Wednesday, April 29, 2015

"Gold is Only Answer" Fred Hickey Tweets "Stock Market is Toast",




Top Short Picks from Equities Research 

 Stratasys is now trading @ $42 this morning pre-market after the company announced last night after the close weak fundamentals.

Equities Research Warned on Shulman @$48 on April 7th and shares closed last night under $42.

Equities research Warned on Titan Machinery @ $30 and shares fell to a ytd low on March 10th @ $12.10. Shares have since gained 31% trading at a Market Capitalization of $310 million. Equities Research continues to warn on TITAN as it trades at a forward PE over 700.


Follow Fred Hickey on Twitter here

Tuesday, April 21, 2015

A Warren Buffett Quote About Cash Flows

Every year in the Berkshire Hathaway Inc.(NYSE: BRK $213,725.00) annual reports, chairman Warren Buffett shares his investment philosophy and strategies.

I recently went through each annual report since 2000 and did a search for the phrase "cash flow".
Each report averages about 20 pages and after searching 15 reports the phrase "cash flow" only was found once. (in 2000)

6/1/2000

Warren Buffett, Chairman of Berkshire Hathaway: click to  <2000 Annual Report:

"Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years.
Market commentators and investment managers who glibly refer to growth and value styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component--usually a plus, sometimes a minus-- in the value equation."

A Favorite Blog About Finance, Economics and Public Policy

Stone Street Advisors is one of the top blogs I follow to learn about fundamental analysis. The founder of Stone Street is Jordan Terry, here is his profile summary from his twitter handle @The_Analyst .
 (Founder & MD, Stone Street Advisors LLC. L/S fundamental value & special situations research/idea generation for Hedge Funds Information@stonestreetadvisors.com)
Here is a great post he published yesterday along with a link to a 7 page report titled : 
  • P/E Ratios – You’re Doing it Wrong

    " Here, I explain why it is imperitive for traders and investors alike to understand the drivers of relative valuation ratios like P/E – free cash flow to equity, equity cost of capital, and long-term growth rate – so that comparisons between firms, across industries, and over time have context, rendering comparison and analysis far more useful than just looking at current and historical levels or averages." 

    Readers should follow Jordan Terry at twitter.

 

 

 



Yahoo Message Board Won't Allow This Post

Every so often I read the Yahoo Finance message board on different stocks that I am following.
A handful of times over the years I have even posted my own comment under certain tickers.

A month ago I posted a comment in the message board for Titan Machinery regarding their bond disclosure and weak fundamentals and after 1 day the post was removed by the administrator.

Yesterday I added another comment to the Yahoo message under the Titan ticker and it was removed by last night. I didn't save the previous comment that I made a month ago, but I did save the comment that I posted yesterday.

April 20,2015 MY post that was removed on the yahoo message board under ticker TITN
The Definitive 14A proxy statement will be filed any day now. There you will find more disclosure than what is in the annual report.
Also Agricredit and Wells Fargo both reduced their available Floorplan lines of credit to TITN by a total of $100 million.  SO they will have less borrowing power in future.
With so much less inventory it will be harder for them to produce sales. They are already simply a reseller and are finding it nearly impossible to compete with the manufacturers CAT , DE and CNHI.
Also, don't lose track that this is just an all around horrible business.
ON $1.9 billion in sales the income from operations was $723,000.
 0.00038% operation income/total revenue) how horrible can you get?

Prior years they only paid interest on approx 50% of inventory now they pay interest on nearly 75%

the list goes on and on....the tricks wells fargo plays with the covenant amendments is out of hand. 6 amendments. 4 in last 12 months. Bondholders who sold those bonds under $70 must be fuming. Had those bondholders known that WFC was going to amend covenants after company was non-compliant they may not have sold so low.

last time i wrote a message like this it was flagged and deleted. I'll save this one and post it somewhere else just in case the yahoo police flag it again.

Saturday, April 18, 2015

THREE NEW LONG STOCK PICKS!!!

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


Payment Options

Wednesday, April 15, 2015

Titan Machinery REPORTS FY2015 LOSS ($1.51)


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 
*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



Wednesday, April 1, 2015

GO DADDY Initial Public Offering (IPO)

Go Daddy Inc. is set to go public today on the New York Stock Exchange through an underwriting led by JP Morgan Securities (JPM), Citibank (C) and Morgan Stanley (MS).

PROSPECTUS  (issued March 19,2015)

PROSPECTUS (issued June 9,2014)

Ticker: GDDY

  • expected raise: 25.3 million shares @ $19 , $480 million.
  • expected market capitalization : $4.2 billion
2014 Sales: $1.4 Billion
2014 Loss : $143 million
Long term Debt as of 12/31/2014:  approx $1.4 billion


CASH FLOW
Year Ended December 31,
       2012               2013               2014       
(in thousands)
Net cash provided by operating activities
$ 106,110    $ 153,313    $ 180,568   
Net cash used in investing activities
(59,365 (208,466 (107,319
Net cash provided by (used in) financing activities
(35,087 91,120    (29,711







Net increase in cash and cash equivalents

$ 11,658   
$ 35,967   
$ 43,538   









GO DADDY originally filed with Securities & Exchange Commission in 2006 before withdrawing due to poor market conditions.
2006 Filings:


Naked Shorting page 204 Prospectus issued March 19,2015
"In order to facilitate the offering of the Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option.
The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of Class A common stock in the open market to stabilize the price of the Class A common stock. These activities may raise or maintain the market price of the Class A common stock above independent market levels or prevent or retard a decline in the market price of the Class A common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time"