One of the Greatest Investment Opportunities...

[bmichaud]

Best Buy worked out quite well for him, which is the only reason I thought ARO may fly....

[watsa_is_a_randian_hero]

Can't help but wonder if it isn't Aeropostale, a recent significant decliner that continues to get pounded....

 

Applying an average net profit margin of 7% to LTM sales of $2.3B, normalized EPS is 2.05. Backing out cash of 1.27 from a $9 stock price gets you to 3.8X earnings, well below Sanjeev's 7X PE target entry point  8)

 

I have gotten hammered on this stock.  Luckily it was a small position; but it has gone from cheap to cheaper, while EBITDA margins has declined and recently even swung negative. 

[bmichaud]

Ya it's ugly to say the least - amazing how quickly profits can evaporate like that. Though I wouldn't be surprised if there is some type of hidden "kitchen sinking" going on that is obscuring core profitability.

[Valuebo]

plastics

 

Lol.. But... :

 

parsad, is it an idea where you are long or short?  Short, it could be tesla.  Long I have no idea, some hints? Market cap? Sector?

 

I m from belgium.  On my side, I recommand to look at resilux on euronext especially their joint venture which has just signed an agreement with procter and gamble about.

 

Sanjeev then said:

 

parsad, is it an idea where you are long or short?  Short, it could be tesla.  Long I have no idea, some hints? Market cap? Sector?

 

Long.  You guys are too smart.  I start giving details and somebody on here will figure it out...guaranteed!  Cheers!

 

You want us to figure it out. Why else would you have posted this?!

 

Yes, I do want you to figure it out...but I can't make it a "gimme". 

 

The only clue is that some of you are on the right track and some of you aren't.  Cheers!

 

 

Packaging?

[Yours Truly]

it's the Hong Kong Dollar!!!

[Palantir]

I doubt it is something like what others have mentioned, probably an asymmetrical bet like a rights or warrant offering.

[Hawks]

I agree with Cardboard. GVC. Chou Funds and Templeton also own it.

[Guest hellsten]

I agree with Cardboard. GVC. Chou Funds and Templeton also own it.

 

Could be, but why is McElvaine selling?

[Hawks]

Hellsten

Tim still owns over 2 million shares according to my findings. In one of his recent reports, I remember him saying he wanted to more evenly balance some of his top holdings. Perhaps that's why he lightened up some.

[rpadebet]

I am throwing in my wild guess BAM (or one of it's subsidiaries like BPY).

 

..and in an era of overblown, overvalued assets out there

 

... I thought I should focus on "assets" here

 

North-American and listed.

.... He was careful not to say US, so i am guessing Canadian

 

.... someone earlier suggested it should start with a B (i don't know how they got to that, but it fits with my guess, so including it as a rationale  ;D )

 

.... He still didn't answer if it was written up on the board. I am assuming it was. BAM was also written up ( so are many others, but this also fits with my guess)

[abyli]

I am throwing in my wild guess BAM (or one of it's subsidiaries like BPY).

 

..and in an era of overblown, overvalued assets out there

 

... I thought I should focus on "assets" here

 

North-American and listed.

.... He was careful not to say US, so i am guessing Canadian

 

.... someone earlier suggested it should start with a B (i don't know how they got to that, but it fits with my guess, so including it as a rationale  ;D )

 

.... He still didn't answer if it was written up on the board. I am assuming it was. BAM was also written up ( so are many others, but this also fits with my guess)

 

I said "something started with B". I agree with you, it could be one of BAM, BPO or BPY.

[alertmeipp]

I am throwing in my wild guess BAM (or one of it's subsidiaries like BPY).

 

..and in an era of overblown, overvalued assets out there

 

... I thought I should focus on "assets" here

 

North-American and listed.

.... He was careful not to say US, so i am guessing Canadian

 

.... someone earlier suggested it should start with a B (i don't know how they got to that, but it fits with my guess, so including it as a rationale  ;D )

 

.... He still didn't answer if it was written up on the board. I am assuming it was. BAM was also written up ( so are many others, but this also fits with my guess)

 

I said "something started with B". I agree with you, it could be one of BAM, BPO or BPY.

