ValuePadawan Posted February 27, 2020 Share Posted February 27, 2020 Sounds like he expects most new contracts to be signed mid 2021- beginning 2022. Thats when earnings visibility would clear up if true. Went through the company recently. My impression is that the pricing of the existing contracts is somewhat of an anomaly, and one can't reasonably expect the pricing to persist. The majority shareholders' behavior is also indicative of this expectation. Since we are not talking about rare materials/know how here (it's mostly a matter of capex, like building a car factory), I don't see how such a company can make much over its cost of capital over time. Hence I don't really buy the Pabrai pitch that this time its different. Remember ZINC. https://medium.com/i-am-a-terrible-investor/how-horsehead-holdings-made-me-look-more-like-a-horses-ass-b5be37aa237a I completely agree that its unlikely that the next round of contracts are priced at $10,000/MT. That was an aberration. I guess the real question is will the contracts be back around the historical average of $4500/MT or will they be considerably higher due to a tight petroleum needle coke market? Graftech's cost basis for electrodes using needle coke is about $2800/MT so there's a large difference in profitability between $4500 and $8000/MT contracts. Considering needle coke prices right now seem to show tightness in that market its not clear to me that electrode prices will revert to $4500 in the next two years. If anyone has better information I'm more than willing to destroy this idea I just haven't seen data to refute the thesis. Link to comment Share on other sites More sharing options...
Guest roark33 Posted May 6, 2020 Share Posted May 6, 2020 https://www.sec.gov/Archives/edgar/data/931148/000093114820000067/a2020-q1earningspressrelea.htm The impact of the virus has induced over 20 of our long-term contract customers to submit force majeure notices. The long-term contracts provide for force majeure volumes to be deferred to the end of the contract period by extending the term of the agreement for the duration of the force majeure event. Other long-term contract customers have been impacted by plant closures and lower steel demand, and are struggling to take their committed electrode volumes. We have had no additional customer bankruptcies at this point, but as a result of the above factors we are experiencing some delays and non-performance from certain customers on their long-term agreements. As a result of this macro environment spot pricing is now below the long-term contract price, and some customers are attempting to renegotiate their contracts or delay shipments. Link to comment Share on other sites More sharing options...
mattee2264 Posted May 14, 2020 Share Posted May 14, 2020 Pabrai completely out of this now. Link to comment Share on other sites More sharing options...
Vish_ram Posted May 14, 2020 Share Posted May 14, 2020 50% decline and sold out. Generally Pabrai exits when it goes below 10 cents. I was watching Ackman Herbalife documentary and found remarkable similarities to Poof funds 1) HLF and Pooof - insiders make it out like bandits 2) Both need fresh set of naive losers to join in, with money and exit with no money 3) Both spend a ton on marketing, recruiting, talks in various forums 4) Both move from country to country to find new recruits and opportunities Link to comment Share on other sites More sharing options...
hasilp89 Posted May 14, 2020 Share Posted May 14, 2020 50% decline and sold out. Generally Pabrai exits when it goes below 10 cents. I was watching Ackman Herbalife documentary and found remarkable similarities to Poof funds 1) HLF and Pooof - insiders make it out like bandits 2) Both need fresh set of naive losers to join in, with money and exit with no money 3) Both spend a ton on marketing, recruiting, talks in various forums 4) Both move from country to country to find new recruits and opportunities unclear are you saying that pabrai's funds are ponzi schemes?. not sure what a poof fund is. Link to comment Share on other sites More sharing options...
valueinvestor Posted May 14, 2020 Share Posted May 14, 2020 50% decline and sold out. Generally Pabrai exits when it goes below 10 cents. I was watching Ackman Herbalife documentary and found remarkable similarities to Poof funds 1) HLF and Pooof - insiders make it out like bandits 2) Both need fresh set of naive losers to join in, with money and exit with no money 3) Both spend a ton on marketing, recruiting, talks in various forums 4) Both move from country to country to find new recruits and opportunities Can you elaborate? Not sure what you are trying to say. Link to comment Share on other sites More sharing options...
valuebet Posted November 12, 2020 Share Posted November 12, 2020 Brookfield sold a decent amount of EAF shares two days ago, roughly 8,407,869 https://www.sec.gov/Archives/edgar/data/931148/000114036120025199/xslF345X01/form4.xml They also sold a small number of shares over the past two weeks. Any thoughts? Link to comment Share on other sites More sharing options...
