MrB Posted November 28, 2014 Share Posted November 28, 2014 Current lawsuit/dispute amounts between CBI and owners on all three nuclear projects. Sources in brackets. Vogtle $933m (10k & CC) VC Summer $244m (CC) Levy $512m (CC/news reports) I don't think these should be treated as anything more than ballparks. However, costs are real and someone is one the hook. Are those amounts just what CBI claims? Or does that include any Westinghouse et al claims? 933m is what CBI is suing for in the initial complaint. More being added. Not sure what being countered for. 244m is estimates of disputed amount from various parties involved. 512m Westinghouse v Duke As mentioned in the case of Vogtle it is said (rumour) that CBI can recover from Westinghouse if the owners do not pay. I think they have to try and get the money first and if unsuccessful then they can turn to Westinghouse. Link to comment Share on other sites More sharing options...
MrB Posted December 1, 2014 Share Posted December 1, 2014 http://www.ftc.gov/enforcement/cases-proceedings/0110015/chicago-bridge-iron-company-nv-chicago-bridge-iron-company https://st.free-lance.ru/users/ebyrgin/upload/f_50798a32134c7.pdf Link to comment Share on other sites More sharing options...
physdude Posted December 1, 2014 Share Posted December 1, 2014 The FTC news seems to be 6 years old! I am not sure I get the relevance to the current company. Link to comment Share on other sites More sharing options...
MrB Posted December 3, 2014 Share Posted December 3, 2014 The FTC news seems to be 6 years old! I am not sure I get the relevance to the current company. If that is your measure of relevance then note that the case was opened in 2002 and relates to an acquisition CBI made in Feb 2001. So almost 14 years ago. Link to comment Share on other sites More sharing options...
Buffetteer Posted December 6, 2014 Share Posted December 6, 2014 Ted or Todd have to be picking up more CBI this quarter, don't you think? In Q1, 2013 they buy at an estimated average of $52/share. In Q2, 2013 they add about 50% at $58/share. Q2, 2014 add 10% at $72/share. I know CBI is dependent on the price of oil, but at 8.5x earnings (compared to S&P's 18.7) you would assume there is enough of a margin of safety for them to add to their position. Price has been beaten down due to a couple analyst downgrades, but the company recently confirmed it's 2014 guidance and projected earnings between $5.75 - $6.05 for 2015. Link to comment Share on other sites More sharing options...
argonaut Posted December 6, 2014 Share Posted December 6, 2014 I would have to re-check the 13-f BRK filings but I think they took their position right to the edge of 10%...to 9.98% and I wondered if there was some reason they didn't want to exceed that amount ... I also noted they hid one purchase on the most recent quarters filing...which may or may not have been adding more cbi...all speculation... Link to comment Share on other sites More sharing options...
physdude Posted December 6, 2014 Share Posted December 6, 2014 There is a poison pill provision so they can't go above 10% without making an offer for the company. Link to comment Share on other sites More sharing options...
Buffetteer Posted December 6, 2014 Share Posted December 6, 2014 I would have to re-check the 13-f BRK filings but I think they took their position right to the edge of 10%...to 9.98% and I wondered if there was some reason they didn't want to exceed that amount ... I also noted they hid one purchase on the most recent quarters filing...which may or may not have been adding more cbi...all speculation... There is a poison pill provision so they can't go above 10% without making an offer for the company. I was not aware of this but that would explain it. Can you direct me to a page that talks about the poison pill, I tried but was unable to find anything. Thank you both for the info by the way, very helpful. Link to comment Share on other sites More sharing options...
gfp Posted December 6, 2014 Share Posted December 6, 2014 They changed the poison pill from 20% to 10% in the 90's. It was originally adopted in 1986 to thwart GAF. http://www.sec.gov/Archives/edgar/data/310431/0000310431-94-000023.txt Link to comment Share on other sites More sharing options...
Buffetteer Posted December 6, 2014 Share Posted December 6, 2014 Thanks GFP, much appreciated Link to comment Share on other sites More sharing options...
