giofranchi Posted August 4, 2013 Share Posted August 4, 2013 I don’t follow ALSK, so forgive me if my questions have already been answered! Reading some of these posts I have understood that ALSK is in a turnaround and that management is doing an excellent job. As always, I am intrigued by a great management with a sound strategic view! So, I would like to know: 1) What’s their track-record? I know they have started just a little more than 2 years ago at ALSK, but what had they accomplished before? (Mr. Brindle, for instance, before founding Lancashire, had sustained a track record of 19% ROE for more than 15 years at the helm of Syndicate 488, which grew to be among the largest syndicates at Lloyd’s. Can something similar be said about Mr. Vadapalli or Mr. Graham?) 2) How much of the company is owned by the management who has engineered the turnaround? Thank you, :) giofranchi Packer, do you know something more about management, other than what can be found on ALSK’s website? Thank you very much, :) giofranchi Link to comment Share on other sites More sharing options...
tombgrt Posted August 8, 2013 Share Posted August 8, 2013 I'm contemplating selling half my second buy. That would be 20% of my total position and 7% of my portfolio (yes it's that big now...). That second part is at 60% gain and average I'm very close to a double. On the other hand, why wouldn't you let your winners run? It has some fair runway to a lowball estimate of IV imo. Link to comment Share on other sites More sharing options...
Packer16 Posted August 11, 2013 Author Share Posted August 11, 2013 I don't know more about ALSK management but I do know more about GNCMA's managements, which is influenced by John Malone. See General Communication (GNCMA) thread. Packer Link to comment Share on other sites More sharing options...
alertmeipp Posted August 11, 2013 Share Posted August 11, 2013 I'm contemplating selling half my second buy. That would be 20% of my total position and 7% of my portfolio (yes it's that big now...). That second part is at 60% gain and average I'm very close to a double. On the other hand, why wouldn't you let your winners run? It has some fair runway to a lowball estimate of IV imo. Nice YTD right there, congrats! Link to comment Share on other sites More sharing options...
Packer16 Posted August 12, 2013 Author Share Posted August 12, 2013 I have swithced about 50% of my ALSK to GNCMA. Same exposure, better assets selling for about the same price. Packer Link to comment Share on other sites More sharing options...
tombgrt Posted August 12, 2013 Share Posted August 12, 2013 Nice. By coincidence I just sold 25% at $3.83. Haven't redeployed it yet. Link to comment Share on other sites More sharing options...
ok22 Posted August 14, 2013 Share Posted August 14, 2013 I have swithced about 50% of my ALSK to GNCMA. Same exposure, better assets selling for about the same price. Packer Packer: I get the better assets and same exposure part of your comment. But cannot fathom how you get to same price/valuation. GNCMA is using most of its cash from operations as capes so FCF is low. Their ROIC on this deployment is low single digits so far. And they are exposed to similar market size and competition risk I think? What is the logic/numbers that lead to you conclude same price on GNCMA and hence redeploy? I am sure you are right given that you know these companies and space an infinitesimal times better than me. But would appreciate some more meat and data around your comment/conclusion since I for one cannot fathom how GNCMA and ALSK valuation is "same price" right now. What do you think GNCMA is worth? Vs. what do you think ALSK is worth? Thanks. ok 22. Link to comment Share on other sites More sharing options...
