Short it.
Saw some screen shots on Twitter that you can’t short it. But options are probably the best move anyway
market cap is $20b but revenues is $20m…wow talk about hype.
anyways…as for ideas, I like broadcom (avgo). Check out their operating cash flows…latest mgmt comments and quarterly numbers suggest they may be increasing dividends…P/e and ebitda multiples are cheap compared to not only sp500 but also to peers.
i actually track avgo. so i decided to look it up, anyways it’s a high growth companies that does a lot of acquisitions. after the 19b ca tech acq in july 2018, post acq ev of ~130b with new debt included. 24b rev, 12b ebitda. normalized net income prolly at 5b. 8.5 fcf. 5.5x rev. 11x ebitda. 15x fcf. 26x NI. they are cheap. these dudes tried to buy qcom for 130b in 2017 (lolzars). they bought broadcom in 2015 for 37b. so they an acq play. because of this all metrics are expanding qoq. growth is prolly 20% yoy. margins are still expanding but its already kinda high wit op margins about 50%. they have good borrowing costs at 3% so it makes sense for them to acquire other cos, plus they stagger their debt. overall its a good company, but i dont like the acq strategy as they plan to keep acquiring other infra software cos and cost cutting. this is essentially a private equity tech firm. now the co has been successful at doing this, but ish too risky for me. i like my growth the way i like my food: organic.
i’m not too focused on past or even current ratios or valuation metrics. I am more interested in catalysts…What is in the pipeline operational wise that can raise or lower its earnings and surprise q numbers?
Bought some Micron today at close ($45.98) ahead of earnings release.
Tepper was prettyyyy bullish on CNBC last week.
GE cutting divy again
What happened to this company? Was its capital arm really hiding all the rot within the industrial side?
Hard to believe
capital segment is the main issue, but their entire company is in decline except aviation and healthcare. here are the negatives!
capital segment from 2015 to 2017 loss -8b, -1.3b, -6.8b. (they are continuing to shrink this by another 25b, currently around 136b in assets vs 494b in 2014 before they started the firesale, and 661b at its peak in 2008). they are expecting to breakeven for ge capital in a year.
power segment from 2015 to 2017 had gains of 4.8b, 5.1b, 2.8b. there is a turnaround. multiyear fix.
oil and gas from 2015 to 2017 went from 2.4b, 1.4b, 0.3b. they spun it off and plan to sell.
lighting and transportation also in decline.
Oil and gas is not in decline. Look at WTI. Look at the broad industry. Baker Hughes is a powerhouse in the LNG, drilling, processing and deep water arena. GE owns 63% of BHGE which is a public company, the market value of their shares is about $22B and their lockup will expire midyear at which point they’ll liquidate. ~$22B of cash coming back to a $120B company…
Power (~29%) isn’t in structural decline, it’s still the backbone of global power generation. But it is a very cyclical business. They completed the Alstom acquisition at the exact peak right as Siemens and others were scaling back (Classic Immelt). Right now Siemen’s estimates global turbine demand is about 1/3 of manufacturing capacity (basically GE and Siemens). Hence the major restructuring and write down at GE. It will be cash generative again (very soon) as the restructuring annualizes, but it’s a fixed cost manufacturing business and they had to match their footprint.
Aerospace (~22%) is booming with next gen production but in ramp this year (using cash) owing to w/c and production build out, will be cranking out cash next year.
Healthcare (~15%) is great and will be spun with debt in early 2019.
Transportation deal should close by year end with $2.9B in cash consideration and primarily an equity stake in a dominating industry company.
Lighting shouldn’t even be mentioned, it’s <10% of revenue and being sold.
