Ophir Gottlieb, CEO, Capital Market Laboratories is A Genius

Capital Market Laboratories

 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


Tweets by @OphirGottlieb

Titan Machinery's $500 Million Negative Cash Flow

The End is nearing for Titan Machinery (NASDAQ: TITN) as sales and net income have continued to declined and inventories and debt have skyrocketed.

Titan Machinery  has generated Negative Operational Cash Flow of $500 million over the last 19 quarters.

Target Cash Flow Declines $2.6 Billion (-63%)

Target Corporation (NYSE: TGT $59.25) announce 2nd quarter financials this morning for the period ending August 2,2014.

Operational Cash Flow:

FY2013 6 months: $4.1 billion
FY2014 6 months: $1.5 billion (63% decline)

TTM ending Aug 3,2013 : $6.96 billion
TTM ending Aug 2,2014 : $3.92 billion (43% decline)

Awaiting Titan Machinery Q2 Results

Titan Machinery (NASDAQ: TITN) Fiscal Year 2015 2nd quarter ended July 31,2014. Over the last several years Titan has reported Q2 financials within the first 10 days of September. Titan has not yet announced when they will be reporting Q2  financials.

Don't Be Surprised if Titan Machinery Pre-Announces Q2  Financials in August

Investors should note that in 2013 Titan shares were halted after the close on May 23,2013 when the company uncharacteristically announced preliminary  FY2014 Q1 financials (approximately 2 weeks before they normally released Q1 numbers). In the press release and on the conference call the following morning, the company  significantly lowered expected Q1 financials and cut their year end FY2014 outlook dramatically.

FY2013 Q1 May 23,2013 Titan Machinery Press Release:

• "First quarter fiscal 2014 revenue is expected to be approximately $50 million less than the Company previously anticipated;"
•  "Preliminary loss per diluted share for the first quarter of fiscal 2014 is expected to be in the range of $(0.01) to $(0.03) on approximately 20.9 million weighted average diluted common shares outstanding, compared to net income of $0.36 on approximately 21.0 million weighted average diluted common shares outstanding in the first quarter last year."
•  "believe we will see improvements in our construction segment in the second quarter and throughout the remainder of fiscal 2014."

FY2013 Q2 reported on September 5,2013 Company  press release



FY2013 Q2 Financials Examined by Equities Research LLC,

•  Thursday, September 5, 2013

  Titan Machinery EPS Falls 73%

  Titan Machinery Lowered Guidance for FY2014 from  $1.70-$2.00 down to $1.20-$1.50
  Q2 Operational Cash flow NEGATIVE $42 million
  
  
  
  
  
  EPS declined 73% 6 months
  FY2013 6 months : $0.60
  FY2014 6 months : $0.16
  
  
  EPS declined 28% Q2 vs Q2
  FY2013 Q2 : $0.25
  FY2014 Q2 : $0.18
  
  
  CASH declined $22 million
  January 31,2013 : $124 million (Accounts Payable $28 million)
  July 31,2013 :       $102 million (Accounts Payable $39 million)
  Total Current Liabilities
  January 31,2013 : $804 million
  July 31,2013 :       $969 million
  Total Long Term Liabilities 
  January 31,2013: $239 million
  July 31,2013 :      $264 million
  Net Income vs Operational Cash Flow
  Trailing 10 quarters ending July 31,2013 Net Income:                 $89 million
  Trailing 10 quarters ending July 31,2013 OP. Cash Flow:        -($345 million)

 

NU SKIN 10Q: Negative Operational Cash Flow

Nu Skin filed their FY2014  2nd quarter 10Q today with the Securities & Exchange Commission.

FY2014 6 months Operational Cash Flow declined over $370 million vs. the comparable first 6 months of FY2013.

• FY2013 6 months Operational Cash Flow : Positive $188 million

• FY2014 6months Operational Cash Flow : NEGATIVE ($184 million)

$NUS 真是个废物
— tom renna (@StockPicker908) August 13, 2014

Op. C/F falls by $370million. $NUS 10Q 6mos 2014 operational cash flow Negative ($184 million) vs positive $188 mil CF 6mos 2013
— tom renna (@StockPicker908) August 13, 2014

New Credit Agreement Requirements Makes Titan Highly Speculative

New Credit Agreement Requirements Makes Titan Highly Speculative

Investors with high risk tolerance looking to make multiples on their investment seek out highly speculative stocks. There are thousands of these stocks available on the over the counter bulletin board and pink sheet market, trading at pennies per share.  Investors are looking at these micro cap stocks that mostly trade below a $10 million market capitalizations and hope the underlying businesses can grow to $100 million valuation one day over the long term.  The common denominator among these stocks is the inability for these businesses to generate enough internal operational cash flow to grow.  These companies are all out seeking financing from Wall Street firms, on both the debt and equity side. Will Titan do another Underwriting soon?

