want to purchase approximately 50k or $500k worth of bonds?

Meaning is the last trade at 19.50 out of $100 or 19.50 out of $1,000. I believe its out of $1,000.

I use Fido and Ameritrade and Fido has it listed but they will not trade it for me. Any suggestions?

Steady as she goes is the best news possible for an insurance company. They are slow moving behemoths. Slow is good.

Did you figure this out from the sealed documents from the Qui Tam case whichlast updated the judge in April and will next update the judge at the end of August. The only real news at that time was that this is not just a civil case anymore but there is criminal cases involved and running in parallel to this meaning it will take longer.

Or did you get your information from the conference call today where this was said.

Is the only place to read these documents on Pacer? They are not on the EPIC site are they?

I hate navigating that thing.

Thanks EI.

I guess I will be going through the filings over the next couple of weeks. Much of my investable cash has been tied up in other investments (Syncora) and Point Blank. I've been trimming in Syncora as I am overweight and looking for something interesting.

Who is MattlinPatterson? I guess I will have to read up. Do they hold the Sr. Subordinated Notes or are those trading anywhere.

Like you said the next 200M goes to Sr. Note holders. Then it should go to Sr. Sub noteholders. The first 2 were settled at 25%. The RBC after interest was more than 100% if I read that correct. Even a return of 25% makes the senior noteholders whole and I assume based on how these are trading there is minimal interest in the Sr. Sub notes if they are available at all.

EI - I own none of this but I've started to dig around again.

Based on what I see the bond prices are valued at a small discount to the current payout level. $23-24 vs $18 (last price posted on here)

I have a few questions:
1. where were you able to trade these? Fidelity will let me trade other bonds but not this one.
2. In looking at this do you have any idea of the JPM case. It appears from a perusal of several documents that discovery is still ongoing and nothing toward a settlement of any type vs the other smaller cases. I wonder if the size of it is the problem. I'm not skilled enough to know if these are different type of securities, tranches etc.

Any thoughts on this from your side re timeline, estimated recovery?
(I've been using 10% as my base estimate, with 0% as a bear case, and 20% as my bull case which may be too conservative) which actually fills the Senior Notes.

3. In the MOR, such as 2529, there is $3.3B in pre-petition liabilities (see note 3). Won't they simply take anything earned from the other cases & JPM and distribute them to these guys first leaving nothing left to bondholders or am I misinterpreting this line.

still illegal. Its not simply that you yourself cannot trade on it. You cannot let others know to trade on it.

I've done enough of these (not a ton but between 5-10) in that these mispricings happen. BTW my range is in the $.18-$.28 range similar to others.

Here is the reason this is not at $.18 today.
1. While there are lots of shares outstanding the market opportunity is not enough for a HF to spend lots of time on these sorts of issues. Think of it this way - a HF would probably have to have a small team of junior analysts going over every BK filing and weird esoteric group. Even then they are not going to make an investment in this that is over 5% of the float or probably more than a few % of their investments.

Right now the world is hard for HF who are losing clients (outside of the biggest HFs) due to the shift to passive mgmt from active. They aren't going to spend time on this.

2. When is the payout going to occur (if at all). I could easily see mgmt make the case to distribute 50% in 3-4 months and state they need the rest of the money to sell the other few assets. I've watched mgmt do this before and draw it out 2 years and spend $8M to sell a business for $1M. Distgusting but legal.

Having this not be a full asset sale is probelmatic for some.
If this rerates which I hope it will it will move on some random day. I watched a stock like this sit at $.30 for 40 days even though the stock said it was worth $75-$1.00. Then suddenly it moved to $.70 on a random day with no news.

Salaries for the top 10 or so are usually required with the insurance group. One should be able to sign into NAIC (where the regulatory filings are stored for the insurance industry and there should be a supplement for the top 10 employee salaries.

I have not looked but when I have looked at other insurers both public and private they are there.

I'd guess the same. I hope that Dave Grande does not fill his old controller position. Its not really needed at this time.

About a year back I send an email to the company with a finance question about some historical documents in looking for some clarificaition. It was relatively minor.

