FGE.to - Fortress Paper (formerly FTP.to)

[triedtestedand]

Alertmeipp:

 

~$84M as of end of Q3

 

 

then factor in the following:

 

a) -28.5M* ... assuming half of -$57M for co-gen remaining CAPEX spend is done in Q4, based on:

            $177M spent at end of Q3 (Sept 30)

            $185M spent as of Q3 MD&A date (Nov2)

            $29M forecast to be spent (excluding contingencies) as of Q3 MD&A date (Nov2)

            $20M (i.e 20%) of extra (based on latest press release)

 

              i.e. {$29M+ ($185M-$177M) + $20M} / 2 = -$57M / 2 = -$28.5M

 

            *NB: Not all would be spent in Q4/2012 timeframe (or even Q1/2013) ... which is why am assuming half of that amount.

 

b) -5M of EBITDA from Thurso

 

Rough guess ... if they actually did do OK in Nov/Dec, as press release indicates, then average utilization might be 90%, which would imply cash costs/tonne of ~$850 of so ... add another $100 in for transport and you're at $950/ton cost ... then assume $850/ton as worst case of what they were getting for price ... and you get 45,000tonnes X -$100/ton  (or -$4.5M)

 

Of course, if cogen was complete, then that EBITDA gets bumped up by $5M/quarter (assuming reasonable utilization)

 

c) -4M of EBITDA/cash from Landqart

 

Another rough guess ... hopefully (much?) better?

 

d) $12M+ of EBITDA/cash from Dresden

 

Assume Q2/2012 results, but then factor in better operating rates post the Q3 upgrades, and better currency

 

e) +8M of other

 

+4M for the loan amount due for Thurso (once work was completed)

+4M for the 5000 tonnes extra that was on inventory, unsold as of Q3

 

f) -$1.5M for corporate

 

g) -$3.4M interest expenses

 

h) no changes in AR/AP

 

i) -$5M ... LSQ spend?

 

 

Sum up a-i above gives you -$27M ... add a fudge factor to that, subtract it from $85M and you get back down to $50M+??

 

 

 

 

 

[BRK7]

Rayonier goes over budget on DP mill conversion...

 

 

http://www.risiinfo.com/pulp-paper/news/Rayonier-expects-2-3-price-increase-on-specialty-dissolving-pulp-prices-in-2013-Jesup-conversion-costs-higher-than-expected.html

 

"SAN FRANCISCO , Jan. 28, 2013 (RISI) - Rayonier said it expects prices for its specialty cellulose, or dissolving pulp, to increase by 2-3% in 2013. The firm also said the cost of a conversion project at its Jesup, GA, mill that will convert its fluff capacity to specialty DP, is expected to run 25-30% above the original forecast."

[no_free_lunch]

This is actually quite sad but it is a plus for the stock.  Sorry if this has been posted before.

 

World grain reserves are so dangerously low that severe weather in the United States or other food-exporting countries could trigger a major hunger crisis next year, the United Nations has warned.

 

Failing harvests in the US, Ukraine and other countries this year have eroded reserves to their lowest level since 1974. The US, which has experienced record heatwaves and droughts in 2012, now holds in reserve a historically low 6.5% of the maize that it expects to consume in the next year, says the UN.

 

http://www.guardian.co.uk/global-development/2012/oct/14/un-global-food-crisis-warning

 

 

Low inventory is not a guarantee but it does tip the odds in your favour and could considerably extend a price increase.  It could be a year or two before it works it's way through to cotton prices.

[alertmeipp]

triedtestedand,

 

thanks for the breakdown. I hope they do better in cash flow perspective. The market is going to get worried if they don't turn Thurso close to into full cap with 50 millions of cash left.

[triedtestedand]

What ... and the market is not worried now?  ;)

[triedtestedand]

PS for BRK7

 

For confirmation, when they talk about DP prices going up only a few %,  it's because Rayonier's plant is intended to ultimately a majority of f high-alpha DP (which is smaller market, but also doesn't get such swings in price).  As relates, the 30% overrun (amounting to ~$80M on a $300M project), it was exascerbated by desire to keep on schedule, given pre-commitments to customers, etc.

