Founder of Equities Research. Stockdiagnostics Specialist

Founder of Equities Research. Stockdiagnostics Specialist
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Saturday, April 18, 2015

THREE NEW LONG STOCK PICKS!!!

My 3 favorite New Stock Picks in my Monthly Newsletter.
 3 Long Picks to Buy and Hold. 
I have a lot of conviction in these 3 picks!


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Wednesday, April 15, 2015

Titan Machinery REPORTS FY2015 LOSS ($1.51)

April 15,2015 8K 
April 15,2015 10K
Footnote: AMENDMENT NO.1 TO THE AMENDED AND RESTATED INVENTORY SECURITY AGREEMENT
Footnote: SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Footnote AMENDMENT NO.1 TO THE AMENDED AND RESTATED WHOLESALE FINANCING PLAN
Wells Fargo and AgriCredit reduce credit lines available to Titan Machinery
  • "As of January 31, 2015, we had a Credit Agreement with Wells Fargo, which includes a $350.0 million wholesale floorplan payable line of credit, a $225.0 million credit facility with Agricredit Acceptance LLC ("Agricredit"), and the U.S. dollar equivalent of $133.0 million in credit facilities related to its foreign subsidiaries to finance equipment inventory purchases. The Wells Fargo and Agricredit credit facilities were amended effective April 2015, which reduced the available borrowings to $275.0 million and $200.0 million, respectively".
 
  • Effective April 10, 2015, the Company amended its credit facility with Wells Fargo to change certain financial covenants, reduce the available lines of credit and change the interest rate, among other things. The minimum consolidated income before income taxes covenant was eliminated for the fiscal year ended January 31, 2015, and changed to a loss of $11.0 million for the three months ended April 30, 2015, a loss of $9.0 million for the six months ended July 31, 2015, income of $1.0 million for the nine months ended October 31, 2015 and income of $10.0 million for the trailing four quarters for each period thereafter. The previous minimum income before income tax covenant was $5.0 million for the period ended January 31, 2015, $6.0 million for each of the two periods ended April 30, 2015 and July 31, 2015, $10.0 million for each of the two periods ended October 31, 2015 and January 31, 2016, and $15.0 million for each period thereafter. The maximum net leverage ratio was changed from 3.0 : 1.00 for all periods to 3.00 : 1.00 as of January 31, 2015 and April 30, 2015, 2.75 : 1.00 as of July 31, 2015 and October 31, 2015, and 2.50: 1.00 for each period thereafter. The Floorplan Payable Line was reduced from $350.0 million to $275.0 million and the Working Capital Line was reduced from $112.5 million to $87.5 million. The interest rate margin was changed from a range of 1.5% to 2.875% to a range of 1.5% to 3.125% per annum, depending upon results of the Company's consolidated leverage ratio and consolidated income before income taxes.
  • Effective April 1, 2015, the Company amended its credit facility with Agricredit, which decreased its available borrowings under the credit facility from $225.0 million to $200.0 million and added an annual renewal fee.


 What a Horrible Business 0.00038% operation income/total revenue
FY2015 total revenue                     $1.9 billion
FY2015 income from operations:     $723,000
Market Capitialization                     $275 million
Price to Earnings Multiple             380 PE
What's wrong with this picture?

From Press Release: "The Company amended its bank syndicate credit facility in April 2015, and as a result of such amendment, was in compliance with all financial covenants of its credit facilities effective for the period ended January 31, 2015."

FY2016 Outlook
  •   Agriculture Same Store Sales Down 20% to 25%
  •  Construction Same Store Sales Flat 
  • International Same Store Sales Flat 
Why inventory reduction will make FY2016 revenues decline dramatically  
*points below from above report
  • *The first issue that they did not address is that there is a strong historical correlation between Titan’s revenue and its Inventories growth rates.
  •  * The ratio or multiple of Revenue that Titan has generated has ranged between 2.06 and 2.53 times its inventories since 2010.   

  WT_?
 "( including equipment inventory classified as held for sale)"

"The Company’s inventory level decreased to $879.4 million as of January 31, 2015, compared to inventory of $1.08 billion as of January 31, 2014, primarily reflecting a reduction in equipment inventory of $167.7 million (including equipment inventory classified as held for sale). The Company had $627.2 million outstanding floorplan payables on $1.2 billion total discretionary floorplan lines of credit as of January 31, 2015, reflecting a decrease of $121.5 million (including floorplan payables classified as held for sale) from the balance of $750.5 million as of January 31, 2014."

