rogermunibond Posted February 27, 2015 Share Posted February 27, 2015 With Docsis 3.0/3.1 there's really no need for TWC to build out FTTH, they might lay fiber back haul but that's another story. Part of the attraction to CHTR and LBTYA to someone like John Malone is precisely the point that technology has made copper coax competitive with fiber for most residential users. Link to comment Share on other sites More sharing options...
Scorps Posted April 15, 2015 Share Posted April 15, 2015 Hi Packer, I was wondering if you have a position in CTCM and what you think of it at these levels? Thanks! Link to comment Share on other sites More sharing options...
Packer16 Posted April 17, 2015 Share Posted April 17, 2015 CTCM is interesting but risky given the fact that a new media restricts foreign ownership of Russian media companies to 20%. If they can figure out how to get around this then it will be a good investment. However recently I have heard some comments that management may be looking to take the company private, not a good scenario so today this is too risky for me. If you like Russian media/telecom you may want to look at MBT. Packer Link to comment Share on other sites More sharing options...
Scorps Posted April 17, 2015 Share Posted April 17, 2015 Thanks Packer! Link to comment Share on other sites More sharing options...
RhubarbXIV Posted April 17, 2015 Share Posted April 17, 2015 CTCM is interesting but risky given the fact that a new media restricts foreign ownership of Russian media companies to 20%. If they can figure out how to get around this then it will be a good investment. However recently I have heard some comments that management may be looking to take the company private, not a good scenario so today this is too risky for me. If you like Russian media/telecom you may want to look at MBT. Packer Packer, Two questions: 1. Where did you hear about management looking to go private? I saw they engaged UBS as adviser, but not much else on the topic. 2. How do risky is the prospect of a takeunder, really, given today's valuation? Disclosure: My fund is long CTCM Link to comment Share on other sites More sharing options...
Poor Charlie Posted April 17, 2015 Share Posted April 17, 2015 I think CTC is one of the most interesting ideas for larger (non-microcap) companies today. It is a hairy idea with a large amount of uncertainty but I see enough risk/reward for a 5% position. Assuming $75m in balance sheet cash and $100m in free cash generation between now and the deadline gets you 25% of the current market cap. In theory if they are going to get shut down they could also runoff/sell their programming inventory and their non-Russian assets which gets you over 50% of the market cap. There are of course liabilities against that and I realize things are never this simple, especially in Russia, but some combination of a liquidation/sale ($200m cash + sale at 2.5X EBITDA = current MC) gets you a decent recovery on the downside. On the upside this is VERY cheap and they could either (a) sell it for a reasonable price or (b) continue to operate it if the 20% law gets repealed or they find a workaround. I don’t believe a full out expropriation is in the cards otherwise it would have been done already. IMO downside is $2 and upside is $12 against current price of low 4s. I should note that I would not be in this if MTG was not in the same boat as me. They have demonstrated/stated that they will act in the best interests of all owners and they have a good amount of money at stake. Feel free to comment Link to comment Share on other sites More sharing options...
Packer16 Posted April 17, 2015 Share Posted April 17, 2015 I agree it is cheap. However, there was an Apr 1, 2015 story by Bloomberg who spoke to CTC Media's founder. His opinion was the most reasonable solution was for the company to go to private via delisting and has was investigating investment into the new private company. The company may structure around this but it appears there is one plan to take the company private and if you look at the IB target prices for CTC they are not much higher than the current stock price so CTC could obtain a fairness opinion to do this transaction with little upside for the current shareholders. I am curious if you know of any plans MTG has for this and do you think MTG would fight for minority shareholders if they were given an opportunity to invest in the new private co? Packer Link to comment Share on other sites More sharing options...
