ZINC - Horsehead Holding Corp

[karthikpm]

Pabrai's picks are all getting killed! ZINC was clearly a bet on the new project , else it was a very poor commodity play .

[valueyoda]

Again, it reminds me of a question I asked several months ago, when the stock was still in the middle teens, how many people on this page would even talk about ZINC if Pabrai wasn't around. The Halo Effect (a great book bytheway) is very strong with this stock. Very much the same is going on with Posco at the moment. History has shown us, especially in the last few years with regard to commodity price dependent companies how far stock prices can drop when there are secular headwinds combined with operational issues. I almost fell for the same trap recently with Constellium (CSTM), a pick by Meredith Witmer a few years ago in Barron's.

[abyli]

Investing Rule #1: buy company that we could understand. If we do not understand the business, how can we valuate the company?

 

It took me many years to get it. To understand a company is first to understand the company's business model,  how the company makes money. Then I checked many famous funds' annual/quarterly reports, I realized most of them did not understand what they were talking about...

[krazeenyc]

I don't own any ZINC.

 

But...

 

The business is very easy to understand -- create Zinc -- sell it.

It's a commodity business -- but my guess is that only a smallish portion of the decline from ~$14 - $9.50 is due to the 10% drop in Zinc prices.

 

What has kept me on the sidelines is I have absolutely no advantage in understanding the challenges of producing Zinc in the manner in which they are doing with scale. Sure, theoretically they should be the low cost provider and the chemistry makes sense. But, from a casual observer, it looks like they're running into a lot of unforeseen "startup" issues that a lot of companies embarking on new things run into. The other issue is, let's say they are able to solve their current problems in a year or two -- what kind of valuation should they trade at? Does that give us enough upside given the operational risks.

[abyli]

Quote Buffett again, I guess all commodity stocks are like that, need some really good luck to make money.

 

"Our failure here illustrates the importance of a guideline – stay with simple propositions – that we usually apply in investments as well as operations. If only one variable is key to a decision, and the variable has a 90% chance of going your way, the chance for a successful outcome is obviously 90%. But if ten independent variables need to break favorably for a successful result, and each has a 90% probability of success, the likelihood of having a winner is only 35%. In our zinc venture, we solved most of the problems. But one proved intractable, and that was one too many. Since a chain is no stronger than its weakest link, it makes sense to look for – if you’ll excuse an oxymoron – mono-linked chains."

[Liberty]

The business is very easy to understand -- create Zinc -- sell it.

It's a commodity business -- but my guess is that only a smallish portion of the decline from ~$14 - $9.50 is due to the 10% drop in Zinc prices.

 

The business isn't just the physical activity of making something and selling it. What makes a business like ZINC complex, IMO, are things like the operating leverage that comes from having expensive plants and equipment (high fixed costs, it cuts both ways), the fact that where the commodity trades has a huge impact on financial results yet management has no ability to do anything about that, and that cycles can be longer or shorter than expected (making the use of any debt dangerous), the fact that a lot can go wrong when building and ramping up a new plant (believe me, I know), the long lead times for this means that by the time production comes on-line, the assumptions you used to value the business might be very different, etc.

[mateo999]

Again, it reminds me of a question I asked several months ago, when the stock was still in the middle teens, how many people on this page would even talk about ZINC if Pabrai wasn't around. The Halo Effect (a great book bytheway) is very strong with this stock. Very much the same is going on with Posco at the moment. History has shown us, especially in the last few years with regard to commodity price dependent companies how far stock prices can drop when there are secular headwinds combined with operational issues. I almost fell for the same trap recently with Constellium (CSTM), a pick by Meredith Witmer a few years ago in Barron's.

 

I absolutely hear what you're saying.  I do think there's a bit of the halo effect, but also notice this is an easy-to-identify investment framework.  Namely chapter 5 of Common Stocks and Uncommon Profits, written in 1958 by Phil Fisher, entitled "When to Buy".

 

"The point in the development of a new process that is perhaps worth the closest scrutiny from the standpoint of timing the buying of common stocks is that at which the first full-scale commercial plant is about to begin production.  In a new plant for even established processes or products, there will probably be a shake-down period of six to eight weeks that will prove rather expensive.  It takes this long to get the equipment adjusted to the required operating efficiency and to weed out the inevitable "bugs" that seem to occur in breaking in modern intricate machinery.  When the process is really revolutionary, this expensive shake-down period may extend far beyond the estimate of even the most pessimistic company engineer.  Furthermore, when problems finally do get solved, the weary stockholder still cannot look forward to immediate profits.  There are more months of still further drain while even more of the company's profits from older lines are being ploughed back into special sales and advertising efforts to get the new product accepted."

