jegenolf Posted April 5, 2011 Share Posted April 5, 2011 After taking a closer look at FBK and MERC, I moved my position to MERC. The reason I switched was because I felt MERC was better positioned to take advantage of this cycle of rising pulp prices. It still appears undervalued to me trading at a P/E of 4.0 to 5.0 times next 12 months earnings. It appears FBK has many multiples more of long-term upside, but it could take several years to realize its potential. Until the major revamping occurs I don't see a catalyst to substantially improve their operations. In other words, I expect the market to reward Merc more in the near-term than FBK. Longer-term FBK has more upside, but because of my concerns that management may not implement many of the ideas discussed, I went with Merc to capitalize on the rising prices. I ran a spreadsheet comparison (a little more than a back of the napkin) based on sales increases (prices) and it shows Merc's superior operating leverage. (attached) Perhaps I should add back FBK and hold both, but I'm not convinced. Am I missing the forest for the trees? (sorry about that one)... Ericd1: I just took a brief look at your Merc vs FBk spreadsheet. How did you deal with EUR reporting of MERC? I just looked too. I think MERC has a better business and FBK is a better investment. It looks like you may be ignoring Price/FCF. For me, that's the biggest piece of the puzzle here. Not sure how everyone else gets to sleep at night with money in FBK, but that's how I do it. And that's also why I'd rather be lucky than good. This big a pulp tailwind was not part of the thesis. Link to comment Share on other sites More sharing options...
Myth465 Posted April 5, 2011 Share Posted April 5, 2011 I just looked too. I think MERC has a better business and FBK is a better investment. It looks like you may be ignoring Price/FCF. For me, that's the biggest piece of the puzzle here. Not sure how everyone else gets to sleep at night with money in FBK, but that's how I do it. --- I guess thats the discount. I dont really focus on earnings, and really pay more attention to P/FCF. One thing is for sure though, earnings get you share price appreciation. Perhaps one can split the difference and buy both. I will have to get back in before Q1 (with FBK it might be better to wait until after ;), at least thats how it has worked over the last 3 quarters). Link to comment Share on other sites More sharing options...
ericd1 Posted April 5, 2011 Share Posted April 5, 2011 I agree FBK has a lot more potential than MERC, but I also think it is going to take quite a bit longer realize the gains. Both in basket make sense especially if the prices remain high through '13! Link to comment Share on other sites More sharing options...
triedtestedand Posted April 12, 2011 Share Posted April 12, 2011 Latest weekly update from FOEX shows NbSK pricing continuing to firm up ... at least from a USD perspective ... although from an FBK perspective (largely?) offset from continuing strength of $CDN vs USD. www.foex.fi Link to comment Share on other sites More sharing options...
FFHWatcher Posted April 18, 2011 Share Posted April 18, 2011 Did I miss that Pabrai owns 14.6M shares of FBK? Is this old news? http://www.newswire.ca/en/releases/archive/April2011/18/c5142.html Link to comment Share on other sites More sharing options...
Myth465 Posted April 18, 2011 Share Posted April 18, 2011 Did I miss that Pabrai owns 14.6M shares of FBK? Is this old news? http://www.newswire.ca/en/releases/archive/April2011/18/c5142.html It seems like his sort of stock given his track record. My bid for half my shares back didnt get filled, I hate having to buy the pink shares, they dont trade much. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted April 19, 2011 Share Posted April 19, 2011 Did I miss that Pabrai owns 14.6M shares of FBK? Is this old news? http://www.newswire.ca/en/releases/archive/April2011/18/c5142.html It seems like his sort of stock given his track record. My bid for half my shares back didnt get filled, I hate having to buy the pink shares, they dont trade much. What was your bid and order size? I feel like it has been way easier to get an order filled compared to 2010. Link to comment Share on other sites More sharing options...
