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Ross812

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    What are you buying today?

    in General Discussion

    Posted

    I went to 7.X% when it was in the low 12's after insider buying in January and February and sold down to 6% last week when it popped to 13 after earnings. I had higher sell orders that never triggered. I was a little shocked when i saw an 11.XX quote this morning as I  didn't expect this back below 13 range after earnings. Maybe I'm missing something.  

    What are you buying today?

    in General Discussion

    Posted

    2 hours ago, lnofeisone said:

    Got it. Thanks. I'm looking to double this one to roughly 5% range. I think the challenges will work themselves out and we'll be heading back to the 20+ range. 

     

    Even with some acquisition expenses, tough YoY workers comp. increases, and a temporary staffing market down 9% YoY, HQI is doing well which speaks to the quality of the business.  The case is pretty straight forward in my mind -  hit less than 50% SG&A on franchise revenue of $36M and a 17% tax rate and you are looking at $15M in earnings on 13.8M shares outstanding - and this is earnings power in an off-cycle year!  You're paying 10x EBIT and 12x earnings right now for a company growing at 27%. 

     

    I get the argument growth is coming from acquisition and that is worth a lesser multiple, but acquisitions are immediately accretive to the bottom line. Look at MRI Network (which is under earning right now), acquired 4Q22 for $13.3M and added $7.8M in revenue in the last year; they paid <2x franchise revenue.

     

    Northbound (higher quality executive staffing) was purchase for $11.4M and generated $1.1M in 10 months ($1.3M proforma); 8.75x franchise revenue

     

    Dubin - 10 months $.11M ($132k proforma) on a $2.5M outlay. 19x franchise revenue 

     

    TEC - looks to be $1.1M on a $7.8M. 7x franchise revenue

     

    Temp Alternatives- $523k (though not all converted to franchises yet) off $7M. 14x franchise revenue

     

    Together its $10.7M (proforma) in franchise earnings acquired for $42M. Assume 50% SG&A and slap a low 10x EBIT multiplier and you are adding $53.5M to the market-cap (27% growth). Looks like a sustainable roll-up to me. 

     

    Organic growth should follow growth in temporary staffing. Check this by looking at HQI ex-franchise revenue from FY23 acquisitions ($9.6M) which is $26.2M vs $28.9M (FY22) down 9.3% which is in line with temporary staffing down ~9%. The good new is temporary staffing follows GDP over the long term so the business should grow organically by 2-3%. I don't know what kind of EBIT HQI should trade at, but its not 10x and when you start playing with the EBIT multiple the spring keeps tightening.  

     

    What are you buying today?

    in General Discussion

    Posted

    1 hour ago, lnofeisone said:

    are you bailing on HQI or rightsizing?

     

    Just right sizing. It was over a 7% position this morning after earnings and I'm more comfortable in the 4 to 5% range. I'm down to a 6%ish position. I've been buying for the last couple weeks in the 12.1X's and was selling this morning in the 12.80+ range.  It's tough getting in and out of when in only trades 15k shares a day and and individual can be a significant portion of that. 

    Share your Portfolio 2024

    in General Discussion

    Posted

    On 1/2/2024 at 9:12 AM, Ross812 said:

    26% FFH

    9% BRK.B

    9% $

    6% USB

    5% LUV

    5% NTDOY

    5% HQI

    4% ADSK

    4% GOOGL

    4% DFIN

    4% MSGE ($30 CCs on full position)

    4% CASH ($50 CCs on full position)

    3% HUM

    3% NNI

    2% TOITF

    2% CHDN

    2% HSY

    2% JCI

    1-2% in tracking positions - BAC, ASHTY, LHX, META, CPNG calls, BABA, BABA calls 

     

     

     Thought I'd check in on this:

     

    26%  29% FFH

    9% BRK.B

    10% $

    6% USB ($44 to$50 calls on full position)

    5%  6% LUV ($35 to$40 calls on full position)

    3% 6% NNI (Adding)

    5% NTDOY

    5% HQI (Adding)

    2% 4% HSY (Adding)

    2% 4%TOITF

    4% ADSK

    4% GOOGL

    4% DFIN

    4% MSGE ($30 CCs on full position)

    3% CASH ($50 CCs on full position)

    3% HUM

    2% CHDN

    2% JCI

    1-2% in tracking positions - BAC, ASHTY, LHX, META, CPNG calls, BABA, BABA calls 

     

     

     

     

    What are you buying today?

    in General Discussion

    Posted

    1 hour ago, Kizion said:

    No fear of high Cacao prices? 

     

    Hershey milk chocolate is only 11% cocoa, Cadbury is 26%, and special dark is 45% and the bulk of their confectionary products are 50% or less chocolate by weight. Hershey can raise prices in line with their competitors and actually increase margins. In addition, Hershey sources cocoa from negotiated supply contracts as well as futures so brunt of the current spike shouldn't hit them unless it persists.  

    What are you buying today?

    in General Discussion

    Posted

    5 minutes ago, Spekulatius said:

    I have had this happen (trading outside the trading range) quite a few times but it’s almost always with odd lot trade executions in very thinly traded securities.

     

    Could it have been a fidelity to fidelity trade or something? Off the exchange. Maybe it was cheaper to fill the remaining 14 shares from a standing customer order than go to the open market? Not sure if fidelity covered the spread from the other customer or maybe it was a market order sell and fidelity reported the average to them? 

    Money market or T-Bill ETF?

    in General Discussion

    Posted

    7 hours ago, blakehampton said:

    I’m deciding on whether to stick with my Fidelity money market or switch over into BIL. I’m curious on what you guys do with your cash.

    I use spaxx or buy individual treasuries for 0 commission at fidelity. Last year I used 1 year CDs that pay on maturity to shift since income from 23 to 24 as we were in a higher tax bracket in 23.

    What are you buying today?

    in General Discussion

    Posted

    On 2/5/2024 at 9:30 PM, Castanza said:


    Yeah not sure either….haven’t seen any news regarding the acquisition and not sure we’ll hear anything till next earnings call. Hopefully some more insider buying shows up soon. 
     

    1% position for me currently so figured I’d average down a bit. 
     

     

    Some of HQIs staffing segments are in a recession right now. Warehouse staffing levels are a leading indicator, question is does the trend reverse? Also, Look into how they manage their workers comp. I'm comfortable with it, but they are taking some lumps right now. Next quarter could be rough.

     

    The company that is managed well and is a good long term hild. With that said, I've been trading around a 4% core position. Bought down to $12.50, sold some at $16, buying more now. 

     

     

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