BG2008 Posted November 12, 2020 Share Posted November 12, 2020 Brookfield sold a decent amount of EAF shares two days ago, roughly 8,407,869 https://www.sec.gov/Archives/edgar/data/931148/000114036120025199/xslF345X01/form4.xml They also sold a small number of shares over the past two weeks. Any thoughts? Don't buy Brookfield IPOs? Link to comment Share on other sites More sharing options...
Arski Posted November 12, 2020 Share Posted November 12, 2020 How could Pabrai be so bearish about GrafTech, while first being so damn bullish? He thought the pandemic would crush GrafTech? I don't know much about GrafTech but looks an interesting investment opportunity. Link to comment Share on other sites More sharing options...
BG2008 Posted November 12, 2020 Share Posted November 12, 2020 How could Pabrai be so bearish about GrafTech, while first being so damn bullish? He thought the pandemic would crush GrafTech? I don't know much about GrafTech but looks an interesting investment opportunity. Seems pretty Pabrai like Link to comment Share on other sites More sharing options...
mattee2264 Posted November 12, 2020 Share Posted November 12, 2020 In fairness to Pabrai I don't think he could have predicted the pandemic which kinda ruined the whole LTC element of his case. But probably a good reminder that you can't buy a commodity type business and delude yourself into thinking heads you win tails you don't lose much. Link to comment Share on other sites More sharing options...
Guest roark33 Posted November 12, 2020 Share Posted November 12, 2020 The LTC element was ruined before the pandemic, people starting breaking their commitments back in 2019. Link to comment Share on other sites More sharing options...
Arski Posted November 12, 2020 Share Posted November 12, 2020 Okay, I feel kinda dumb here. I didn't dig into this company but what is LTC? And even for a commodity business they are still making quite good money right? Ttm FCF per share of 2, which gives a EV/FCF of 5.5. Or am I just into the wrong path? Link to comment Share on other sites More sharing options...
Guest roark33 Posted November 12, 2020 Share Posted November 12, 2020 LTC is long-term contracts. There is a huge amount of operating leverage in this business and pricing continues to decline. So, as sales decline, fixed cost structure is hard to change, therefore this company can go from very profitable to losing money quickly. The debt is another reason to worry given the financial leverage. Link to comment Share on other sites More sharing options...
kab60 Posted November 13, 2020 Share Posted November 13, 2020 Seems like longs should've questioned BAM's motives. Between buybacks and special divys it smelled like these guys wanted to prop up the price to get out, and considering the assymetric info and their track record of screwing minorities that was a red flag. Anyway, price is different today, LTC's are being amended but also extended, so the risk reward is obviously different today. But when not even the Company knows how much capacity is on the way in China, uncertainty is very high, and then you have both operating and financial leverage. Smells like a recipe for disaster, but it also has some attibutes which could make it a multibagger. Just don't think the price is at all there yet. Perhaps interesting as a small option if it gets beaten real good. Link to comment Share on other sites More sharing options...
Arski Posted November 13, 2020 Share Posted November 13, 2020 LTC is long-term contracts. There is a huge amount of operating leverage in this business and pricing continues to decline. So, as sales decline, fixed cost structure is hard to change, therefore this company can go from very profitable to losing money quickly. The debt is another reason to worry given the financial leverage. They've $40m debt maturity in 2023, $113m in 2024 & $1,439m in 2025. That results in a quarterly debt payment of around $140m. The only issue is the LTA's and the volatile price of steel. Link to comment Share on other sites More sharing options...
Arski Posted November 13, 2020 Share Posted November 13, 2020 Seems like longs should've questioned BAM's motives. Between buybacks and special divys it smelled like these guys wanted to prop up the price to get out, and considering the assymetric info and their track record of screwing minorities that was a red flag. Anyway, price is different today, LTC's are being amended but also extended, so the risk reward is obviously different today. But when not even the Company knows how much capacity is on the way in China, uncertainty is very high, and then you have both fixed and financial leverage. Smells like a recipe for disaster, but also go on to multibag. Perhaps interesting as a small option if it gets beaten real good... That would be a good strategy. EV/FCF of 6 is indeed something too high for this uncertainty. Link to comment Share on other sites More sharing options...