Titan Machinery was a little private reseller of agriculture and construction equipment located in the mid west prior to it successfully going public in December 2007.  

By Titan being a publicly traded company it was able through the years to raise equity and debt to compensate for their inability to generate operational cash flow.  Since February 1,2009 Titan has generated over $517 million in Negative Operational Cash flow.

 

• FY2010 Negative $47 million Operational Cash Flow

•  FY2011 Negative $35 million Operational Cash Flow 

•  (FY2012 Q2) Equity Underwriting 4.2 million shares @ $28.75

•  FY2012 Negative $182 million Operational Cash Flow 

• (FY2013 Q2) Debt Underwriting $150 million Convertible Note 

•  FY2013 Negative  $115 million Operational Cash Flow 

•  FY2014 Negative $82 million Operational Cash Flow

•  FY2015 Q1 Negative $54 million Operational Cash Flow 

Since Wells Fargo has recently made two amendments to the $150 million Credit agreement, Titan’s risk of violating these new covenants has increased substantially. Unlike most high risk micro cap securities that have low market capitalization with high upsides, Titan Machinery trading near $16  per share has an even higher risk with an $330 million downside if it was to default on its note.

Archives

• Most OverPriced Stock Titan Machinery Files Proxy Statement

  Titan Machinery Reports Q1 Loss of ($0.20) 

  Don't Assume Titan Machinery Will Be Profitable because Management Says So

   

Don't Assume Titan Machinery Will Be Profitable because Management Says So

On Yahoo Finance someone asked "What PE Should Titan Machinery Trade At?"

My Answer:

Your question assumes Titan Machinery will even have any earnings in FY 2015.
I question if Titan will even be profitable this year.
In the company's most recent reported Q1 they loss ($0.20) per share. The quarter prior to that ,Q4, they loss money as well.

We can't expect the management's guidance to mean anything.

Management made the following Guidance for FY2014:

• On April 10,2013 gave guidance for FY2014 of $2.00-$2.30.

1 month later on:

• On May 23,2013 guidance for FY2014 was lowered to $1.70-$2.00

3months later on:

• On September 5,2013 guidance was lowered again to $1.20-$1.50

When the year ended on January 31,2014 the FY2014 EPS came in @ $0.78 per share.

Everyone needs to realize that this company has generated a total of negative $434 million of operational cash flow over last 13 quarters combined.

The Management is deceiving the Public by advertising NON GAAP cash flow. The only reason that that insignificant number was positive in this Q1 is because they add the monies they borrowed in the first quarter to cash flow. (that is why they allowed the floor plan debt to go up, so that they can make their NON GAAP cash flow number to be positive, how ridiculous)

 By increasing their net floor plan debt they were able to report a positive NON GAAP C/F number in Q1. Ridiculous? definitely.

Management has an equity interest in Dealer Sites LLC. Titan recently increased their lease agreements with Dealer Sites from $50million to $100 million last year.
Management is making money on properties, (thanks to Titan footing the bills).
Titan pays for insurance and all expenses of the property although it is owned by outside entity owned by management.
In FY 2012 and FY2013 the 10K disclosed the related party dealings in detail. In April's FY2014 10k , Deloitte allowed Titan to omit this disclosure.

It appears to me that CNH was stuffing Titan with inventory these past few years to boost CNH's own revenue/profit numbers (timely with Fiat deal). The relationship with CNH is very Cozy. A large percentage of the inventory that Titan has parked, they are not paying interest on.

Wells Fargo recently amended the convertible note terms for the 3rd time. (tightening the covenants more and more).
Titan's debt/equity for Q1 increased from .70 to .716
 

The other big issue here, is what are these Mutual Fund Analysts (Money Managers) getting paid for? Have you seen what ZACKS has been reporting? another joke.