Poor Charlie Posted April 17, 2015 Share Posted April 17, 2015 I agree it is cheap. However, there was an Apr 1, 2015 story by Bloomberg who spoke to CTC Media's founder. His opinion was the most reasonable solution was for the company to go to private via delisting and has was investigating investment into the new private company. The company may structure around this but it appears there is one plan to take the company private and if you look at the IB target prices for CTC they are not much higher than the current stock price so CTC could obtain a fairness opinion to do this transaction with little upside for the current shareholders. I am curious if you know of any plans MTG has for this and do you think MTG would fight for minority shareholders if they were given an opportunity to invest in the new private co? Packer I vaguely remember hearing about the founder saying something to that effect (if you have the article would you mind posting it) but my understanding is that he is non-Russian. I don’t think MTG would sign up for this given it would mean they would have to divide up the 20% which would cut MTG’s stake meaningfully. IMO a 10% (or thereabouts) stake in the new entity would not be worth it given that (a) they would be junior to a Russian partner who has demonstrated they are willing to screw their partners and (b) they would face legal / reputational issues irrespective of the fairness opinion. I think the most likely suitor would be a Russian oligarch who tries to buy the company or take control via a buyout of MTG’s 39%. MTG was already approached by Kovalchuk (Bank Rossiya / Gazprom Media) to buyout their 39% but they said no. This, along with the hiring of Tsukanova, speaks to their commitment to find the best deal for all shareholders. Link to comment Share on other sites More sharing options...
DavidVY Posted May 4, 2015 Share Posted May 4, 2015 What do you think of Qualcomm? Is the Samsung issue overhyped? Seems like Samsung's chips arent performing as well as Qualcomms. Koreans are fiercely nationalistic (remember korean cola? lol), so is this a temporary issue or a long-term structural issue for qualcomm Link to comment Share on other sites More sharing options...
Packer16 Posted May 6, 2015 Share Posted May 6, 2015 I don't follow QCOM so I can't provide any intelligent comment. It is too large (market cap) for me at this point. Packer Link to comment Share on other sites More sharing options...
Eye4Valu Posted May 6, 2015 Share Posted May 6, 2015 Packer: In your opinion, which security (e.g. individual stock) offers the best risk-reward proposition in the market today? Why? Link to comment Share on other sites More sharing options...
Packer16 Posted May 7, 2015 Share Posted May 7, 2015 Probably either Emeco, Intralot or Taeyoung E&C Preferreds. The details are on the subject threads. Packer Link to comment Share on other sites More sharing options...
Eye4Valu Posted May 7, 2015 Share Posted May 7, 2015 Thanks! Will check those out. Link to comment Share on other sites More sharing options...
tombgrt Posted May 8, 2015 Share Posted May 8, 2015 Thanks Packer. I'm somewhat surprised by your strong interest in Emeco. Like most of your positions, it's heavily debt leveraged which offers the potential of big gains. It also has strong operational leverage if conditions change for the better. The bull case seems to revolve exactly around the industry turning and improving again. My question is, how do you get comfortable with this uncertainty? Debt leverage is great for high equity returns when you have very stable and predictable EBITDA/FCF but with commodity related businesses, it's basically a double edged sword. Where would you expect EBITDA to land for Emeco in a few years if things improved? Or do you simply see it as a play on commodities where you just have to wait and see if and when it pays off? I can see it being a serious multi-bagger but I assume you also have to be comfortable with the chance of losing most/all of your capital if the recovery doesn't materialize. The recent Rentco acquisition (currently still hanging) is also a bit odd and should show the uncertainty of management towards the future. Foolish or a smart way to hedge further industry pain? Link to comment Share on other sites More sharing options...
Packer16 Posted May 8, 2015 Share Posted May 8, 2015 Of the 3 companies Emeco has the most uncertainty but that is where sometimes the greatest gains come from. I am down about 50% in the position today but with activism of Black Crane I feel the shareholders will be given a fair shake in any recovery. They have deferred the Rentco acquisition twice and are now in discussion with Orion for horizontal acquisition in the equipment rental space. If the Orion merger takes place then the potential is there for some additional upside. Businesses like this in the US trade at much higher multiples (8x EBITDA for United Rentals) so the upside potential is there. With Orion acquisition you have a potential catalyst to unlock the value. We will see. One caution, Emeco's debt trades in the 70s, so this is an exception (which I may regret) to my rule of buying the equity of firms whose debt trades at a significant discount to par. Packer Link to comment Share on other sites More sharing options...
tombgrt Posted May 8, 2015 Share Posted May 8, 2015 Hey Packer, thank you for the quick reply! Will look into it a bit more. Link to comment Share on other sites More sharing options...