 

a few paragraphs later:

 

"Then when month after month difficulties crop up in getting the commercial plant started, these unexpected expenses cause per-share earnings to dip noticeably.  Word spreads that the plant is in trouble.  Nobody can guarantee when, if ever, the problems will be solved.  The former eager buyers of the stock become discouraged sellers.  Down goes the price of the stock.  The longer the shake-down lasts, the more market quotations sag.  At last comes the good news that the plant is finally running smoothly.  A two-day rally occurs in the price of the stock.  However in the following quarter when special sales expenses have caused a still further sag in net income, the stock falls to the lowest price in years.  Word passes all through the financial community that the management has blundered.  At this point the stock might well prove a sensational buy."

[Haasje]

I think it is a little dangerous to engage in a lot of results oriented thinking like what is going on with ZINC now. The upstart-problems continuing are obviously a very unpleasant problem. I would prefer to ride my stocks up only. However, the core thesis remains intact. Competitive advantage due to the company having tied up the U.S. EAF-dust supply with long term contracts. That competitive advantage should be good for the next decades.. As much as I hate the looong ramp up time and the stock price decline I do not think it reflects badly on the investment thesis. I added some today, talking about the HALO effect; Guy Spier did so as well recently. 

 

 

[RadMan24]

Again, it reminds me of a question I asked several months ago, when the stock was still in the middle teens, how many people on this page would even talk about ZINC if Pabrai wasn't around. The Halo Effect (a great book bytheway) is very strong with this stock. Very much the same is going on with Posco at the moment. History has shown us, especially in the last few years with regard to commodity price dependent companies how far stock prices can drop when there are secular headwinds combined with operational issues. I almost fell for the same trap recently with Constellium (CSTM), a pick by Meredith Witmer a few years ago in Barron's.

 

I absolutely hear what you're saying.  I do think there's a bit of the halo effect, but also notice this is an easy-to-identify investment framework.  Namely chapter 5 of Common Stocks and Uncommon Profits, written in 1958 by Phil Fisher, entitled "When to Buy".

 

"The point in the development of a new process that is perhaps worth the closest scrutiny from the standpoint of timing the buying of common stocks is that at which the first full-scale commercial plant is about to begin production.  In a new plant for even established processes or products, there will probably be a shake-down period of six to eight weeks that will prove rather expensive.  It takes this long to get the equipment adjusted to the required operating efficiency and to weed out the inevitable "bugs" that seem to occur in breaking in modern intricate machinery.  When the process is really revolutionary, this expensive shake-down period may extend far beyond the estimate of even the most pessimistic company engineer.  Furthermore, when problems finally do get solved, the weary stockholder still cannot look forward to immediate profits.  There are more months of still further drain while even more of the company's profits from older lines are being ploughed back into special sales and advertising efforts to get the new product accepted."

 

a few paragraphs later:

 

"Then when month after month difficulties crop up in getting the commercial plant started, these unexpected expenses cause per-share earnings to dip noticeably.  Word spreads that the plant is in trouble.  Nobody can guarantee when, if ever, the problems will be solved.  The former eager buyers of the stock become discouraged sellers.  Down goes the price of the stock.  The longer the shake-down lasts, the more market quotations sag.  At last comes the good news that the plant is finally running smoothly.  A two-day rally occurs in the price of the stock.  However in the following quarter when special sales expenses have caused a still further sag in net income, the stock falls to the lowest price in years.  Word passes all through the financial community that the management has blundered.  At this point the stock might well prove a sensational buy."

 

Thank you for posting this, I couldn't remember if it was Graham or Fisher who wrote it. The "Halo" effect could be real, but didn't Pabrai buy at much lower levels? I mean when a super investor buys something at $5-8 range and it trades around mid teens, I would expect one to be cautious about their expected returns. 

[Homestead31]

Pabrai started his position much lower, but also added to it at the $14 level (pre - dilution from recent equity raise).

 

there is massive uncertainty here, but it seems likely that eventually they will get this plant running.  IRRs are obviously affected by time, but value is less affected.  it is difficult to say how this will work out, and if they will need to raise more capital in the interim.  As i see it, at these prices you can factor in a capital raise and still see upside.

[tombgrt]

The business is very easy to understand -- create Zinc -- sell it.