 

More details per below ...

 

http://seekingalpha.com/article/1132611-rayonier-s-ceo-discusses-q4-2012-results-earnings-call-transcript

 

The difference is they didn't get a big haircut for the issue, probably partly because the rest of the segments in their business have been doing OK/well.

 

 

[BRK7]

thanks for the additional info, triedtested.

 

BTW, cotton #2 futures contract is +2% today, which is nearly +10% YTD.

[colinwalt]

Not sure this will make anyone feel any better, but big (or smallish innovative) projects often (almost always?) go over budget, a combination of:

 

- our general optimistic approach to project planning

- not wanting to have the project canned before it starts due to coming up with a scary realistic estimate

- an inability to learn from previous similar projects

- not wanting (if you have been tasked by the boss to get a project done) to look like a perennial naysayer by constantly reminding everyone of the risks, uncertainties, unknowns etc (they'll hire someone else more optimistic to run the project)

- and any other relevant cognitive dissonance that you can and can't think of...

 

Here's another one :-)

 

http://finance.yahoo.com/news/anglo-american-4-billion-writedown-071552883.html

 

"Minas Rio, which is now costing Anglo more than three times its original estimates, has been seen as Anglo's most significant failure of recent years and is partly responsible for costing outgoing chief executive Cynthia Carroll her job."

 

So you get canned for being realistic ("pessimistic") before it starts and canned when it all too often goes badly wrong

 

FWIW I think that all of the downside and counting is more than priced into FTP at this point...

 

[Liberty]

Good post, colinwalt. More on this cognitive bias here:

 

http://en.wikipedia.org/wiki/Planning_fallacy

[PlanMaestro]

Well, it all depends on how far off is the final tally. A triple or quadruple would not be good news.

 

The cost of the Sochi Winter Olympics has quadrupled from the original estimate of $10bn making it far more expensive even than London 2012.

[OptsyEagle]

I believe one of the analysts said that FTPs most recent hiccups with production, in the new year, has come from their unrelenting quest to ensure high quality of product.  Can't really slight them for that, although high production of high quality product would be best.

 

By the way.  The last quote I saw on specialty pulp was Buckeye getting something like $1,700 per tonne for it, in the 3rd quarter I think.  Specialty dissolving pulp prices seem to be holding up quite well.

 

That kind of price makes me understand the benefits of high quality products.

[Liberty]

Interesting to look at today's volume. At one point this afternoon it looks like a block of almost 200k shares was traded.

[alertmeipp]

Interesting to look at today's volume. At one point this afternoon it looks like a block of almost 200k shares was traded.

 

Saw that, thought that maybe from one of us.

[triedtestedand]

It looks like it was 193K shares right at the stroke of noon.  Wonder who sold/bought?  Big short covering?  May find out if institutional holdings are updated as of end of the month (or at end of quarter).

 

Per attached graph (cut from CCFgroup.com) spot VSF pricing in China back to 14500 yuan/mt ... but it dove deep (with sharp rebound) in Q4 ... needs to get up over 15000 ... maybe continued cotton rebound will help?

vsf_20130129.tiff

[jeffmori7]

Hey guys, I was wondering where is our young friend from Belgium, tombgrt? He used to post a lot here, he was kind of all in on Fortress..but we don't have anymore news now. That's unfortunate, I appreciated his comments, hope he will come back.

[Liberty]

Hey guys, I was wondering where is our young friend from Belgium, tombgrt? He used to post a lot here, he was kind of all in on Fortress..but we don't have anymore news now. That's unfortunate, I appreciated his comments, hope he will come back.

 

That's a good question. I appreciate tombgrt's contribution to this forum too.

[augustabound]

Just checked his blog and it's been deleted.  :-\

[jeffmori7]

He had a blog?