Packer16 Posted August 14, 2013 Author Share Posted August 14, 2013 ALSK is in a different place than GNCMA. GNCMA is in investing in its network. To get an idea of the return you need to look at CFO of CFO - normalized Cap Ex. For ALSK CFO has been flat with cap ex about 15% of revenue (call that maintenance cap ex). For the TTM ALSK is going to generate 36m in FCF before the AWN transaction. The transaction will add at a minimum ALSK's portion of the AWN synergies or $10m so the total will be $46m. So the FCF multiple will be 3.7x for a slow growth situation. The normalized EBITDA multiple is close to 4.5x. For GNCMA, you have CFO-normalized Cap Ex (15% of revs) of $65m plus 2/3rds of AWN synergies gets you $85m or a FCF multiple of 4.6x. The normalized EBITDA multiple is 4.6x. With GNCMA you also get growth of CFO about 27% per year over the past 5 years (or $67m). To get this growth. GNCMA had to invest $462 m of growth cap-ex (cap-ex - maintenance cap ex) for an incremental RoI of 14.5%. The key assumption behind both of these derivations is the loss from VZ entering the market will be offset by revenue gains in broadband sales. Clearly, GNCMA is in a better position to do this. So given these multiples, ALSK is cheaper but has less growth than GNCMA and at these prices I slightly favor GNCMA. Packer Link to comment Share on other sites More sharing options...
tombgrt Posted August 15, 2013 Share Posted August 15, 2013 Thanks for that last post Packer, much appreciated. Decided today to sell another 25% of my position at $3.65. The rest of my position is almost pure profit and I'll just let it run. Prefer at least some cash or say some LRE (if my order gets hit that is). Still have plenty of portfolio upside if ALSK would suddenly jump to $5+, which I think will take some time. If not, even better. Link to comment Share on other sites More sharing options...
tombgrt Posted August 20, 2013 Share Posted August 20, 2013 Quite the drop yesterday in telecoms. Had a new order in for $2.85 for alsk but I guess we can't always be lucky.. :) Link to comment Share on other sites More sharing options...
ok22 Posted August 28, 2013 Share Posted August 28, 2013 Back up the truck time on ALSK? Link to comment Share on other sites More sharing options...
bookie71 Posted August 28, 2013 Share Posted August 28, 2013 Be sure that you have factored in the fact that Verison is coming to town and is building towers all over their area. Link to comment Share on other sites More sharing options...
ok22 Posted August 28, 2013 Share Posted August 28, 2013 bookie71 how much revenue and EBITDA do you think is at risk from VZ entry? how much backhaul revenue upside is there from VZ entry? Link to comment Share on other sites More sharing options...
tombgrt Posted August 28, 2013 Share Posted August 28, 2013 Today I bought back 65% (in shares) of what I sold earlier at $3.65-3.83. Couldn't resist and the cash was just sitting here. Also bought some GNCMA a few days ago. Link to comment Share on other sites More sharing options...
ok22 Posted August 28, 2013 Share Posted August 28, 2013 tombgrt: Care to share your valuation and thesis for ALSK? What is your reason for buying back? Link to comment Share on other sites More sharing options...
tombgrt Posted August 28, 2013 Share Posted August 28, 2013 Most if not all has been said here before. In the last few Q's ALSK turnaround became reality. Debt deleveraging, broadband, good asset base to compete (I think the threat from VZ isn't insurmountable), ... I believe the stock was still cheap when I sold but the upside of course was a lot lower. Now it's maybe almost double what i was at $3.90 if you believe ALSK is worth anywhere near $300M. I mainly wanted to cut back on the size of the position and lock in some profits when I sold (no taxes on gains here btw). Link to comment Share on other sites More sharing options...
bookie71 Posted August 28, 2013 Share Posted August 28, 2013 I have no idea although I think I read that they have about 1/3 of US business and are tops in satisfaction. I know I will be considering switching. At Rotary last week a friend commented that he had found someone worse and dummer than GCI, ACS. Link to comment Share on other sites More sharing options...
ok22 Posted August 28, 2013 Share Posted August 28, 2013 Bookie 71: did not fully understand the comment from your friend at Rotary. Could you expand upon what he meant and was referring to. Thanks. Link to comment Share on other sites More sharing options...
bookie71 Posted August 28, 2013 Share Posted August 28, 2013 He meant that they are totally inept. He is a super intelligent (Mensa type) who writes a tremendous amount of bank and credit union software. A lot like those folks in the smart discussion except he has social skills, but no financial skills or he would be extremely wealthy. Link to comment Share on other sites More sharing options...
