BAS Exhibits Classic 100% Upside Reversal

1,758 views

In December, for like two days, I sold out of BAS. I was done.

And then I was right back in again. I think now I can finally give a small sigh of relief. I mean, my chest is still tight, but at least BAS is a +50% winner for me again (my cost average is somewhere in the $7 range).

I’m sticking around in these names for longer yet. I understand that you do not believe. But I have this strange conspiracy theory ringing in my ears.

That this is all just one big gigantic attempt to fuck retail investors and make off with their toys.

One day, we’re all going to wake up and it will be like oil was never in trouble. The Saudi’s will flip a switch, toast to their good friends in Iran (who will perhaps be sunbathing with Exxon Mobile executives) and everything will be ’90’s summer fun again.

It doesn’t make sense, I know. I don’t have any proof, or evidence, or even anything that looks like “sanity”. But it’s going to happen, mark my words.

Anyway, I’m +16% for the year, sort of 1/3rd-ish of the way out of the hole I made in 2014.

Will Somebody – Please – Put A Stop To All The Law Firms

1,188 views

Will you look at the AEC headlines on Yahoo?

Following the buyout offer for the company, every shark and his brother is trying to get in on the feeding frenzy.

There is bound to be a comment section retort that “well, this is the job of law firms, to weed out the bad deals.”

Shareholders just got bought out for a 20% premium above market, and I have followed AEC long enough to know they are getting a great deal on this.

You and I both know, somewhere in the back of our minds, that this is not about protecting shareholders. There will be a time and a place for that discussion, and it is not now.

This is about blackmailing a corporation by pigeon holing them into a godless court system we have erected, whereby they can have two very unsatisfactory choices: 1) spend years jumping over capricious judicial hurdles or 2) pay off the law degrees.

The tasteless recourse is to pay the law firms, even when there is no real fair claim in play, just to tidy things up. Tell, what is more dangerous to shareholders; a couple percent on buyout offers orchestrated by people you can theoretically fire and overrule, or an environment where any jackass over the bar can hold you up for vast sums of money on a whim?

I am sorry if I’m mistaken, as I don’t follow the legal landscape very closely for reasons best described as “contempt”, but I don’t remember it always being this bad. It was just one or two suits, a few years ago.

Now, a board of directors can barely do anything without having eight class-actions stuffed down their throats.

I’ll take the MBA’s over the Juris Doctor’s, thank you. Someone needs to get this under control.

Basic Energy Services (BAS) Didn’t Really Lose Much Money

1,295 views

BAS is up 12% right now following their earnings report. They lost a ton of money on paper and the market isn’t falling for it.

Basically, despite idling equipment and firing 20% of personnel, BAS wrote off more in depreciation than the same quarter a year ago. But properly stored and idle equipment isn’t really depreciating, is it? So there was about $20 million there over my fair guess for what the company’s actual depreciation probably looks like, best estimate. Then they wrote off another $5 million or so in non-cash items tucked into expenses for employee retention and such.

You pull out the write downs and the company lost may $0.19 per share, compared to a gain (after one time items) of $0.11 per share in Q4 of 2014.

Let’s look big picture here; the company saw revenues plummet 35%. I mean, Completion and Remedial Services alone plunged 45%. All of that cost me $0.19? (Cue crude jerking motion of the arm)

I don’t care. We’re fine here. Management knows what they are doing. The company just renegotiated their credit facility, lowering the issue amount by $50 million to $250 million outstanding in order to strip some undesirable covenants, but adding an accordion feature that can get them to +$50 million or $350 million total if it’s an emergency. They have headcounts under total control, and they are defending market share vigorously. They’ll get cash flows to balance in the next 6 months and we go forward from there.

I’m not worried about BAS. BAS’ competition should be panicked.

Jeffrey I. Friedman Wins

1,223 views

Associated Estates Realty just announced a deal to sell itself to Brookfield Asset Management for $28.75 a share. The stock is up 16% today on the news.

A unit of Brookfield Asset Management Inc. agreed to buy U.S. apartment landlord Associated Estates Realty Corp. in a deal valued at $2.5 billion, including debt.

Brookfield offered to pay $28.75 a share in cash for the Richmond Heights, Ohio-based company, according to a statement Wednesday. The price is about 17 percent more than Associated Estates’ closing price on Tuesday.

This concludes a long and contentious battle over the proper valuation of AEC. I missed out on about the last 20% of upside (riding it from $15 to above $22), but still feel very happy for AEC shareholders nonetheless.

This company was treated so poorly by analysts for some sin that the CEO had committed in the 90’s. Was it an actual sin, or were the analysts being stupid? I don’t know.

What I do know is that AEC just unlocked major value for shareholders after laudable performance for the past five years. Nice work and congratulations to each of them.

That’s the match.