 

Isn't BAM too large of a co to warrant this kind of secrecy?

[rpadebet]

 

Isn't BAM too large of a co to warrant this kind of secrecy?

 

BPY fits that thinly traded bill then. 1.5 bill market cap, 80 mill shares outstanding, approximately 80-90K of that trades each day on average @$20 so average daily turnover approx $1.5 mill. If his portfolio is $8 mill => $2 million position, it takes time to accumulate without moving market.

 

Also he mentioned something about "...putting to work crap loads of money", these guys have demonstrated for years how they can put to work crap loads of money ($180 bill or so in AUM for BAM) and they are asking for more funds to put to work..

[T-bone1]

I've never heard a very compelling thesis on RFP . . . but a lot of very smart people that Sanjeev thinks very highly of have very large positions in it . . .

[CanadianMunger]

Glacier Media Inc.

 

Sanjeev said he was buying at the $1.55 level and maybe a bit higher. The stock is now down to $1.15 following negative comments from a BMO analyst who was previously a big supporter. Market cap is now $103 million and it is pretty illiquid.

 

Cardboard

 

This could be it. Although the company did get very close to breaching its covenant on its debt.

 

They have quiet a few levers to avoid a run by the banks however: real-estate, further cost cutting (although its CEO runs a very tight ship).

 

It seems that they are sort of facing a perfect storm : they levered the company up to buy Post Media asset and it hasn't worked off as they expected ... plus you have weakness in the national advertising creating all sorts of issues for them. Additionally, they have a potential $20-$25m tax hit due to dispute with CRA. If they didn't have a ton of debt, things would have been much easier to navigate.

 

CEO and mgmt owns abt 33% .. .so they have a huge vested interest to make this work.

 

My sense they will eventually pull it off.

 

Berkshire AR 2012:

 

Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s

going on in your town – whether the news is about the mayor or taxes or high school football – there is no substitute

for a local newspaper that is doing its job. A reader’s eyes may glaze over after they take in a couple of paragraphs

about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbors will

be read to the end. Wherever there is a pervasive sense of community, a paper that serves the special informational

needs of that community will remain indispensable to a significant portion of its residents.

 

Charlie and I believe that papers delivering comprehensive and reliable information to tightly-bound

communities and having a sensible Internet strategy will remain viable for a long time.

 

-CM

[Otsog]

Are you the one driving up FP?

[LakesideB]

Glacier Media Inc.

 

Sanjeev said he was buying at the $1.55 level and maybe a bit higher. The stock is now down to $1.15 following negative comments from a BMO analyst who was previously a big supporter. Market cap is now $103 million and it is pretty illiquid.

 

Cardboard

 

This could be it. Although the company did get very close to breaching its covenant on its debt.

 

They have quiet a few levers to avoid a run by the banks however: real-estate, further cost cutting (although its CEO runs a very tight ship).

 

It seems that they are sort of facing a perfect storm : they levered the company up to buy Post Media asset and it hasn't worked off as they expected ... plus you have weakness in the national advertising creating all sorts of issues for them. Additionally, they have a potential $20-$25m tax hit due to dispute with CRA. If they didn't have a ton of debt, things would have been much easier to navigate.

 

CEO and mgmt owns abt 33% .. .so they have a huge vested interest to make this work.

 

My sense they will eventually pull it off.

 

Berkshire AR 2012:

 

Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s

going on in your town – whether the news is about the mayor or taxes or high school football – there is no substitute

for a local newspaper that is doing its job. A reader’s eyes may glaze over after they take in a couple of paragraphs

about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbors will

be read to the end. Wherever there is a pervasive sense of community, a paper that serves the special informational

needs of that community will remain indispensable to a significant portion of its residents.

 

Charlie and I believe that papers delivering comprehensive and reliable information to tightly-bound

communities and having a sensible Internet strategy will remain viable for a long time.

 

-CM

 

I got to read that quote above when I was looking into this business.