[alertmeipp]

I hope he is fine, I remember he mentioned that he is still young. Probably regrouping himself for a restart.

 

Better to restart when young than old.

[siddharth18]

Did some digging - is this his blog? http://contrairestier.wordpress.com/

 

http://i.imgur.com/xNsLs1c.png

[Liberty]

Did some digging - is this his blog? http://contrairestier.wordpress.com/

 

That seems to be it. His account was last active on this forum in early December, and his last twitter post was in early November. Not sure what happened, but I hope he's all right.

[augustabound]

He had a blog?

 

Yep and I only found it from googling Fortress Paper since he had a couple of blog posts and noticed the contact line like siddharth18 did.

 

[tombgrt]

Hey all! I got a PM from triedtestedand last weekend telling me you guys missed me, so here I am. =)

 

I've taken a big break from the forum/blogging/twitter and cut back on reading books, annuals, ... in early november for several reasons. With around 3/4th's of my portfolio in FTP at the time (had some cash, BRK and BAC warrants), the obvious catalyst for this break from active investing came with another very disappointing quarter for FTP. While I had already lowered my activity the months before, it felt like the perfect time to take some time off. I officialy started working after graduating last fall and have also been very busy in my social life (and a project I'm slowly working on) which left me with limited time to spend.

 

I didn't deactive the blog (I couldn't put it offline (temporary?) without deleting the content?) so I stored it on another URL for safe-keeping. At some point I might restart it again but I feel that it takes a lot of effort for little return. Only a few of my Dutch-speaking readers had a decent understanding of the subject. Aside from that my experience is low and my writing skills were average at best. Ever the critic? Idk..

 

Taking a step back and just looking at the market (and twitter, this great forum, ...) once in a while puts things in another perspective. I can both focus on my work and social life AND stay rational about my investments and the market. Oh, while I have lost a decent amount of money with FTP so far, my life has rarely been better! So no worries guys, I'm doing great.  :D

 

On-topic:

I haven't bought more FTP after the big drop but obviously didn't sell either. It's dirt cheap IF they do only half of what they promised but at some point enough is enough. The recent run-up followed by the announced delay for the co-gen project wasn't a big surprise to me really. If it all does turn out ok, I'll probably get a decent return anyway in a few years. Disappointment comes from high expectations and at this point I banned all of them out of my mind concerning FTP. We'll see how it pans out.

 

Atm I hold 25-30% cash (small portfolio vs first paychecks at steady job help a lot! ;)). I don't see anything I really like at this point and was surprised that no one else was saying anything about market valuation/cash levels here in these last few months before the "How much are you allocated in cash?"-topic. In general, it seems like people were equally bearish at S&P500 @ 1200 points! Even BRK isn't really that compelling anymore after it's run-up. One of my last posts in November was about how undervalued BRK was compared to the market if I'm not mistaken. That is still the case but I prefer I decent cash level now. But it's one of the few things I would consider if it dropped 10-15% from here. The same goes for LUK and FFH. I would have to do more d.d. in other names to get comfortable with them at this point.

Buying BAC at $5 and BRK under $70 was easy compared to this market if you ask me. Occasionally buying and keeping enough cash is probably the way to go for me at this point.

[Liberty]

Tembec update:

 

http://www.woodbusiness.ca/industry-news/tembec-reports-q4-loss

[Liberty]

Hey all! I got a PM from triedtestedand last weekend telling me you guys missed me, so here I am. =)

 

 

Hey, good to hear from you! Thanks for the update, glad you are doing well.

 

I've slowed down a bit my online activities too because there are so many of my positions that are low maintenance, I just have to wait for them to work out or not. I have a lot of FTP, EGD, BAC.WS.A, AIG.WS, etc, and all of them are multi-year investments for me. I've been adding some AIG warrants recently, but that's about it. Trying to keep my level of activity low and let time do its work.

 

Anyway, hope you'll keep posting here, even if sporadically!

 

Cheers.