ok22 Posted September 3, 2013 Share Posted September 3, 2013 http://www.sec.gov/Archives/edgar/data/1089511/000115752313004303/a50699956.htm Hmmm... Not sure how to think about this convert buy back through issuing shares. What is the logic with buying such a small amount of the notes? And how to think about the impact on the stock price of the effective $3.58 conversion price price paid. Is this good or bad for ALSK's stock price? What if they do this for a significant amount of the remaining $117.5m of notes? What price would they have to pay to convert all of it? And what would the stock price and valuation impact be? Not sure I see the logic here behind this move. All thoughts and opinions much appreciated. Thanks. ok22 Link to comment Share on other sites More sharing options...
Guest wellmont Posted September 3, 2013 Share Posted September 3, 2013 it's a debt for equity exchange. this move tells me that they don't think the bonds will ever be converted to equity by 2018 @ $10.28. So with the stock up this year they are using it to deleverage the balance sheet. they are being proactive because,depending on credit market conditions, they don't want to have to come up with $120m in a bad environment, to pay them off in 2018. it's possible they could do more of these. I see it as a negative short term for the stock and neutral to positive long term for the stock. Link to comment Share on other sites More sharing options...
Packer16 Posted September 3, 2013 Author Share Posted September 3, 2013 I see it as a LT positive because it provides them more flexibility with respect to returning cash flow to shareholders once they receive more of the preferred distributions. It will lower upside due to smaller amount of leverage but I think the value of the flexibility is higher. Packet Link to comment Share on other sites More sharing options...
ok22 Posted September 3, 2013 Share Posted September 3, 2013 I re-read the various SEC filings and presentations on ALSK on the transaction and their recent earnings and earnings projections etc. Also re-read most of this thread. Couple of things that struck me and have me concerned/confused are: 1. ALSK is projecting $25m and then $15 m of Free Cash Flow (they define it as EBITDA-Interest Expense-Capex) for 2013 and 2014. 2. They INCLUDE the preferred distribution in their annual EBITDA forecast calculation. I was counting that as in addition to the projections in 1. above 3. This makes we think that at most they can pay down debt by 25m and 15m in the next 2 years. This is much lower than my original estimates. And there is no room for dividend reinstatement/buy backs or any other return of cash return to shareholders. 4. Even if you add in $10m to EBITDA to normalize for lower future capex, cash available for debt pay down is lower than my original estimates based on the INCLUSION in point 2. above 5. Dilution of shares is an issue with the signaling from the recent small convert action. If they believed in great Cash generation between now and 2018, they should just wait to take it out at higher prices. A worrying sign. 6. Thinking my valuation was too optimistic here and considering accepting my losses, licking the wound and moving on. Someone please convince me otherwise. Looking for reasons to hold the stock and ignore the paper losses. But having trouble with what this company is actually worth. If Free Cash Flow is in the $25m-$35m annual range for the next 5 years, the stock seems expensive at these prices. The big double in price seems like a "oh, they are not going bankrupt" and late buyers (suckers?) like me buying in the $3.50's. Help! ok22 Link to comment Share on other sites More sharing options...
Guest wellmont Posted September 3, 2013 Share Posted September 3, 2013 the people that got the shares from the convert are selling them. or covering their shorts. the signal, however, is there is going to be more supply of shares than there was before. this could cause people to front run the swaps and sell the shares. Link to comment Share on other sites More sharing options...
tombgrt Posted September 3, 2013 Share Posted September 3, 2013 Correct wellmont. I got lucky again with this stock (relatively since i still hold a 15÷ position.) Upon reading the news i sold the last week bought portion again at $3.03. Wouldnt be surprised if this went lower because of the added pressure. I disagree with ok22 and dont see this as expensive. Debt repayment will be higher. Link to comment Share on other sites More sharing options...
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