tylerdurden

You don’t think they are doing at least ok reagarding “materalizing expected synergies”? I think the most important reason to own this is their record so far on synergies. Declining revenues is different matter of course...

@ dyow - I was really confident that they were going to keep the div untouched bcs as mentioned, best time to cut the dividend, if they were ever going to do it, was right after the merger probably. CEO actually felt the need to answer that timing question during the call as well although it was kind of a BS answer. My speculation is that they could have kept the dividend but didn’t really see any benefits regarding share price so were compelled to change course. I mean if the share price was above 20 I bet the dividend was not going to be cut. At least not this year. Anyways who cares at this point. I dont really see this move driven by the business performance for now. They could have easily waited another year and picked some extra cost cut benefits before 2020. Seems like they are not increasing capex significantly after div cut either. Counterintuitively, dividend cut actually could enable new investors to come in. There should be some at least who were at the sidelines bcs there was this constant dividend cut rumors pressuring the stock. So now no pressure at all on that which means one less thing to worry about for some perhaps...

He probably had to sell something bcs of the investors leaving his fund. Surprised he cut this much bhf. There could be tax loss harvesting as well

To me, dividend cut increases the probability that the revenues will be stabilized with additional flexibility on capex so the chances that ctl will work as an investment could be higher after the div cut. I didn’t like them breaking their promise but i give them a second chance as long as they continue cutting costs...

They have been selling everything. Check their filings. They only had 5% cash at year end. and their fund has been doing poorly and they are getting redemptions. Another stock i follow CNX has also gotten crushed recently which was a big holding of theirs....now with CTL (their largest holding) going against them i am sure investors aren't happy. Oh and here is what they said about CTL's dividend in their annual letter recently "The dividend moved back up to a mid-teens yield with minimal chance of any cut.".......only to have CTL cut the dividend a couple weeks after. Wasn't southeastern very active in pushing for the CTL and Level 3 merger? How can you be so actively involved and misread the situation so badly? These guys don't seem to be in touch with reality. If they did push for the merger, you have to wonder how good that analysis was considering how badly they misjudged the safety of the dividend. With what’s going on with cnx and even with their ge investment or agn nothing has been working for these guys lately. How about this poison pill type of decision taken by CTL for protecting NOLs? Is that a coincidence they announce it with the div cut? Any ideas anyone?

I agree regarding the impact on Management’s credibility however it seems to me they feel like they needed to try a new approach since commiting to the dividend didn’t work out for the share price for more than a year now. Who knows what banker is pitching what to these guys. Or someone at the board (un)justifibly thinks the problem was the debt level and he seemed right unfortunately until now. To me it’s all about revenue stabilization. If they can do that with higher or lower dividend this should go back up. Cutting the dividend providing more flexibility for capex could potentially help but we’ll see i guess...

Since there are no clear cut answers in the world of 'high corporate finance" :-), I guess the company just wanted to try a different path and see whether it'll stick with investors. They tried full commitment on dividend for a while and the stock didn't react so they are trying this new approach to see whether the investors would actually like it better. Valuehalla, It seems Mason Hawkins decreased marginally but they sounded confident about CTL in their annual letter. I'd guess they sold some earlier in the quarter to pick up some other names. Also these 13f reports could be sometimes confusing. They manage some separate accounts too for their customers I believe so any customer who wants to sell independently could also show in their overall 13F reports. In terms of competition, management says they don't see anything out of the ordinary. The assets they own should give them at least some pricing power hopefully. With the new flexibility on capex perhaps they can compete better too. There has been some consolidation in the industry so you'd expect some pricing power because of that as well but these are all assumptions of course...

Petec i think ctl was trading above 24 last august so that’s less than 9 perc yield i guess. Anyways my issue is the management’s credibility. If this was on the table they should not have communicated that full commitment to the dividend. The call was like a joke too. They can not even answer why they picked the new leverage level which is not very different from previous target of low 3x. I dont care whether you put a timeframe or anything. All i hope is with the new flexibility in capex they can show some increase in enterprise revenue. Isn’t this the main pillar of this story? We all know consumer business is screwed. If they can show some stabilization stock price should recover. I also hope they were conservative again with their cost cutting estimates and they can accelerate as it was in the first phase. Perhaps i am too much hopeful. We’ll see :) I can not blame revenue loss on the management. There are clearly big headwinds however they need to show some progress on enterprise revenues...

This could be the right call for the company but no question erodes management's credibility after constantly telling dividend is safe etc etc. over the quarters. There is chicken and egg issue here. The stock was pressured because of the dividend cut rumors and so the yield was that high obviously so the other argument is if they had stuck to their guns, the stock price could have increased and normalized the yield. This stock was more than 24 bucks only last august so raising the surrender flag by management was perhaps premature just because the share was getting killed in the short run. Not sure why they are not buying back shares with this share price now. If they'll do extra investments to stabilize the revenues I am ok with this decision but overall it certainly left bad taste after making all those empty promises about the dividend. Hey Valuehalla, I have been reading your comments for a long time about CTL on this board so I just wanted to share my thoughts about selling now. I know it is frustrating and i certainly have my doubts for the management's honesty and/or competence about capital allocation strategy but i think it is the worst time to sell this stock. Why don't you take a deep breath and give them a couple of more months or quarters if you can? This is highly likely an overreaction to the dividend cut news. Shouldn't impact the intrinsic value of the company at all... Anyways just don"t want you to regret this.