 

The local adverts in the community newspaper make majority of their revenues and they are quiet resilient. However, National advertising is still about 10% of their community newspaper business.

 

Since the newspaper business is mostly fixed cost, what happens to national advertising has a disproportionate impact on the company's profitability. National advertising is paramount for their community business due to the operating leverage in this business. Some of the national advert cycle is cyclical and some of it is structural as advert dollars flow to the digital medium.

 

Their other half of the business - 'essential information' is a terrific business with growth in it.

 

If you combine all the debt and put a reasonable number to the pending CRA judgement the margin of error is that much narrower. Its a straightforward thesis, if you think they can avoid breaching their covenants, this could be a blockbuster opportunity as its trading at 25% fcf yield on a depressed free-cash flow number. They could do thinks like sales lease back of their RE or sell parts of their non-core RE to avoid disaster (which they did this quarter) or cut costs a lot more aggresively.

[CanadianMunger]

 

If you combine all the debt and put a reasonable number to the pending CRA judgement the margin of error is that much narrower. Its a straightforward thesis, if you think they can avoid breaching their covenants, this could be a blockbuster opportunity as its trading at 25% fcf yield on a depressed free-cash flow number. They could do thinks like sales lease back of their RE or sell parts of their non-core RE to avoid disaster (which they did this quarter) or cut costs a lot more aggresively.

 

With management having that much skin in the game, I would say the probabilities are weighted towards survival.   

 

-CM

[LakesideB]

 

 

With management having that much skin in the game, I would say the probabilities are weighted towards survival.   

 

-CM

 

I agree to your statement. Simply put, that is one of the biggest difference I find between this and the fate of yellow media.

 

[Guest hellsten]

Chou has also been selling GVC…

 

794107 shares in 2010:

http://www.choufunds.com/pdf/SA10%20pdf.pdf

 

513307 shares in 2013:

http://www.choufunds.com/pdf/Semi-AR13.pdf

[CanadianMunger]

Chou has also been selling GVC…

 

794107 shares in 2010:

http://www.choufunds.com/pdf/SA10%20pdf.pdf

 

513307 shares in 2013:

http://www.choufunds.com/pdf/Semi-AR13.pdf

 

It certainly is worth noting the McElvaine and Chou sales, these guys are as patient as you get. 

 

There is a possibility of permanent loss of capital depending on how you feel the CRA and debt situation evolves.

 

I'm certain to regret this one - either I'll wish I should have really loaded up or wonder why I stepped out of my (small) circle of competence.  Time will tell.

 

-CM

[no_free_lunch]

Don't forget when comparing canadian newspapers to us newspapers, that there is a free alternative in canada called the CBC.    It is funded by the federal government so doesn't need to turn a profit (although they are being pushed to increase revenues).  When I was looked at NWSA I recall reading that in the UK, the newspapers are not doing as well with paywalls due to the BBC which is the UK equivalent of the CBC.  To me this is a critical difference when coattailing Buffet..

[OracleofCarolina]

speaking of Chou semi-annual report, sheesh, he lost his a** in Torstar and Rainmaker so far.

 

 

[Guest Dazel]

 

 

Glacier has exceptional management...and they are localized in the right location...West...farming, oil and gas etc...

They really should be going to mr. Buffett and getting a fair price and become his consolidator. They are exactly what he is looking for. Fortunately, for Buffett he is going to get a great price..unfortunately for Glacier they are going to get a decent price but together they would do very very well.

 

Dazel.

[Ballinvarosig Investors]

Parsad likes companies with a lot of free cash flow, so I would be expecting the price/FCF multiple to be pretty low.

 

As suggested by someone else, a small cap natural resources stock seems unlikely to me - this kind of stock would be too risky for Parsad to make it a 25% position in my eyes.

 

I don't think it's BAM either. The financials on it look ok, but certainly nowhere near good enough to make it a 25% position.

 

I am guessing the company has a long history of stable earnings, has lots of free cash flow, but maybe has some quirk that is preventing the full value of the stock being realised....

 

Put me out of my misery Parsad - am I way off?