Myth465 Posted April 19, 2011 Share Posted April 19, 2011 I was trying to buy 2500 shares, for 1.60. Perhaps I should go over the ask, but I hate doing that on an all red day. I think this will be a good quarter. I mean we have had 3 dud quarters with low volumes for all sorts of reasons. Record pulp, cost improvements, something has to give. I want in prior to the release, right now its 8% higher than my sales price and I can deal with that. Though this new position will be much smaller. Link to comment Share on other sites More sharing options...
tyska Posted April 19, 2011 Share Posted April 19, 2011 I was trying to buy 2500 shares, for 1.60. Perhaps I should go over the ask, but I hate doing that on an all red day. I think this will be a good quarter. I mean we have had 3 dud quarters with low volumes for all sorts of reasons. Record pulp, cost improvements, something has to give. I want in prior to the release, right now its 8% higher than my sales price and I can deal with that. Though this new position will be much smaller. Myth What am I missing that you were unable to get your order filled, when it traded below 1.60 most of the day. Link to comment Share on other sites More sharing options...
EdWatchesBoxing Posted April 19, 2011 Share Posted April 19, 2011 Did I miss that Pabrai owns 14.6M shares of FBK? Is this old news? http://www.newswire.ca/en/releases/archive/April2011/18/c5142.html That's weird, they're talking about the rights subscription from last summer, but the PR was released today. I wonder if he still holds 11.2% Link to comment Share on other sites More sharing options...
Myth465 Posted April 19, 2011 Share Posted April 19, 2011 I was trying to buy 2500 shares, for 1.60. Perhaps I should go over the ask, but I hate doing that on an all red day. I think this will be a good quarter. I mean we have had 3 dud quarters with low volumes for all sorts of reasons. Record pulp, cost improvements, something has to give. I want in prior to the release, right now its 8% higher than my sales price and I can deal with that. Though this new position will be much smaller. Myth What am I missing that you were unable to get your order filled, when it traded below 1.60 most of the day. I ask that same question. Perhaps TOS's execution suck. I would guess bid was 1.56 and ask was 1.64 or something like that. Only 7500 shares traded by mid day or so. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 19, 2011 Share Posted April 19, 2011 Myth, place the same bid tmw at 1.6 - I will get you some if we don't pop tmw. ;D Link to comment Share on other sites More sharing options...
Myth465 Posted April 19, 2011 Share Posted April 19, 2011 Myth, place the same bid tmw at 1.6 - I will get you some if we don't pop tmw. ;D Lol, only if you put a bid in on some SD leaps at $13, or ATPG at $21. Owe this game would be much more profitable if I were better at timing these things. I cant believe S&P still gets any respect from the market. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 19, 2011 Share Posted April 19, 2011 LOL. Remember I own those craps too. ATPG trading at 16 is puzzling. I thought we are going to mid 20 after the permits. Well, when the cash flows, the debt goes, pps will take care of itself. I can wait. Your Leaps will be fine. ;D Link to comment Share on other sites More sharing options...
lessthaniv Posted April 19, 2011 Share Posted April 19, 2011 Did I miss that Pabrai owns 14.6M shares of FBK? Is this old news? http://www.newswire.ca/en/releases/archive/April2011/18/c5142.html That's weird, they're talking about the rights subscription from last summer, but the PR was released today. I wonder if he still holds 11.2% I can't figure out why this is only being reported now? Any thoughts or did Monish just figure out it was missed? Link to comment Share on other sites More sharing options...
Uccmal Posted April 19, 2011 Share Posted April 19, 2011 LessthanIV - does look kind of strange like someone goofed up or just realized he holds a reportable amount. Link to comment Share on other sites More sharing options...
triedtestedand Posted April 19, 2011 Share Posted April 19, 2011 Something doesn't add up here ... based on how I read the press release, Pabrai's holdings BEFORE the rights offering (where # shares outstanding grew from ~90M to ~130M) would have been 12,874,854 shares (i.e. 14,654,534 - 1,778,500), or ~14.3% of the outstanding amount, so it's not like his holdings % increased over the 10% reporting threshold as a result of the transaction ... in fact his % ownership decreased after the rights offering. Between Pabrai and FFH, they hold ~37% of the shares outstanding. Maybe Pabrai's holdings were highlighted in putting together the proxy for the AGM, which might imply that he increased beyond the 10% reporting threshold after March 25, 2010. That's the date referenced in last year's proxy. http://www.fibrek.com/static/en/PDF/infoFinanciere/NP/NP_2009.pdf Probably worth a note to FBK investor relations, no? Link to comment Share on other sites More sharing options...