It's a commodity business -- but my guess is that only a smallish portion of the decline from ~$14 - $9.50 is due to the 10% drop in Zinc prices.

 

The business isn't just the physical activity of making something and selling it. What makes a business like ZINC complex, IMO, are things like the operating leverage that comes from having expensive plants and equipment (high fixed costs, it cuts both ways), the fact that where the commodity trades has a huge impact on financial results yet management has no ability to do anything about that, and that cycles can be longer or shorter than expected (making the use of any debt dangerous), the fact that a lot can go wrong when building and ramping up a new plant (believe me, I know), the long lead times for this means that by the time production comes on-line, the assumptions you used to value the business might be very different, etc.

 

Lessons learned bro, lessons learned...  ;)

 

Again, it reminds me of a question I asked several months ago, when the stock was still in the middle teens, how many people on this page would even talk about ZINC if Pabrai wasn't around. The Halo Effect (a great book bytheway) is very strong with this stock. Very much the same is going on with Posco at the moment. History has shown us, especially in the last few years with regard to commodity price dependent companies how far stock prices can drop when there are secular headwinds combined with operational issues. I almost fell for the same trap recently with Constellium (CSTM), a pick by Meredith Witmer a few years ago in Barron's.

 

I absolutely hear what you're saying.  I do think there's a bit of the halo effect, but also notice this is an easy-to-identify investment framework.  Namely chapter 5 of Common Stocks and Uncommon Profits, written in 1958 by Phil Fisher, entitled "When to Buy".

 

"The point in the development of a new process that is perhaps worth the closest scrutiny from the standpoint of timing the buying of common stocks is that at which the first full-scale commercial plant is about to begin production.  In a new plant for even established processes or products, there will probably be a shake-down period of six to eight weeks that will prove rather expensive.  It takes this long to get the equipment adjusted to the required operating efficiency and to weed out the inevitable "bugs" that seem to occur in breaking in modern intricate machinery.  When the process is really revolutionary, this expensive shake-down period may extend far beyond the estimate of even the most pessimistic company engineer.  Furthermore, when problems finally do get solved, the weary stockholder still cannot look forward to immediate profits.  There are more months of still further drain while even more of the company's profits from older lines are being ploughed back into special sales and advertising efforts to get the new product accepted."

 

a few paragraphs later:

 

"Then when month after month difficulties crop up in getting the commercial plant started, these unexpected expenses cause per-share earnings to dip noticeably.  Word spreads that the plant is in trouble.  Nobody can guarantee when, if ever, the problems will be solved.  The former eager buyers of the stock become discouraged sellers.  Down goes the price of the stock.  The longer the shake-down lasts, the more market quotations sag.  At last comes the good news that the plant is finally running smoothly.  A two-day rally occurs in the price of the stock.  However in the following quarter when special sales expenses have caused a still further sag in net income, the stock falls to the lowest price in years.  Word passes all through the financial community that the management has blundered.  At this point the stock might well prove a sensational buy."

 

Yeah that might all be true in some cases but it's also incredibly helpful to develop confirmation bias. The above is just a good story and your specific company can go that way or it cannot. There are a lot of good books on investing but it's those that are filled with redundant stories like these that I dislike somewhat. Reminds me of "One up on Wall Street" by Peter Lynch and others. Good stories in them but little of fundamental or scientifically based value that actually helps your process along imo. This just off-topic...

 

Pabrai started his position much lower, but also added to it at the $14 level (pre - dilution from recent equity raise).

 

 

Aside from the fact that he added:

 

How is it relevant at which point he bought if he didn't sell in the mid teens? If he didn't sell back then at $14 and held on, he was basically saying it's is good value at that point, especially for a value investor. Holding in reality is "buying the stock at that certain point". His losses also aren't less real or serious from the mid teens until now because he had a lower cost basis.

[rishig]

May be I am missing something basic, but in my opinion, ZINC is not cheap even if it reaches the 75% utilization projected.

 

Share price: $9.54

Shares outstanding: 52m

Market Value: $496m

Net debt (as of 03/15): $330m

Enterprise value: $826m

 

Projected EBITDA at 75% utilization: $90m

EV / projected EBITDA: 9x

 

Is EV / projected EBITDA 9x really the cheapest low cost commodity producer of a commodity out there today? I doubt it. But correct me if I am wrong.

[jawn619]

May be I am missing something basic, but in my opinion, ZINC is not cheap even if it reaches the 75% utilization projected.

