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Talking stocks, trading, and investing in general

Discussion in 'Business, Careers & Education' started by mikeman, Feb 2, 2011.

  1. otc

    otc Well-Known Member

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    Man, that would sure suck for everybody else.

    Netflix would somehow get stupid (probably move away from unlimited towards pay per view) and then you wouldn't be able to play netflix on anything except an iDevice.
     
  2. idfnl

    idfnl Well-Known Member

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    VA
    

    Definitely, I wouldn't use it, but it would be a boon for the stock. Having all that cash sitting around is a sink hole...
     
  3. Concordia

    Concordia Well-Known Member

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    A few weeks ago bought (and plan to hold) DXJ. A WisdomTree ETF of Japanese stocks, hedged against the Yen. Should be a modest double-play if the Yen depreciation shakes some things loose in the Japanese economy.
     
  4. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    NM my original post. Thanks for the lower outlook GE.
     
    Last edited: Apr 19, 2013
  5. seeldoger47

    seeldoger47 Well-Known Member

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    Although I was surprised by how much the BoJ was able to whack down the Yen, I don't see why 'this time is different' considering 20 plus years of policy failure. Also this seems to be a crowded trade.
     
  6. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    I've been looking at this with the same cynicism.
     
  7. otc

    otc Well-Known Member

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    Dang, netflix up 20% in after hours trading.

    Probably time for me to get out...

    edit: I'm out. I had made mumblings to myself that I would be out at at least 200. Initially that had meant wait for it to get above 200 and then put in a stop order at 200 and hold it for the long term. But since who knows what the morning might bring, I decided to just dump it all. I can always buy back in if I like and I doubt that its going to open up much more than +25% tomorrow. The news is good...but is it really *that* good?
     
    Last edited: Apr 22, 2013
  8. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    Nice, i havent looked at that stock in forever. Looking better than it did.
     
  9. otc

    otc Well-Known Member

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    Exactly! (I bought it in two chunks starting about a year ago...at $80 and then $60).

    Out at 216.5...got lucky on that one.
     
    Last edited: Apr 23, 2013
    1 person likes this.
  10. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    Very nice!

    Banking seems to be slowly creeping back to life in the pre market.
     
  11. seeldoger47

    seeldoger47 Well-Known Member

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    Interesting, stocks continue to rally despite a week of disappointing economic data and not so great earnings. Does anyone here have a handle on these markets?

    Edit (I usually don't like looking at sell side material but I stumbled upon this chart): as soon as I posted I saw this chart from Citi showing the issuance of various securities over the past decade. Numbers are well below precrisis levels, which coupled with the psychological 'floor' CBs' have put in various asset prices, could account for the continued upward pressure in risk assets.[​IMG]
     
    Last edited: Apr 26, 2013
  12. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    It's been hurting them in regard to revenues, but really hasn't hurt them in earnings. The stock market is an indicator of confidence in the economy to some degree, but how accurate can it be when it is comprised of companies which are all judged according to individual performance and have been doing well in spite of the economy.

    Also, it's being propped up by stimulus pushing people into higher risk securities on a search for yield.
     
  13. otc

    otc Well-Known Member

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    Of course now I need to figure out what to do with my NFLX proceeds...I don't sell things very often (or only sell specifically to buy something else) so I'm not used to having so much cash in the account.
     
  14. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    Last weeks sell off was well timed for me in that regard, I bough some BAC and WFC, early this morning I bought PFE on bad news about one of their drugs not being accepted in Europe, which I'm sure they will do their darnedest to change that.
     
  15. Aldous

    Aldous Well-Known Member

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    Thoughts on NOK...might be a good long term play with their push for windows and their superior quality to HTC.
     
  16. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    Looks like Europe wants some stimulation. :smarmy:
     
  17. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    Anyone have any experience with FWM, Fairway market?
     
  18. phreak

    phreak Well-Known Member

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    Why does FWM interest you?

    I just opened a position in PRSC.

    PRSC - Providence Service Corp

    PRSC is a company that has been growing at a great pace but has been mismanaged/misguided over the years by a distracted (ousted as of 6 months ago) CEO. The new management team is in place now.