TIS A Sore Point On An Otherwise Clean Day

1,091 views

TIS is down 5.8% as of right now because they decided to price a 1.5 million share secondary offering. This is about 17% of outstanding shares so I can maybe see why the stock took a nice dive. The money is going to add another facility in South Carolina.

I have a longstanding policy not to overreact to secondary offerings, especially not when management can account for how they want to spend the cash. Just get the operation up and going in a reasonable timeline and these things have a habit of being neutral on existing shareholders…when they aren’t actually beneficial.

It’s the finance holes you have to look out for. But these are the companies that are losing money already. A profitable company rarely issues their way to losses.

I pay management to manage my companies for me. I’m not going to sit around micromanaging their choices, trading in and out like I have an attention disorder, because of something as stupid as a secondary offering. If they want another facility so bad they’re willing to make it happen right now, what does that say about expectations of future demand for product? So let them have it.

I’ll judge them on the outcomes.

Cameco & Canada Enter Uranium Agreement With India

1,354 views

Here’s the scoop. This has been a rumor for a while now, but India and Canada finally signed an agreement to deliver nuclear fuel to India for their power generation. This comes as India’s economy is (finally?) making it out of the 19th century and power requirements are growing.

Nuclear energy is on the way back in, because it has to be. Environmentalist groups are basically anti-everything, but they have upset the balance in one key aspect – a large block of the population, about half, believe that traditional carbon emitting forms of fuel will end all life on Earth.

While I’m sure Greenpeace would love to block every form of power generation conceivable, their victories against coal are going to create momentum for nuclear power. You cannot block the main source of fuel and also block development of all the other sources of fuel. I mean, advancements in solar are impressive, but we’re still in the midst of a decades long process of incorporating that into the grid. And let’s be honest, Greenpeace hates constructing those too.

The sane folks are going to slowly latch onto the anti-coal message (and by and large already have), but they aren’t going to embrace the hardcore environmentalist message…ever. So that means we’re going to get more nuclear power as public policy shifts to fuel diversification.

Japan restarts are being held up by some asshole judge. That’s actually fine for the Japanese for the moment since import pricing have presumably fallen sharply with the recent oil selloff. But how long do you really think that will last? Eventually power generation costs jump and they have to restart.

India is running to nuclear because growing nuclear is going to provide air pollution free generation, which they need same as China. My guess is CCJ stock jumped yesterday on confirmation that, yes, this is actually happening and not just a pipe dream.

BAS Exhibits Classic 100% Upside Reversal

1,758 views

In December, for like two days, I sold out of BAS. I was done.

And then I was right back in again. I think now I can finally give a small sigh of relief. I mean, my chest is still tight, but at least BAS is a +50% winner for me again (my cost average is somewhere in the $7 range).

I’m sticking around in these names for longer yet. I understand that you do not believe. But I have this strange conspiracy theory ringing in my ears.

That this is all just one big gigantic attempt to fuck retail investors and make off with their toys.

One day, we’re all going to wake up and it will be like oil was never in trouble. The Saudi’s will flip a switch, toast to their good friends in Iran (who will perhaps be sunbathing with Exxon Mobile executives) and everything will be ’90’s summer fun again.

It doesn’t make sense, I know. I don’t have any proof, or evidence, or even anything that looks like “sanity”. But it’s going to happen, mark my words.

Anyway, I’m +16% for the year, sort of 1/3rd-ish of the way out of the hole I made in 2014.

Will Somebody – Please – Put A Stop To All The Law Firms

1,188 views

Will you look at the AEC headlines on Yahoo?

Following the buyout offer for the company, every shark and his brother is trying to get in on the feeding frenzy.

There is bound to be a comment section retort that “well, this is the job of law firms, to weed out the bad deals.”

Shareholders just got bought out for a 20% premium above market, and I have followed AEC long enough to know they are getting a great deal on this.

You and I both know, somewhere in the back of our minds, that this is not about protecting shareholders. There will be a time and a place for that discussion, and it is not now.

This is about blackmailing a corporation by pigeon holing them into a godless court system we have erected, whereby they can have two very unsatisfactory choices: 1) spend years jumping over capricious judicial hurdles or 2) pay off the law degrees.

The tasteless recourse is to pay the law firms, even when there is no real fair claim in play, just to tidy things up. Tell, what is more dangerous to shareholders; a couple percent on buyout offers orchestrated by people you can theoretically fire and overrule, or an environment where any jackass over the bar can hold you up for vast sums of money on a whim?

I am sorry if I’m mistaken, as I don’t follow the legal landscape very closely for reasons best described as “contempt”, but I don’t remember it always being this bad. It was just one or two suits, a few years ago.

Now, a board of directors can barely do anything without having eight class-actions stuffed down their throats.

I’ll take the MBA’s over the Juris Doctor’s, thank you. Someone needs to get this under control.