 

Share price: $9.54

Shares outstanding: 52m

Market Value: $496m

Net debt (as of 03/15): $330m

Enterprise value: $826m

 

Projected EBITDA at 75% utilization: $90m

EV / projected EBITDA: 9x

 

Is EV / projected EBITDA 9x really the cheapest low cost commodity producer of a commodity out there today? I doubt it. But correct me if I am wrong.

 

+1

 

I believe a lot of people, myself included got into this to clone Pabrai. I got out a couple of months ago and If you look at the actual numbers of the company I think you are correct and this looks like the opposite of what Pabrai preaches. This looks like low upside, high downside given the uncertainties with the ramp of the plant. This was an important learning experience for me to note that great marketing does not translate to good investing and that blindly following others is a recipe for pain.

[racemize]

May be I am missing something basic, but in my opinion, ZINC is not cheap even if it reaches the 75% utilization projected.

 

Share price: $9.54

Shares outstanding: 52m

Market Value: $496m

Net debt (as of 03/15): $330m

Enterprise value: $826m

 

Projected EBITDA at 75% utilization: $90m

EV / projected EBITDA: 9x

 

Is EV / projected EBITDA 9x really the cheapest low cost commodity producer of a commodity out there today? I doubt it. But correct me if I am wrong.

 

Management has indicated that it should be 90-110 incremental EBITDA upon full run-rate of the plant.  BG did some calculations at this post as well:

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/zinc-horsehead-holding-corp/msg219632/#msg219632

 

Of course, that doesn't mean it will actually pan out.  I hold a small position.

[rishig]

Even if we take BG's bull case as a given,  $180m in EBITDA translates to EV/EBITDA of 4.5x. Not cheap imo.

[cmlber]

Even if we take BG's bull case as a given,  $180m in EBITDA translates to EV/EBITDA of 4.5x. Not cheap imo.

 

Let's just assume the plant was at 100% capacity utilization, producing $180m in EBITDA.  Please explain how 4.5x EBITDA isn't cheap?  :o

 

Auto companies trade at 4.5x EBITDA. They convert MUCH less of their EBITDA to FCF (again, assuming we're at 100%, which I know is an assumption). They need to hold 15% of sales on the balance sheet in cash for a rainy day (ZINC probably needs 1-2%).  They are consumer taste dependent (ZINC is not). Their business will be destroyed by self driving cars and Uber in a few decades (ZINCs business will likely grow for the next 50 years).

[valueyoda]

Given the likelihood of further zinc price weakness and the low probability that management will actually deliver operationally, the multiple is far higher than 4.5x EV/EBITDA. We have seen the story played out in the last 4 years with other low-cost producers of potash (POT), iron ore (VALE), steel (PKX) etc. The short side of this trade seems to get riskier given the large price drop, but I wouldn't be long either since further operational and financial leverage could cut the stock in half.

 

I take it as a huge warning signal that most commodities are trading new multi-year lows, especially given the fact that the economic recovery in the US is getting mature and China is still in the middle of a multi-year economic restructuring. I am really worried that when the next recession hits - and history would suggest 2017 for the US - that low inflation rates could get negative with dire consequences for all commodities. I am tried to buy the bottoms in many commodity dependent companies in the last few years with some success from a trading perspective, but hardly from a long term investing point of view (gold miners, oil companies, coal companies, steel companies) since they all ended up as major value traps given their operational and financial leverage. I am very worried about all the Posco bulls on this forum for similar reasons. Yes, the stock is cheap from certain value metrics. Yes, the company has a low-cost advantage relative to most other steel companies. Is it a buy though? I am not so sure. It could rally substantially from time to time, given its oversold conditions, but whether it marks a long term bottom that is very much the question.

[rishig]

Even if we take BG's bull case as a given,  $180m in EBITDA translates to EV/EBITDA of 4.5x. Not cheap imo.

 

Let's just assume the plant was at 100% capacity utilization, producing $180m in EBITDA.  Please explain how 4.5x EBITDA isn't cheap?  :o

 

Auto companies trade at 4.5x EBITDA. They convert MUCH less of their EBITDA to FCF (again, assuming we're at 100%, which I know is an assumption). They need to hold 15% of sales on the balance sheet in cash for a rainy day (ZINC probably needs 1-2%).  They are consumer taste dependent (ZINC is not). Their business will be destroyed by self driving cars and Uber in a few decades (ZINCs business will likely grow for the next 50 years).