    PRSC operates in two segments; government sponsored social services and non-emergency transportation (NET). The first business is their legacy business and only accounts for 30% (dropping every quarter) of revenue. The second (NET) business is contract-based and won at the state or county level to give medicare/Medicaid patients rides to their appointments. This saves the state money since a private company does it cheaper..so it shouldn't be affected by budget cuts. The NET operations started in 2007 and has won tons of new contracts, which were purchased with debt ($150M peak) and almost led to bankruptcy in 2008/2009. Current debt is at $90M.

    The social services business has been holding its own and the NET business has been winning tons of new contracts and growing quickly, but margins have suffered. Revenues have grown from 691mm in 2008 to an expected 1.1 billion in 2012, almost entirely from NET. NET keeps winning new contracts from aggressive bids, but initiating these contracts entails expensive startup costs. As well, 3 contracts in 2012 were poorly bid. PRSC bids on a contract and gets paid based on the number of people in the geographic area. So if more people use the service in that area than they expected, they don't get extra compensation. For example, snow storms are actually good for them because people cancel their appointments and stay home (big reason why Q12012 was so weak vs 2011). So in those 3 contracts, operation rates came in much higher than management had modeled, ruining the profitability of the entire company. Which their financials support. Management has said they aim for a company-wide ebitda margin of 6.5%. From 2008-2010 they managed to surpass this, delivering margins of 6.5%, 8.3%, and 8.3%. However, in 2011 the problems started and they only achieved a 6.2% ebitda margin. This year looks to come in below 5%. That's a terrible margin obviously.

    The former CEO of the company, Fletcher McCuster is the founder of PRSC. He did a decent job growing the company but wasn't ready to take on the NET business, and didn't build a team that knew either.

    Now starts the most significant selling point..the reason to buy. In summer of 2012 a hedge fund, Coliseum Capital, bought a 7% stake in the company. CC does what lots of other hedge funds do..buy a stake large enough to get their voice heard, then push for change and ultimately a sale. This same strategy was implemented in 2009 with Rural/Metro RURL. RURL is also in the NET business. In 2009 CC bought a small stake in RURL. 2010 CC bought more shares and increased their position. Late 2010 the RURL CEO was fired and replaced with a CC managing partner. Debt was renegotiated from 13% to 6% and margins were improved. Early 2011 RURL sold to a private equity firm for $17, or 9x ebitda. The initial shares were bought at $4 with purchases as high as $7.50.

    Now stop me when this sounds familiar. CC bought their initial stake in PRSC in early 2012 around $14. A managing partner of CC became a director of PRSC in June. In mid 2012 the PRSC share price dropped and CC bought more and now owns 16% of the company. Late 2012 the CEO/CFO "retired" (bahaha). A lead director has taken over as interim CEO and the former director from rural/metro has become the new CFO. CC also bought an extra 100k shares soon after the management change around $12.50.

    It's obvious what CC's strategy is and what will happen next. It's actually already happening. The conference call of Q32012 the exec in charge of NET said they're primary focus is on those 3 bad contracts killing their bottom line. The first was renegotiated to a higher rate. The second was terminated altogether. The third was still being reworked. It's clear they're emphasizing higher margins. The old goal of 6.5% margins is easily within reach. When RURL sold it had 10% margins, so that's the goal imo

    If we assume revenues of $1.1B and margins of 6.5% we get ebitda of $71.5M. RURL sold for 9x in 2011. Another NET business, EMS, sold to a PE firm for 10x in 2010. If we give PRSC 8x, that equates to a $570M EV. Take off the debt which should be down to 60M by the end of 2013 and the market cap of equity is $510mm. 13M shares outstanding and you have $39 a share. The stock is currently trading at $18.50
     
  19. GreenFrog

    GreenFrog Well-Known Member

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    Oct 20, 2008
    Might buy TSLA as a long-term play.

    I hope AAPL recovers to 600+ by the end of the year :(.
     
    Last edited: May 8, 2013
  20. Pennglock

    Pennglock Well-Known Member

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    Mar 20, 2006
    So Barclays has a high-yield ETF with the ticker: JNK. Love it.
     

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