Related Party Transactions: (read more here: Most Overpriced Stock Titan Machinery)
  • We leased one store property pursuant to an operating lease from C.I. Farm Power, Inc., a company affiliated with Peter Christianson, our President and Director, during each of the years ended January 31, 2015, 2014 and 2013. The lease expires on July 31, 2018, subject to the right of either party to terminate upon 60 days' written notice, We also lease buildings from Dealer Sites, LLC ("Dealer Sites"), an entity in which a minority position is owned by an entity affiliated with David Meyer, the Company's Board Chair and Chief Executive Officer, Peter Christianson, the Company's President and a director, and certain other Christianson family members. An entity affiliated with Tony Christianson, one of the Company's directors, formerly held a minority interest in Dealer Sites, LLC until December, 2012. During the year ended January 31, 2013, Dealer Sites was deemed to be a related party, however, as of January 31, 2013 and through the year ended January 31, 2015, Dealer Sites was not deemed to be a related party as total related party ownership in the entity was less than 10%. The Company leased 48 buildings pursuant to different operating lease agreements with Dealer Sites, LLC ("Dealer Sites") as of January 31, 2013.

    • Rent expense for operating leases with related parties totaled $0.1 million, $0.1 million and $7.0 million for the years ended January 31, 2015, 2014 and 2013, respectively. The Company has leased one store property pursuant to an operating lease from C.I. Farm Power, Inc., a company affiliated with Peter Christianson, the Company's President and a director, during each of the years ended January 31, 2015, 2014 and 2013. The lease expires on July 31, 2018, subject to the right of either party to terminate upon 60 days' written notice, The Company also leases buildings from Dealer Sites, LLC ("Dealer Sites"), an entity in which a minority position is owned by an entity affiliated with David Meyer, the Company's Board Chair and Chief Executive Officer, Peter Christianson, the Company's President and a director, and certain other Christianson family members. An entity affiliated with Tony Christianson, one of the Company's directors, formerly held a minority interest in Dealer Sites, LLC until December, 2012. During the year ended January 31, 2013, Dealer Sites was deemed to be a related party, however, as of January 31, 2013 and throughout the years ended January 31, 2015 and 2014, Dealer Sites was not deemed to be a related party as total related party ownership in the entity was less than 10%. The Company leased 48 buildings pursuant to different operating lease agreements with Dealer Sites as of January 31, 2013. As of January 31, 2013, the leases expired on various dates through January 2028, contained purchase options based on fair values at the time of purchase, and provided that the lessee pay all property taxes, utilities, insurance and all expenses necessary for the general maintenance of the respective buildings. During the year ended January 31, 2013, the Company also received $1.3 million, pursuant to sale-leaseback agreements with Dealer Sites.
      The Company utilizes C.I. Construction, LLC ("C.I. Construction"), an entity owned by the brother-in-law of Peter Christianson and Tony Christianson, to perform construction management services for its building and leasehold improvement projects. Payments to C.I. Construction, which include cost reimbursements of certain building supplies and other construction costs, totaled $1.9 million, $3.9 million and $6.7 million for the years ended January 31, 2015, 2014 and 2013, respectively. The Company also had accounts receivable from C.I. Construction of $0.1 million outstanding as of January 31, 2014; no such amounts were outstanding as of January 31, 2015. During the year ended January 31, 2013, the Company also paid a total of $0.2 million to Cherry Tree & Associates, LLC, an entity affiliated with Tony Christianson, primarily for services related to the Senior Convertible Notes offering.
       










Tuesday, April 14, 2015

Ophir Gottlieb, CEO, Capital Market Laboratories is A Genius



 A month or two ago I came across an online financial website called
Capital Market Labs and I have been hooked on using the tools ever since.
I was so excited that I placed a call to the company and spoke directly
with the CEO, Ophir Gottlieb and praised him for creating such
outstanding research tools.

He was a great guy on the phone and
was kind enough to spend quite a bit of time with me and then floored me
when he told me that soon the site would be exponentially more powerful in
a couple weeks. Well now its a month or so later and sure enough the site is even bigger and better!


Anyone who invests in the markets should be using Capital Market Labs!

If anyone needs any help or would like to connect with me and go over the
site, I would be happy to surf the site with you. (it has a free version
and a premium version).. I don't work for the company i just enjoy using the tools.

Below is an interview on BNN with Ophir


BNN - Watch TV Online | Off the Charts: Twitter, Apple and Amazon


Everyone in the Market Place should be following Ophir




Thursday, April 9, 2015

Two Years Ago Today, A Warning That Has Been Cut In Half

NAME
TICKER
4/9/2015
4/9/2013
Perform
2/22/2013
Perform
Titan Machinery
TITN
$13.58
$26.12
-48%
$28.67
-53%
Standard & Poors 500 index
GSPC
$2,091
$1,568
33%
$1,502
39%



On April 9,2013, the day before Titan Machinery (NASDAQ: TITN) reported FY2013 annual financials, Equities Research Warned the public that the stock @ $26.12 was overpriced based on fundamental research.



On February 22,2013 Equities Research Newsletter Subscribers were given the Warning the Febrausry Newsletter @ $28.67

Today @ $13.58 I continue to Warn on Titan Machinery as the company prepares to release FY2015 Annual financials next Wednesday April 15th before the market opens.
 










March 9,2015 Warning preliminary FY2015 annual financials released






TITAN ANNOUNCED THEY EXPECT YEAR END LOSS OF $32 MILLION AND WARNS COMPANY IS IN NON COMPLIANCE WITH COVENANT OF WELLS FARGO NOTE, BUT CHAIRMAN SETTLES INVESTORS BY SAYING HE ANTICIPATES A 6TH AMENDMENT From the lender. 