Saluki Posted November 13, 2020 Share Posted November 13, 2020 Prem bought a little (about US$6mm) on the dip: https://www.dataroma.com/m/holdings.php?m=FFH Link to comment Share on other sites More sharing options...
BG2008 Posted November 13, 2020 Share Posted November 13, 2020 In fairness to Pabrai I don't think he could have predicted the pandemic which kinda ruined the whole LTC element of his case. But probably a good reminder that you can't buy a commodity type business and delude yourself into thinking heads you win tails you don't lose much. Pabrai has a history of investing in commodity businesses that seemingly has unbreakable contracts that turns out to be unenforceable when things go bad. He invested in a regional airline that had what he considered iron clad contracts. There was the Horsehead investment and then this EAF. If you get involve with commodities, stop pretending that there is some unforeseen risk that no one could have predicted. There is always something that surprise you. These observation is what taught me to start buying better businesses. Berry Global Packaging DuPont Specialty Chems Cable businesses Self Storage etc Pabrai keeps making the same mistakes. To a lesser extend, Buffet keeps saying that airlines and airplanes are bad businesses. But he keeps getting involved in them. The fact that Buffet bought airlines instead of Heico or Transdigm is mindblowing Link to comment Share on other sites More sharing options...
Gregmal Posted November 13, 2020 Share Posted November 13, 2020 I once heard a saying that you'll know its time to stop trading once you stop making money. The Pabrais, Chous, Eihnhorns, Watsas should have probably quit about a decade ago. Or at least went the way of David Winters. Have some decency and return outside money and then just do your own thing. Prem is a little different cuz he owns a real company, but for the others its pretty embarrassing at this point. Link to comment Share on other sites More sharing options...
kab60 Posted November 13, 2020 Share Posted November 13, 2020 Prem bought a little (about US$6mm) on the dip: https://www.dataroma.com/m/holdings.php?m=FFH I was thinking FFH had gotten into the "close-your-eyes-and-just-buy-price-range" and might be worth a quick flip - perhaps even longer term hold if one thought they'd adjust their equity strategy. However, taking a stake in EAF indicates it's probably still not for me. Link to comment Share on other sites More sharing options...
BG2008 Posted November 13, 2020 Share Posted November 13, 2020 I once heard a saying that you'll know its time to stop trading once you stop making money. The Pabrais, Chous, Eihnhorns, Watsas should have probably quit about a decade ago. Or at least went the way of David Winters. Have some decency and return outside money and then just do your own thing. Prem is a little different cuz he owns a real company, but for the others its pretty embarrassing at this point. What is fascinating is that there are small cap value that has worked in recent times. The Scott Miller band and his brothers. Matt Sweeney with Laughing Water. ADW just takes way too much concentration risk. AltaFox has killed it. I spent sometime trying to decipher how they have made it work. It seems like that they buy beaten down companies with growth. I am doing some thinking and I think one needs to evolve a bit. The $50mm cheap net/net probably stays that way without a liquidation. There are no natural buyers of those assets. AltaFox' presentation was an eye opener. Just musing. Link to comment Share on other sites More sharing options...
valuebet Posted December 7, 2020 Share Posted December 7, 2020 Senior Secured Notes Offering https://www.graftech.com/investors/news/news-details/2020/GrafTech-Announces-Commencement-of-Senior-Secured-Notes-Offering/default.aspx Link to comment Share on other sites More sharing options...
elliott Posted December 9, 2020 Share Posted December 9, 2020 Didnt Pabrai buy at about USD11 per share? If he has not sold, he is not that bad; if he sold, well... Link to comment Share on other sites More sharing options...
Guest roark33 Posted December 9, 2020 Share Posted December 9, 2020 He sold between end of Dec 2019 and March 2020, so probably at the lows:) Wasn't on his 3/31/20 13F filing. Link to comment Share on other sites More sharing options...
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