There was a lot of rot in the finance arm, but they took their write-downs and are in the process of selling that down. People that can’t understand this value case should just stay out of industrials. But people who don’t understand the business and aren’t accustomed to cyclicals will continue to live in the past talking about headlines while actual value analysts are looking at the wall of capital return and annualizing restructuring (~$3B of cost out in the last 12 months including >10,000 laid off) can do the simple math. Culp coming in off the board and pushing out Flannery right as this was about to go down for a $300M pay package and the glory will forever be one of the coldest moves of all time. I have a large chunk of shares at a high cost base ($14) but loaded up on long $18 strike calls the day of the Culp announcement (up >70%). All is right.
best of luck.
how much $$ did you drop on GE as stock?
how much $$ did you drop on the calls? at what expiration? planning to hold to the end like erj?
also just fyi, market cap is 120b, but enterprise value is like 180b. market cap can easily change, but the debt you have, that shit needs to be paid in full.
FYI I think I understand the company a bit better than you but thanks for the heads up on the EV. How much debt is getting spun off on the Healthcare business Nerdy? How much of $22B goes against the debt? The firm still has a 9% stake in combined Wabtec and shareholders have 40%. What value are you giving that? Do they sell the air leasing business for $10B, they’ve had unsolicited offers. What does normalized EBITDA look like coming out of this? Proud of you for reading the debt number though…
Anyhow, ERJ is great, feeling pretty good about that one, still above cost basis, production ramping, Boeing partnership, a few recent analyst upgrades and Brazil shaping up nicely. I said 5 year holding period 2 years ago, so no harm no foul on that one.
I won’t disclose stake size but it’s a nice one and the calls expire 1/20 but I’m planning to ditch them sometime around June as the market wakes up to reality. Stick to hyping SNAP, if the debt number says zero it must be a good buy right?
lol no need to get butt hurt. just wanted to see if ud stick to ur convictions and how much dough you dropping. just didnt want you to play the i went in at this price, got out at this price, and got in again game that you criticized others for. on the debt side, state ev next time, stating market cap on a levered company is misleading.
snap is dead. killed by insta. if they cant figure out how to ramp up revenue and generate profit, they are fooked.
I mean, the GE stake I’ve disclosed for awhile and I’m not playing the fake trade game if I’m telling you my cost base is above current market…
The options though were solid.
q1 2019 gdp decline.
q2 2019 gdp decline.
Is this for the US and are you saying growth slowing or outright decline and is that negative YoY or negative QoQ. Either way I’m calling bull.
Also what’s with people floating around butt hurt down voting investment talk?
Got to respect Black Swan for actually posting his picks, regardless of if they end up working out or not. When I switched jobs and was allowed to post stocks, I was going to start posting banks. But then everyone got happy about banks and I haven’t been motivated to find any. Good luck on the GE stuff. I still don’t really understand what edge can exist for these huge companies
Keep in mind for GE you’ll be down to three core business lines comprising ~60% of pre-chaos revenues so they won’t be the behemoth they were. Finance will be gutted to less than half its original size and shrinking or 1/5th if you go back even to early 2010’s. All that’s left is aero engines (type of turbine), power (turbines) and wind (spinning turbine type thing, ~10% of revenue) and in power they’ll be one of two industry competitors with like 80% market share and in aero they’ll be one of three major engine suppliers (and one of two offering next generation engines). So they’ll actually be pretty streamlined when it’s all said and done. The only reason they’ll be a “behemoth” is because they sell big ticket items that would overwhelm a smaller company when you consider the capex and investment required to design and produce. For instance the H-Class gas turbine which they have the largest market share in sells for as much as $500M a piece and are typically bought in at least pairs while the leap engines cost about $15M a piece and are also sold at a rate of approximately 2,000 per year. Aircraft are certified for a single type of engine then produced en mass. That’s a real moat. Boeing won’t even work with anyone but the three leading engine suppliers because of the supply chain and quality risk and the airlines want strong, relationships, reliability and commonality.
all just a guess…only time will tell.
I am saying the US…two consecutive quarters of gdp decline is recession but we shall see…I recently felt bold enough to say this of course with super gray lawyer like talk in between to cover my arse on my call with an insti investor.
You know…you gotta sound like we can see the future…and then on to say…because of the risks…we…the gist of it is get ready and invest more because we still (only) have a few months left. haha…you know the drill.