Buffetteer Posted December 7, 2014 Share Posted December 7, 2014 Just came across this interesting bit of information. In addition to Berkshire's ownership, Geico owns 2.66% of the company as well? Would this not technically put Berkshire's total ownership above the 10% threshold? http://investors.morningstar.com/ownership/shareholders-major.html?t=CBI®ion=usa&culture=en-US&ownerCountry=USA (click on the "Institutions" tab below Major Shareholders) Link to comment Share on other sites More sharing options...
mike Posted December 7, 2014 Share Posted December 7, 2014 They changed the poison pill from 20% to 10% in the 90's. It was originally adopted in 1986 to thwart GAF. http://www.sec.gov/Archives/edgar/data/310431/0000310431-94-000023.txt globalfinancepartners, I am not sure it is still valid. CBI was spun off in 1997 (see the link below) and your link dates back to 1994. http://articles.chicagotribune.com/1997-03-06/business/9703060105_1_chicago-bridge-iron-praxair-cbi-industries Link to comment Share on other sites More sharing options...
mike Posted December 7, 2014 Share Posted December 7, 2014 Just came across this interesting bit of information. In addition to Berkshire's ownership, Geico owns 2.66% of the company as well? Would this not technically put Berkshire's total ownership above the 10% threshold? http://investors.morningstar.com/ownership/shareholders-major.html?t=CBI®ion=usa&culture=en-US&ownerCountry=USA (click on the "Institutions" tab below Major Shareholders) Buffetteer, please have a look at the 13G below. Try to play with the numbers in it and then you will figure out Geico's stake is part of Berkshire's state. http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=66838&fid=9270475 Link to comment Share on other sites More sharing options...
Buffetteer Posted December 7, 2014 Share Posted December 7, 2014 Thanks for the info Mike. OK, now I'm really confused, lol. Not sure how to read the 13G. It lists Buffett, Berkshire, National Indemnity, GEICO (and others) separately. I can't imagine those are all separate purchases as some of the numbers are identical. So, is the overall Berkshire ownership (at the time) 9,550,755 shares and the rest is just a breakdown of that number, or should all those acquisitions be added together to get a total Berkshire ownership of the company? I was not able to manipulate the numbers so as to show that GEICO's stake is part of Berkshire's. Link to comment Share on other sites More sharing options...
JAllen Posted December 7, 2014 Share Posted December 7, 2014 The rest is just a breakdown of that number. Berkshire just places a few of the shares in each Berkshire subsidiary as they see fit. Link to comment Share on other sites More sharing options...
JAllen Posted December 7, 2014 Share Posted December 7, 2014 The other managers in this doc at the top are the various Berkshire subsidiaries that own stock or have them in pension funds. So Berkshire as a whole owns $108 billion of stocks, and Todd and Ted are given X billion to manage, but once they own them, they are placed by various subsidiaries. This is akin to an individual owning them personally, in an IRA, their spouse may own some, there may be a trust for kids, etc. http://www.sec.gov/Archives/edgar/data/1067983/000095012314012218/xslForm13F_X01/primary_doc.xml Link to comment Share on other sites More sharing options...
Buffetteer Posted December 7, 2014 Share Posted December 7, 2014 The rest is just a breakdown of that number. Berkshire just places a few of the shares in each Berkshire subsidiary as they see fit. That's what I suspected, thanks JAllen. This is why I am a member of this board, some very knowledgeable people here...a wealth of information. :) Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 8, 2014 Share Posted December 8, 2014 Looks like an interesting investment. Has anyone figured out what free cash flow is? Based on my 5-minute dive through the financials it looks like the GAAP earnings are much higher than FCF. I am probably just missing something but tough to invest without understanding this. Link to comment Share on other sites More sharing options...