I received a warm email 2 days later from David Grande with a thorough explanation that was more than necessary. The email had been sent from IR to the CEO and was sent to Dave. From the time it was sent to him and the time he responded was less than 2 hours.

With them not writing new business there is not a need for a controller at this time, imo.

Don't disagree that his ass is on the line.

I want to know the details of the 13% interest loan that he won't payoff. He paid down other debt at lower rates before this one. I assume he is a part of that getting interest payments.

I like companies where management owns a slug. I don't like companies where the owner can use it at his piggybank and nobody can do a damn thing. Finding out the plant was closed only now is a joke of the highest order.

I'm done with it.

I sold out in the spring but keep watching for proof of something positive. He sucks. I'm surprised its not down more. However I have noticed that BDCO moves 2 or 3 days after news.

Guys. Guys. I'm sorry. Very sorry.

I just relistened to it. The $50M that I mentioned was the dividend payment (actually $55M) from SGI. Its not the value of the Pike Point dividend.

I had two many things going on and I screwed up my notes.
My apologies.

I believe on the call they stated that this was the first payment in several years and that the next payment would be next June so annually.

What I haven't done is actually read through the stuff to see if that is what to expect annually or if that was a catchup of many years.

Just let no one tell you the markets are 100% efficient.

Stock had been trading around $1. BK filed went to $.05-.06. Then settled for months in the $.10-$.15. News of $8M win pushed it to $.30-$.35 where it sat for months even though liquidation analysis showed they had $1.00/share in bank. Randomly one day it jumped from $.35 to $.70 and then sat. I sold out then and moved on. I think final distributions were around $.82 IIRC.

No. god no. It would be nice.

The company was 4Kids Entertainment. (The holder of US rights to Pokémon, Yu-Gi-Oh and a bunch of other Japanese shows.

They were forced into Bankruptcy when their main supplier of content (from Japan) walked in one day and said they were terminating their agreement.

The company had previously had a cash balance that Lehman had invested it for. During discovery they showed what they had asked Lehman to do - put it in municipal holdings and money market funds. Instead they dumped it into crap. That $80M went bye bye.

They settled with Lehman for $8M for their lack of fiduciary duty but they had this $80M unsecured claim that they needed to monetize in bankruptcy. A small shop (probably 1 or 2 guys) offered to buy it for 400k. I remember being shocked that it went for so little. There was no auction or bid.

I think its important to note that Lehman's administrator is the same guy who was named the administrator for the City of Detroit. I'm guessing the legal teams (and there are hundreds on Lehman) know each other.

This Lehman thing is interesting in that the expected ratio keeps increasing. I think in the article it estimates payout at something like 38%. A few years back I watching the Lehman trainwreck play out as I owned a stake that had a claim against Lehman for $80M. As part of the BK process at that time it appeared that unsecured debtors were getting 1-2%. Its now up to 38%. In the case I was watching I think that $80M claim was sold for $400k or .5%. That $400k investment is now worth $28M-that is a solid return.

I've been wondering about this and thought this was the most likely scenario as the idea has been banded about since back to 2011.

I've been assuming that the Surplus notes trade around 70 (do I have that correct? - I 'd believe there is a CUSIP - does it trade.

If that was the case I was hoping they would be able to buy a bunch at the discount and retire it. That would be accretive to book value. Also, if NYSID allows them to make dividend payments to the parent I would assume that they would be close to allowing them to write new business.

I assume Quicken Loans. They are a major business who has decided to move many jobs downtown. They kind of were the ones that broke the dam. Other companies and individuals have followed their lead.

I was just in Detroit about a month ago and before going I spent a lot of time looking at properties for sale. Stuff near the water and where the downtown redevelopment has been is going for a good price. However there are parts of Detroit that are still really cheap and I mean it can change in a few blocks.

The $1-1000 homes are gone but you didn't want those anyway. The money to be made was in the $20k house. Those are now $60-80k.

There is optimism there that hasn't been there before. One guy I joked with laughed and said "Hey we aren't Flint!"