Homestead31 Posted May 10, 2015 Share Posted May 10, 2015 Packer - how do you think about unrealized losses? i believe you were down 50% in intralot at one point too. do you sell for tax losses ever? what are your thoughts on maintaining your conviction in the face of a market that disagrees with you? how often do you check your portfolio? do you just not check prices so you can ignore the volatility, or do you just have the emotional ability to sit through the short time unrealized losses? i know pabrai has said he won't sell for at least 2 years no matter what if the quality of the business has not been degraded. how do you feel about that? any other thoughts appreciated as well! thanks Link to comment Share on other sites More sharing options...
Packer16 Posted May 11, 2015 Share Posted May 11, 2015 Since most of money is in retirement accounts, I do not do tax loss selling but that is a good idea. In terms of conviction, I recheck my thesis and valuation and pretty much follow the Pabrai rule of not selling until after at least 2 years if the valuation has not changed. The cases I have sold, the valuation has changed or I have found another stock that has higher appreciation potential. I do a portfolio check every week and recalc valuations. In most of the stocks that have had significant appreciation, the stock has declined after I bought it. I focus on the valuation number not the price as my anchor in the investment seas. Packer Link to comment Share on other sites More sharing options...
plato1976 Posted May 15, 2015 Share Posted May 15, 2015 Hi Packer, Do you think AIQ at 20 a buy as attractive as Intralot b/c it's in the U.S.? Of the 3 companies Emeco has the most uncertainty but that is where sometimes the greatest gains come from. I am down about 50% in the position today but with activism of Black Crane I feel the shareholders will be given a fair shake in any recovery. They have deferred the Rentco acquisition twice and are now in discussion with Orion for horizontal acquisition in the equipment rental space. If the Orion merger takes place then the potential is there for some additional upside. Businesses like this in the US trade at much higher multiples (8x EBITDA for United Rentals) so the upside potential is there. With Orion acquisition you have a potential catalyst to unlock the value. We will see. One caution, Emeco's debt trades in the 70s, so this is an exception (which I may regret) to my rule of buying the equity of firms whose debt trades at a significant discount to par. Packer Link to comment Share on other sites More sharing options...
Phaceliacapital Posted May 18, 2015 Share Posted May 18, 2015 Regarding your rule of buying equity where debt trades significantly below par, any opinion on Intelsat? Leveraged at 7.5x EBITDA but nearly all bonds are trading at or even above par. Link to comment Share on other sites More sharing options...
Packer16 Posted May 18, 2015 Share Posted May 18, 2015 AIQ and Interlot are both attractive with Intralot having more upside and risk due to Greek and EM exposure. I looks interesting. I will take a look. Thanks. Packer Link to comment Share on other sites More sharing options...
Phaceliacapital Posted May 18, 2015 Share Posted May 18, 2015 There's a not so old writeup on VIC in case you're interested. I think it's striking that bonds are trading at these levels with such a leverage. Link to comment Share on other sites More sharing options...
ageofsocrates Posted May 18, 2015 Share Posted May 18, 2015 Hi Packer, Just had a quick question to ask related to valuation. In the earlier posts, you mentioned using enterprise value to ebitda to screen stocks. Why not use enterprise value to free cash flow instead? does this strategy screen poorly? Link to comment Share on other sites More sharing options...
one-foot-hurdles Posted May 19, 2015 Share Posted May 19, 2015 Regarding your rule of buying equity where debt trades significantly below par, any opinion on Intelsat? Leveraged at 7.5x EBITDA but nearly all bonds are trading at or even above par. Just started looking at this one, down 7% today Link to comment Share on other sites More sharing options...
ageofsocrates Posted May 22, 2015 Share Posted May 22, 2015 Hi Packer, Just had a quick question to ask related to valuation. In the earlier posts, you mentioned using enterprise value to ebitda to screen stocks. Why not use enterprise value to free cash flow instead? does this strategy screen poorly? Hi Packer, just to add in to my question. Any filters do you use when identifying companies and how do you normalize earnings? Link to comment Share on other sites More sharing options...
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