 

I didn't say ZINC is currently trading at 4.5x EV/EBITDA. If ZINC can get to the bull case then may be, yes may be, it can get to $180m EBITDA. That translates to 4.5x EV/EBITDA. Who knows what zinc (the commodity, not the stock) prices will be then? And what does that translate to in FCF multiples. My guess is after paying interest, taxes and making capital expenditures, 10x P/FCF which in my opinion is the fair value of low cost producer of a commodity. Am I willing to pay fair price today for something that may happen in the future? No.

 

Your point about how ZINC compares to XYZ is irrelevant imo if we are investing on an absolute orientation. 

[cmlber]

Even if we take BG's bull case as a given,  $180m in EBITDA translates to EV/EBITDA of 4.5x. Not cheap imo.

 

Let's just assume the plant was at 100% capacity utilization, producing $180m in EBITDA.  Please explain how 4.5x EBITDA isn't cheap?  :o

 

Auto companies trade at 4.5x EBITDA. They convert MUCH less of their EBITDA to FCF (again, assuming we're at 100%, which I know is an assumption). They need to hold 15% of sales on the balance sheet in cash for a rainy day (ZINC probably needs 1-2%).  They are consumer taste dependent (ZINC is not). Their business will be destroyed by self driving cars and Uber in a few decades (ZINCs business will likely grow for the next 50 years).

 

I didn't say ZINC is currently trading at 4.5x EV/EBITDA. If ZINC can get to the bull case then may be, yes may be, it can get to $180m EBITDA. That translates to 4.5x EV/EBITDA. Who knows what zinc (the commodity, not the stock) prices will be then? And what does that translate to in FCF multiples. My guess is after paying interest, taxes and making capital expenditures, 10x P/FCF which in my opinion is the fair value of low cost producer of a commodity. Am I willing to pay fair price today for something that may happen in the future? No.

 

Your point about how ZINC compares to XYZ is irrelevant imo if we are investing on an absolute orientation.

 

You said even if we take BG's bull case as a given, 4.5x is not cheap imo.  So weren't you saying 4.5x EBITDA wouldn't be cheap even if ZINC were there today (i.e. taking it as a given).

 

This is why it's a good idea to do the math and not guess, because you're way off.  If they were doing $180m EBITDA, lets call interest on $400m debt $40m/yr, D&A will be about $50m, taxes would be $27m, and maintenance capex is $12m.  That gets you $101m FCF on a $540m market cap.  5.3x FCF, it's very different from 10x FCF.  You'd be making about 20%/yr if you just held that forever.  And yes it's a "commodity" business, but most commodity businesses have depleting resources, ZINC can be in business without significant capex for the next 100 years and will make money through all cycles (again, taking $180m EBITDA as a given, as you suggested). 

 

I understand they aren't at $180m EBITDA, but it's just foolish to make the argument that even if they get there, it isn't cheap.  If you think they won't ever get there, that's a different story and you could be right (although I think you're wrong).  But it's absolutely cheap in the hypothetical where you "take it as given" that they are producing $180m in EBITDA.

[rishig]

Even if we take BG's bull case as a given,  $180m in EBITDA translates to EV/EBITDA of 4.5x. Not cheap imo.

 

Let's just assume the plant was at 100% capacity utilization, producing $180m in EBITDA.  Please explain how 4.5x EBITDA isn't cheap?  :o

 

Auto companies trade at 4.5x EBITDA. They convert MUCH less of their EBITDA to FCF (again, assuming we're at 100%, which I know is an assumption). They need to hold 15% of sales on the balance sheet in cash for a rainy day (ZINC probably needs 1-2%).  They are consumer taste dependent (ZINC is not). Their business will be destroyed by self driving cars and Uber in a few decades (ZINCs business will likely grow for the next 50 years).

 

I didn't say ZINC is currently trading at 4.5x EV/EBITDA. If ZINC can get to the bull case then may be, yes may be, it can get to $180m EBITDA. That translates to 4.5x EV/EBITDA. Who knows what zinc (the commodity, not the stock) prices will be then? And what does that translate to in FCF multiples. My guess is after paying interest, taxes and making capital expenditures, 10x P/FCF which in my opinion is the fair value of low cost producer of a commodity. Am I willing to pay fair price today for something that may happen in the future? No.

 

Your point about how ZINC compares to XYZ is irrelevant imo if we are investing on an absolute orientation.

 

You said even if we take BG's bull case as a given, 4.5x is not cheap imo.  So weren't you saying 4.5x EBITDA wouldn't be cheap even if ZINC were there today (i.e. taking it as a given).

