17thstcapital

You don't want to value the income stream but haven an opinion on the stock price - interesting.....

I've spent time on this co before. It's a nice little business but I passed for a few reasons. One, there's absolutely no growth and I couldn't figure out how they'll ever generate top line growth. Related to that, I couldn't get comfortable with their competitive position - I know they have patents and all but doesn't seem farfetched that something else could displace them in the future. Finally, this company is horrificly underlevered and I didn't get the sense that this would change anytime soon. This seems like a great buyout or a debt for equity recap candidate. I know there's an activist here who I respect a lot and so maybe they can unlock some of the value here.

Thanks for sharing - all good points. You've spend a lot of time on distributions - any thoughts on valuation? Is the valuation out of hand given what we know now - even if you assume distribution was cut to say zero? I certainly don't make a habit of making investments based solely on distributions/dividends with a disregard for valuation.

Thanks for the writeup. You didn't mention any multiples/valuation metrics so would be helpful if you shared some numbers. What do you think the stock is worth when business/cycle ramps up? Based on my model, the Company trades 3 turns more expensive to comps so I wonder why you think now is the right time to get involved here.

Thanks for posting. Question - what is the current EBITDA run rate and how can you bridge it to base case in the writeup? I tried but given the cryptic disclosure, wasn't able to do it. If they can get to $45-50mm level, stock's probably a bargain. I also don't see any downside in waiting for a Q or two to get more comfortable with the turnaround - might miss the bottom but given the upside potential here, there should still be plenty of money to be made.

What exactly is the thesis here? Other than Icahn being a large holder?

Is this an investment thesis - that someone else likes it therefore its risky?

Good summary of the situation. I've owned this for a year and like it just as much today than I did when it was trading at roughly half the current price. Hard to argue that the stock isn't significantly undervalued at just over 3x EBITDA and so downside is very limited, especially given the growth profile of the assets. The company is flush with cash and so there could be a shareholder friendly event (dividend, buyback, etc) in the near future which could be a catalyst to move the stock higher. The risk here is that they make a bad acquisition but given this management's history, I don't think that is a high probability event. Doubt this stock trades at this level 12-24 months out.

What about hardware purchase obligations? Could be in the billions and I don't see why a supplier would let them off the hook for that.

Congrats on your trade - way to stick with it when there were few believers. It's also been one of my largest holdings and continues to be. However, I have to disagree with your fair value comment. I think there's still a lot more room for this stock to run. I can easily see $2.50 in EPS here, and maybe even $3.00/sh, in the not so distant future. Apart from Frontier catalyst which may be priced it, there's a possibility of a dividend and/or buyback and that is not reflected in the current valuation. Also not priced in is the FCF from the new contracts and the restructurings. Add to this, the very large NOL balance. Net net: this continues to be one of my favorite event driven names where my fair value is closer to 20 and I'll stick around for now to see how all this plays out......

Assumptions that I'm using - $30mm for pre OH EBITDA for online in 2013 - $9.5mm overhead for online in 2013 - online overhead is roughly 35% of total current overhead - $38mm for pre OH EBITDA in 2014 - $10mm overhead for online in 2014 - Net net: EBITDA for online in 2014 is $28mm A multiple of 10x on $28mm gets me to a stock price of ~$17 today. 12x gets me ~$19. Any preserved NOLs are gravy. I think my segment EBITDA and overhead assumptions are conservative but this dopey management - who shockingly gave no guidance on yesterday's call - has surprised us to the downside before. Also, I think 10-12x for a low capex/high growth business is not unreasonable. I added to my position yesterday. Let's see what happens.

Thanks sir. It's a good outcome - sometimes you get lucky! But I'm not a seller yet (in fact, I plan to add) as I think the market is not fully pricing the package correctly. Based on my model, I get to ~15 at an 8x EBITDA multiple and I've been very conservative with my overhead allocations. At 12x, its a ~19 stock. I can keep going but you get the idea. These are not aggressive multiples for a high growth company in a pretty sweet spot in the ad category. Now, I couldn't tell you if DGIT's online business is better than its competitors - that's way beyond my paygrade - but it has demonstrated nice top line and EBITDA growth and management is pretty confident about its prospects given the guidance that they laid out for the year. Let's see what happens. Maybe I'll end up looking foolish for not punting.....

Not really sure what to make of this: http://www.iphoneincanada.ca/news/developers-missing-payments-velti-mobclix-network/

Thanks for bumping this. Been following this company for a few months. Don't own it yet but its intriguing. Definitely outside my circle of competence but at these prices, the risk/reward is interesting. The CFOs model for growth, in particular FCF growth, is impressive and even if they do half of what they think they can in FY14, the stock will move. For me, its a 'show me' stock and so haven't pulled the trigger yet.

My two cents on this discussion of marginal cost for oil production...... Everyone in the press seems to be using the Bernstein report from May 2012 to get to this average $92/barrel marginal cost figure so I'll stick to that specific report. - the MC by company range was wide - from below $30 to above $90. Don't recall how they came up with $92 as the average/median. - their MC est for CHK was below $40 - however, note that cash costs range by company are significantly lower - anywhere from $10 to $45 for an average/median of $39.65 - their CC est for CHK was around $10 (don't know why CHK estimates are so low. btw, their price target for CHK in that report was 17, below the then market price of 18.44) So while MC of $92/b (and growing) does suggest a theoretical floor for oil, cash costs are much much lower which tell me that there's always potential for lower oil prices in the short term.