Synergies are not “almost fully captured”. They are in transformation phase for the merger which should still provide material synergies going forward.

Look.. zero hedge is in the house! No, there isn't a third mandate for the Fed. Algos and quants don't matter. You don't get a helping hand. What is with all this bullshit? You get guys who spend all their days pontificating about the free market but once they start booking some losses they start crying like little girls and begging for a quasi-governmental agency for help. Grow a set. Ok, rant over. Now over to serious analysis. I'm not picking on you but I'll use your post as a spring board. By reading these boards I think there is some serious misunderstanding about what is meant by inflation when the Fed and pundits are using it. They don't mean actual inflation, they mean inflationary pressures. The fed's job is to look and combat inflationary pressure in order to keep inflation at 2%. It is not to fight inflation - i.e. if inflation gets up to 3%, then try to bring it back down to 2%. So you don't have to actually see inflation tick up for the fed to act. What you actually saw from the fed this week is really, really standard central bank stuff. If you have a strong economy around full employment that's expanding at a faster pace than potential you tighten. Btw, I am in the camp that the fed shouldn't tighten. The reason for that, which is the right argument for tightening, is the headline numbers are painting a wrong narrative. If the economy is doing so great then the labour market is banjo tight. At this level we should see wage inflation, but we don't see that. So maybe the economy is not doing so great. One of the worst mistakes in the history of the fed was the recession of 1937. Maybe we should avoid that this time around. Of course this is also political bullshit. They want the cake and eat it too. A booming economy and low rates. It doesn't work that way. If you have a booming economy rates will go up. If you want lower rates, it's because your economy ain't that good. They also fired Janet Yellen who was a looser money type with Jay Powell who was a tighter money type which conservatives liked. So why are they bitching now? They got exactly what they asked for! Hey rb I’ll have to include you as another tone deaf person like Powell. Tell me which recession we went into because of high inflation other than volcker fighting high inflation back in 70s. The real threat is bubbles (financial stability) and everybody including powell admits this except you. Anyways you just reminded how this board is full of people who have very closed minds and false sense of overconfidence in their views so no need to waste time posting probably. Good luck to all

Really good conversation here. I enjoyed reading your posts. One thing I have not seen mentioned is the hidden third mandate (kinda) for Fed. They always talk about the financial stability alongside unemployment and inflation objectives. I think it totally makes sense to normalize the cost of money etc. especially if you are not sure where the bodies are buried. However I have to agree with Druckenmiller about timing. This market is really weird with all the algos and quants etc. We can easily find ourselves in a self fullfilling prophecy if the market keeps on tanking fast and this spreads into real economy and/or other weak countries etc. I think there is gotta be some concern here for overall confidence and sentiment. I like Powell but come on man he seems so tone deaf. They don't even know the exact impact of all these interest increases on real economy because of the lagged impact (18 months some say). No inflation. no real urgency and you decide to increase amid this lack of confidence in markets. why? I don't get it. why not waiting for Jan or March and make everybody happy including Trump for a while? I fully support normalizing rates but not like this. At the end of the day, no one knows about future so they have to be more careful/gradual...

I think it mainly depends on your time horizon. If it is 3-5 years, higher chance the fluctuations in price would not change the end outcome on this investment, even there is a downturn in cycle. Hell, if your horizon is forever as for some people who cares, as long as you think you are buying on the cheap side. With autos, it seems to me with electrification and more driverless functions coming in, nxpi should do ok even if the auto industry doesn’t do that great. Weight of the electric vehicles and driverless type cars will be higher in any case. Not talking about full driverless yet. That’s long time away.

I respect Chou and follow him on a regular basis as much as possible. Having said that, I think he could be a little bit more honest with himself and his investors. Let's look at his Sears investment for example: I think at this point, most observes would say a bankruptcy is in the cards and it is a matter of time only however he has been writing all the same thoughts about this investments for the last I don't know how many letters. "We bought it at an expensive price but the idea still holds etc etc." Come on man, I saw this with Berkowitz, Pabrai and probably others. It is hard to manage other peoples' money I guess as some of you guys know better. It is really hard to admit mistakes straight it seems. Warren Buffett does it pretty well but not all managers have the same type of reputation which gives him the luxury to be more honest... Anyways, I like him and we all know that not all of your ideas will work even in 10 years timeframe, especially last ten years but he can and should be more honest I think overall.

Hey Rasputin - just curious whether you assumed the same NIM pick up from 2017 in your analysis for 2018E eps. I believe we had a Fed increase in March 17 and another one in June 17 right so interest pick up was partial in 2017 although BAC should get the full year pick up in 2018 assuming no additional increases in 18.