gokou3 Posted December 8, 2014 Share Posted December 8, 2014 I posted this on the "What are you buying today?" thread: Bought CBI common and 2017 $30 calls. Currently trading sub-8x 2015 P/E per management guidance of $5.75-6.05 EPS. Much lower than peers. Two perceived problems with the company: 1) Bad nuclear contract - huge extras that may or may not be collected. One-time issue. Management is eager to buy back shares once this matter is resolved. 2) Low oil prices lowering future work demand - this is a known problem. Company has $30B backlog which is equivalent to 2-yr of revenues. Management commented during Q3 CC that they are somewhat insulated due to their diversification into various other infrastructure work. Btw, today's price is about 30% lower than when Todd Comb bought them in 2014Q2. BRK owns almost 10% of CBI. ;) The nuclear contract is draining their OCF. Basically, CBI has some argument with the client which results in CBI doing work and not being able to collect the money -- yet. There will be resolution one way or the other in the next year. I suggest reading the 2014Q3 CC transcript on SA where management has explained the situation very well. They fully expected Q4 will be FCF positive. Link to comment Share on other sites More sharing options...
MrB Posted December 8, 2014 Share Posted December 8, 2014 Looks like an interesting investment. Has anyone figured out what free cash flow is? Based on my 5-minute dive through the financials it looks like the GAAP earnings are much higher than FCF. I am probably just missing something but tough to invest without understanding this. Off memory the FCF/NI (might have been OCF/OP) averaged 92% over the last decade, with a big variation since they bought Shaw. This is one explanation being put forward for the weakness in the share price. Link to comment Share on other sites More sharing options...
AzCactus Posted December 10, 2014 Share Posted December 10, 2014 This stock is owned by David Tepper (small 1.54% position) and Berkshire (0.57%)---but this 0.57% probably comprises a much larger percentage of Combs or Weschlers portfolio as they each manage around $7 billion if memory serves me. Also, I think I read on Valuewalk that H. Kevin Byun from Denali holds a position. Can someone let me know if they have any particular insight into the reason shares are getting so beat up? Link to comment Share on other sites More sharing options...
mttddd Posted December 10, 2014 Share Posted December 10, 2014 This stock is owned by David Tepper (small 1.54% position) and Berkshire (0.57%)---but this 0.57% probably comprises a much larger percentage of Combs or Weschlers portfolio as they each manage around $7 billion if memory serves me. Also, I think I read on Valuewalk that H. Kevin Byun from Denali holds a position. Can someone let me know if they have any particular insight into the reason shares are getting so beat up? As i see it they do a lot of work related to oil/gas and the entire sector is taking a beating with oil prices so low right now. Iv been slowly adding to my position. Link to comment Share on other sites More sharing options...
jch548 Posted December 10, 2014 Share Posted December 10, 2014 Someone on another board looked back on the past two years of contract awards and only saw something like a $50mm platform award on an oil project. So the debate is how tied to oil exactly is CBI. From what I have read they seem to be the masters of constructing oil tanks but I imagine that type of work isn't so material to CBI anymore. I saw an analyst claim that CBI will be a main beneficiary of completing the LNG build out in the U.S. On a more negative view Sinopec is stepping back from LNG as the economics are losing favor as China's domestic gas prices have fallen. Watching at the moment. Link to comment Share on other sites More sharing options...
gokou3 Posted December 10, 2014 Share Posted December 10, 2014 Someone on another board looked back on the past two years of contract awards and only saw something like a $50mm platform award on an oil project. I listened to the Investor's Day webcast yesterday. Indeed management commented that for the next year, the opportunities are in LNG, petrochemicals, and gas-fired power plants. Some federally funded environmental cleanup work as well. The cheap oil price is especially beneficial for the petrochem industry which uses the byproducts of crude as the feedstock. Management also commented that for capital allocation, the priority is to pursue share repurchases. They have an authorization in place equal to 10% of the outstanding shares. They seem confident that they will be FCF+ for Q4 2014 and for 2015. Link to comment Share on other sites More sharing options...
gokou3 Posted December 11, 2014 Share Posted December 11, 2014 I believe this is from our fellow boardmember (xazp?): Chicago Bridge & Iron Falls With Oil Prices Despite Having Virtually No Oil Exposure http://seekingalpha.com/article/2748385-chicago-bridge-and-iron-falls-with-oil-prices-despite-having-virtually-no-oil-exposure?isDirectRoadblock=false&app=1&uprof=11#comments_header Link to comment Share on other sites More sharing options...
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