 

This is why it's a good idea to do the math and not guess, because you're way off.  If they were doing $180m EBITDA, lets call interest on $400m debt $40m/yr, D&A will be about $50m, taxes would be $27m, and maintenance capex is $12m.  That gets you $101m FCF on a $540m market cap.  5.3x FCF, it's very different from 10x FCF.  You'd be making about 20%/yr if you just held that forever.  And yes it's a "commodity" business, but most commodity businesses have depleting resources, ZINC can be in business without significant capex for the next 100 years and will make money through all cycles (again, taking $180m EBITDA as a given, as you suggested). 

 

I understand they aren't at $180m EBITDA, but it's just foolish to make the argument that even if they get there, it isn't cheap.  If you think they won't ever get there, that's a different story and you could be right (although I think you're wrong).  But it's absolutely cheap in the hypothetical where you "take it as given" that they are producing $180m in EBITDA.

 

Thanks for the clarification. Yes, I was way off on the math of EBITDA -> FCF.

[cmlber]

Thanks for the clarification. Yes, I was way off on the math of EBITDA -> FCF.

 

No problem.  The way I look at it, that 100m in FCF is worth 15x and I could make the argument that it's worth more.  ZINC is a much higher quality business than an "average" business.  Yes it's reliant on a commodity, but it will be cash flow positive through cycles, so "normal" earnings can be calculated pretty easily based on average zinc prices over cycles.  And it's "normal" earnings will grow by inflation every year.

 

If you think its worth 15x at full ramp that is a triple from here.  If they never get Mooresboro above 50%, the tax shield plus Inmetco, Zochem, and the recycling operation is probably worth 50-75% of the current price.  So if you believe those two facts, the market is pricing in an 80% chance of permanent failure.

[abitofvalue]

looks like some heavy selling in the name over the last 2 days..  Stock can't seem to catch a bid here.

 

Thought the update was disappointing but not sure i get the 25% sell-off on the news.  Management seems to have lost credibility (rightly so!).

 

Don't understand why they keep reiterating or issuing optimistic guidance and other updates. would be better served shutting up for a bit and reporting once the situation is resolved or actual events occur.  for example - they announced the bypass around the solvent extraction settler would be installed few weeks back and now are out saying we are going to defer this and test a lower-cost approach! um.. what? Seems like this amount of specificity is designed more to give the appearance of competency and reassure investors that progress is being made rather than actually you know executing on a fix.

 

The holders list seems to have a fair number of institutional investors even excluding Pabrai's 11% stake.  (Hotchkis & Wiley, RS Investments, Greywold, Royce, American Century. Tocqueville, Loomis Sayles, Trian etc..  will be interesting to see if any of them added here or if they were sellers.  Will signal their conviction / what management is saying in less public settings. 

 

 

 

 

[tylerdurden]

looks like some heavy selling in the name over the last 2 days..  Stock can't seem to catch a bid here.

 

Thought the update was disappointing but not sure i get the 25% sell-off on the news.  Management seems to have lost credibility (rightly so!).

 

Don't understand why they keep reiterating or issuing optimistic guidance and other updates. would be better served shutting up for a bit and reporting once the situation is resolved or actual events occur.  for example - they announced the bypass around the solvent extraction settler would be installed few weeks back and now are out saying we are going to defer this and test a lower-cost approach! um.. what? Seems like this amount of specificity is designed more to give the appearance of competency and reassure investors that progress is being made rather than actually you know executing on a fix.

 

The holders list seems to have a fair number of institutional investors even excluding Pabrai's 11% stake.  (Hotchkis & Wiley, RS Investments, Greywold, Royce, American Century. Tocqueville, Loomis Sayles, Trian etc..  will be interesting to see if any of them added here or if they were sellers.  Will signal their conviction / what management is saying in less public settings.

 

I guess at least Pabrai is not adding since he has to report any additional activity right away since he has more than 10%.

[AzCactus]

I guess at least Pabrai is not adding since he has to report any additional activity right away since he has more than 10%.

 

In my opinion the fact that Pabrai is not adding is bad and pretty alarming.  He was adding a ton of shares in the second quarter of 2013 when the stock was higher than it is at the present time.  One would think that the price dropping would make it a better bargain in Pabari's eyes.  Anyone have other thoughts on this?

[kab60]

Impossible to say. Can't figure out myself whether to add or sell to be honest. Management said in july update that they still target 75 pct utilization in Q3 but they haven't exactly delivered om their guidance before. On the other hand we are already well into Q3, they hired external expertise, so they should have a lot more visibility than before on the current quarter.