The bond (2019) fell to an all time low that week to $66.50 yield 14.88% , but after the Chairman stating he anticipates the lender to amend the covenants, which would be for a 6th time and 4th tim in 1 year, BOND IS NOW TRADING UP 12% since the low less than a month ago.

What's very dangerous for stockholders and bondholders is THE RISK of default if Wells Fargo Does NOT Amend Covenant on the terms of the $150 million convertible Note for a 6th Time.
 The public disclosure that is due out in the 10K regarding how Wells Fargo will handle the company which is  expecting to be in noncompliance with the current minimum income before income tax covenant as of the end of its January 31, 2015 fiscal year.
  •  Chairman Meyer stated last month in a press release that "The Company anticipates amending this covenant associated with this credit facility effective as of the end of its January 31, 2015 fiscal year and for future periods, and therefore does not anticipate being in violation of any covenants as of January 31, 2015."

INVESTORS LONG THE STOCK AND BONDS NEED TO HOPE THAT WELLS FARGO MAKES A 6th Amendment like Chairman Meyer Anticipates.

Don't Trust Titan Machinery's Guidance


Wednesday, April 8, 2015

An Equities Research Newsletter Annualized 24% Over 6 Years

In July 2008 when NASDAQ was down 14% year to date for 2008, Equities Research wrote it was time to be Bullish on Yahoo!, Amazon and EBAY.

Since the commentary on July 21,2008 (6.7 years ago)  NASDAQ has annualized 12% for a total gain of 117%.  Meanwhile over the same period these 3 tickers have an annualized return of 24% and a total gain of 323%.
.

NAME
TICKER
7/21/2008
4/8/2015
6.7 yrs
Annual Rtn
AMAZON
AMZN
68.48
381.51
457%
29%
YAHOO!
YHOO
21.67
45.05
107%
11.50%
EBAY
EBAY
24.06
56.89
136%
13.70%
3 tickers
3 tickers


323%
24%
NASDAQ
NASDAQ
2279.53
4948
117%
12%


*note: if you look really deep into some old newsletters you'll find some that didn't perform so well and others that outperformed even this newsletter.

.

Disclaimer.
All Newsletters, published by Equities Research, LLC , does not constitute a recommendation by Equities Research, LLC to buy, sell, hold any security, or to follow any particular trading or investment strategy. Also, the information provided should not be construed as an offer, or a solicitation of an offer, to buy or sell securities. An investor's best course of action must be based upon individual circumstances. EquitiesResearch.com shall not be liable for any damages or costs of any type arising out of or in any way connected with your use of The Newsletters, or any of our services.

EquitiesResearch.com, its officers and employees may buy and sell any position in the securities or companies mentioned
Content copyright 2005-2015. Equities Research LLC. All rights reserved

Tuesday, April 7, 2015

New Short Pick At An All Time High (A.Schulman)


Equities Research issues a Strong Sell on A.Shulman (NASDAQ: SHLM) @ $48.40 this morning after the company reported 2nd quarter FY2015 last night after the close.
A. Shulman reported a loss for Q2 ending February 28,2015, it was the first loss in a 2Q since 2010. Revenue for the quarter declined by $46 million (-8%) vs Q2 2014.
For the six month period the company's net income fell 44% from $22.2 million to $12.8 million.


To learn more contact Tom Renna 908-477-4796 
www.bigcharts.com















I JUST WANT TO SAY ONE WORD TO YOU



Sunday, April 5, 2015

Barron's Features Olstein Fund's Cash Flow Specials

Robert Olstein, the founder of the Olstein Funds, is a top money manager on Wall Street for over four decades. The Olstein Funds have always been a favorite of mine here at Equities Research.

This weekend Barron's featured  Eric Heyman, the co-manager of the Olstein Strategic Opportunities fund (ticker: OFSAX ), with his Top 5 Stock Picks: Unloved, but Cash Rich (beaten-down stocks producing lots of cash flow.)
  •  Three small-cap stocks he likes right now are Integra LifeSciences ( IART ), Wesco International ( WCC ) and ABM Industries ( ABM ). 
  •   Lifetime Brands ( LCUT )
  •  Daktronics ( DAKT )
Equities Research Archives: 
  • Bob Olstein Favorite Metric: FREE CASH FLOW

     

    (click here) OLSTEIN: Earnings vs. Cash Flow

    INVESTING, When a Rosy Picture Should Raise a Red Flag by Gretchen Morgenson

      Eight Warnings You Want to See by Herb Greenberg

     Fund Junkie by Ian MacDonald

     Sometimes It Takes a Sherlock by Gretchen Morgenson 

     Fair Game:Why All Earnings Are Not Equal by  Gretchen Morgenson

     American Association of Individual Investors  October 2010
    What You Can Learn from Shareholder Letters by Eric R. Heyman

     Depreciation, An Appreciation by Lawrence C. Strauss

     Olstein Shareholder Letters