Basic Energy Services (BAS) Didn’t Really Lose Much Money

1,295 views

BAS is up 12% right now following their earnings report. They lost a ton of money on paper and the market isn’t falling for it.

Basically, despite idling equipment and firing 20% of personnel, BAS wrote off more in depreciation than the same quarter a year ago. But properly stored and idle equipment isn’t really depreciating, is it? So there was about $20 million there over my fair guess for what the company’s actual depreciation probably looks like, best estimate. Then they wrote off another $5 million or so in non-cash items tucked into expenses for employee retention and such.

You pull out the write downs and the company lost may $0.19 per share, compared to a gain (after one time items) of $0.11 per share in Q4 of 2014.

Let’s look big picture here; the company saw revenues plummet 35%. I mean, Completion and Remedial Services alone plunged 45%. All of that cost me $0.19? (Cue crude jerking motion of the arm)

I don’t care. We’re fine here. Management knows what they are doing. The company just renegotiated their credit facility, lowering the issue amount by $50 million to $250 million outstanding in order to strip some undesirable covenants, but adding an accordion feature that can get them to +$50 million or $350 million total if it’s an emergency. They have headcounts under total control, and they are defending market share vigorously. They’ll get cash flows to balance in the next 6 months and we go forward from there.

I’m not worried about BAS. BAS’ competition should be panicked.

Jeffrey I. Friedman Wins

1,223 views

Associated Estates Realty just announced a deal to sell itself to Brookfield Asset Management for $28.75 a share. The stock is up 16% today on the news.

A unit of Brookfield Asset Management Inc. agreed to buy U.S. apartment landlord Associated Estates Realty Corp. in a deal valued at $2.5 billion, including debt.

Brookfield offered to pay $28.75 a share in cash for the Richmond Heights, Ohio-based company, according to a statement Wednesday. The price is about 17 percent more than Associated Estates’ closing price on Tuesday.

This concludes a long and contentious battle over the proper valuation of AEC. I missed out on about the last 20% of upside (riding it from $15 to above $22), but still feel very happy for AEC shareholders nonetheless.

This company was treated so poorly by analysts for some sin that the CEO had committed in the 90’s. Was it an actual sin, or were the analysts being stupid? I don’t know.

What I do know is that AEC just unlocked major value for shareholders after laudable performance for the past five years. Nice work and congratulations to each of them.

That’s the match.

TIS A Sore Point On An Otherwise Clean Day

1,091 views

TIS is down 5.8% as of right now because they decided to price a 1.5 million share secondary offering. This is about 17% of outstanding shares so I can maybe see why the stock took a nice dive. The money is going to add another facility in South Carolina.

I have a longstanding policy not to overreact to secondary offerings, especially not when management can account for how they want to spend the cash. Just get the operation up and going in a reasonable timeline and these things have a habit of being neutral on existing shareholders…when they aren’t actually beneficial.

It’s the finance holes you have to look out for. But these are the companies that are losing money already. A profitable company rarely issues their way to losses.

I pay management to manage my companies for me. I’m not going to sit around micromanaging their choices, trading in and out like I have an attention disorder, because of something as stupid as a secondary offering. If they want another facility so bad they’re willing to make it happen right now, what does that say about expectations of future demand for product? So let them have it.

I’ll judge them on the outcomes.

Cameco & Canada Enter Uranium Agreement With India

1,354 views

Here’s the scoop. This has been a rumor for a while now, but India and Canada finally signed an agreement to deliver nuclear fuel to India for their power generation. This comes as India’s economy is (finally?) making it out of the 19th century and power requirements are growing.

Nuclear energy is on the way back in, because it has to be. Environmentalist groups are basically anti-everything, but they have upset the balance in one key aspect – a large block of the population, about half, believe that traditional carbon emitting forms of fuel will end all life on Earth.

While I’m sure Greenpeace would love to block every form of power generation conceivable, their victories against coal are going to create momentum for nuclear power. You cannot block the main source of fuel and also block development of all the other sources of fuel. I mean, advancements in solar are impressive, but we’re still in the midst of a decades long process of incorporating that into the grid. And let’s be honest, Greenpeace hates constructing those too.

The sane folks are going to slowly latch onto the anti-coal message (and by and large already have), but they aren’t going to embrace the hardcore environmentalist message…ever. So that means we’re going to get more nuclear power as public policy shifts to fuel diversification.

Japan restarts are being held up by some asshole judge. That’s actually fine for the Japanese for the moment since import pricing have presumably fallen sharply with the recent oil selloff. But how long do you really think that will last? Eventually power generation costs jump and they have to restart.

India is running to nuclear because growing nuclear is going to provide air pollution free generation, which they need same as China. My guess is CCJ stock jumped yesterday on confirmation that, yes, this is actually happening and not just a pipe dream.