cwericb Posted April 19, 2011 Share Posted April 19, 2011 Pulp holding steady at $1,013. Link to comment Share on other sites More sharing options...
triedtestedand Posted April 20, 2011 Share Posted April 20, 2011 Hey all: I put a note into FBK ... a) They didn't get notice of Pabrai's investment until the release came out, so they're looking into it as well. b) They confirmed Q1 quarterly results will be posted May 19th timeframe, noting extra time has been allowed to prepare for switch to IFRS accounting. Regarding "b", I'd like to resurrect a line of questioning for Sharper and others with accounting savvy regarding IFRS: I'm presuming that for FBK, the biggest effect of transition to IFRS accounting will be a (significant) change in book value (downwards) relating to valuation of their fixed PP&E assets? If so, will this result in a big one-time loss as the headline for the quarter? If such a loss does materialize, does it translate into a shield against current/future taxes from profits on operations? Also, does IFRS get implemented by all companies at the same time, or do they get to choose transition timeframe? I'm thinking other companies will have similar issues, but that the early adopters of such transition may bear the brunt of most of the communication/optics issues of such. Thanks for any feedback. I'm not so much worried about this in the long-term for FBK, but near-term it could be a turn-off for some. (My own valuation of FBK is premised largely on FCF from operations, noting that FBK has very high quarterly depreciation tucked into results, which impacts net profit but hides the alchemy of turning fixed asset values into $$/less-debt). Link to comment Share on other sites More sharing options...
alertmeipp Posted April 20, 2011 Share Posted April 20, 2011 Just notice MERC is back under 13. I may get some. Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 20, 2011 Share Posted April 20, 2011 All that happens is that the BS & opening equity gets adjusted downwards. They have allready disclosed how much & where the adjustments will be. Because they wrote down plant there is less to depreciate, so most would expect quarterly depreciation from 01/01/2011 onwards to be lower than the previous run-rate. Improved profitability. SD Link to comment Share on other sites More sharing options...
cwericb Posted April 20, 2011 Share Posted April 20, 2011 Here is some more info on Pabrai/FBK http://canadianinsider.com/coReport/allTransactions.php?ticker=fbk Link to comment Share on other sites More sharing options...
jegenolf Posted April 20, 2011 Share Posted April 20, 2011 All that happens is that the BS & opening equity gets adjusted downwards. They have allready disclosed how much & where the adjustments will be. Because they wrote down plant there is less to depreciate, so most would expect quarterly depreciation from 01/01/2011 onwards to be lower than the previous run-rate. Improved profitability. SD Do they get the write-down as a NOL or something? I'm not really tracking on how they just lose a depreciable asset. Profitability be damned, I want the cashflow. Link to comment Share on other sites More sharing options...
EdWatchesBoxing Posted April 20, 2011 Share Posted April 20, 2011 Here is some more info on Pabrai/FBK http://canadianinsider.com/coReport/allTransactions.php?ticker=fbk So it looks like it was reviewed and they found out they should have reported. Link to comment Share on other sites More sharing options...
tyska Posted April 28, 2011 Share Posted April 28, 2011 http://www.reuters.com/article/2011/04/28/domtar-idUSL3E7FS3J020110428 "Q1 adj EPS $3.25 vs est $2.35" "April 28 (Reuters) - Domtar Corp's first-quarter profit topped market estimates, as a result of higher paper shipments and higher selling prices of pulp, but the Canadian pulp and paper producer expects shipments to decline this year. " Would be nice if FBK estimates were out by as much. Link to comment Share on other sites More sharing options...
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