If you look on Morningstar at the list of institutional holders of both the Equity and the Debt, I wonder how do these decision makers have jobs? It is even more scary that mom and pop are trusting their nest egg monies with these amateurs (and they actually pay these funds to manage their money).

oh boy, Wall Street, what a silly place

List of Institutional Holders  

Archives:

Most OverPriced Stock Titan Machinery Files Proxy Statement

A Review of Securities & Exchange Commissions Comments regarding Titan Machinery Disclosure

Markowski says Titan Machinery Will Be Bankrupt

10K FootNote: Wells Fargo Tightens Debt Agreement (again) on Titan Machinery

Under Armour Q1 Operational Cash Flow declines 100%

$UA Q1operational cash flow declined from Negative $74 mil to Negative $147 million. 100% decline. TTM OP CF is $50 mil. trading @ 200 X C/F
— tom renna (@GFNNstock) April 24, 2014

Titan Machinery's Inventory Reduction Guidance will Lower Future Sales Significantly

Creditors Forcing Titan To Switch Gears

report by Michael Markowski, www.OnlinefinancialSector.com

When Titan Machinery released its fiscal 2014 year end results on April 10, 2014, it forecasted or provided guidance for its operating cash flow.  Titan stated that it was going to generate $60 million to $80 million in positive non GAAP operating cash flow for its current fiscal year ending January 31, 2015.  It further stated that the method that it would utilize for the Company to generate positive operating cash flow in a fiscal year for the first time in at least six years was its liquidation or its reduction of its equipment inventories by $250 million.  Under Titan’s inventories reduction guidance total inventories would decline from $1.08 billion as of January 31, 2014 to $758 million by January 31, 2015. 

We are highly confident that the decision by Titan’s management to reduce its inventories to $758 million will result in a decline in the Company’s revenue and profits for fiscal 2016 as compared to fiscal 2015.  Fiscal 2016, would be the second consecutive year that Titan’s revenues decline.  Titan, based on its own guidance that it has already given, will depart fiscal 2015 by reporting its first annual revenue decline since it’s been a public company. 

Those who are invested in Titan’s shares are having a great time at the grand party that started as soon as its management concluded their conference call.  During the call, which included a 23 page presentation, Titan’s management provided details and highlights for its fiscal 2014 earnings report.  It also provided guidance for fiscal 2015. 

Every great party always ends with a hangover.  As Titan moves through fiscal 2015, the analysts making of and publishing their projections for its next fiscal year (2016) beginning on February 1, 2015, will become increasingly paramount.   As the analysts and Titan’s institutional investors begin to do their homework we have no doubt that they will come to the same conclusion that we have come to.  Doubts as to whether or not Titan can continue to be a growth company or even meet its EPS projections for 2015 will begin to surface.  During 2013, Titan’s management lowered it EPS guidance for its 2014 fiscal year three consecutive times.  . 

Titan Machinery’s EPS Guidance for Fiscal Year (FY) January 31, 2014

Date of Guidance EPS Estimate FY 2014 Final EPS  FY 2014 04/10/13 $2.00-$2.30 $0.78 05/23/13 $1.70-$2.00 $0.78 09/05/13 $1.20-$1.50 $0.78 12/05/13 $0.55-$0.75 $0.78

There was one highlight at the bottom of page 19 of the presentation which Titan’s management provided to analysts and investors on April 10, 2014 that raised our eyebrows.  It was that the company had “$410.7 Million Available on $1.2 Billion Floorplan lines of Credit”.  On November 14, 2013, Titan’s Credit Agreement with Wells Fargo had been amended.  Under the amended terms and conditions Titan’s Net Leverage Ratio (Total Liabilities/Tangible Equity) was permitted to be a maximum of 3.5 for any fiscal period on or after January 31, 2014.  

According to the Balance Sheet data which Titan published in its April 10^th press release its Total Liabilities were $1.15 billion on January 31, 2014.  Titan’s permitted Total Liabilities under the Credit Agreement that was amended on November 14, 2013 was $1.31 billion.  The maximum net amount that Titan could have increased its Total Liabilities by as of January 31^st was $160 million and not the $410.7 million that the company claimed was available via its unused portion of its Floorplan lines of Credit.  The difference between the two amounts is $250.7 million.  

On April 3, 2014, which was one week before Titan announced its earnings, the company’s Credit Agreement with Wells Fargo was again amended.  Under the new terms the Company’s Consolidated Net Leverage Ratio was decreased from 3.5 to 3.25 by October 31, 2014 and to 3.0 by January 31, 2015.  The Total Liabilities permitted under the amended terms was $1.22 billion for fiscal quarters ending July and October 31^st and $1.12 billion on January 31^st.  This assumes no change in Titan’s tangible book value.  In its guidance Titan indicated that the company would take a $4.2 million pre-tax charge associated with the company’s realignment that it expects to be realized in the first quarter of fiscal 2015.  This charge could lower Titan’s tangible book value and reduce it permitted Total Liabilities. 

Based on the recently amended Wells Fargo Credit Agreement, Titan’s Total Liabilities for its fiscal quarters ending on July 31, 2014 and October 31, 2014, can only increase by $70 million as compared to what its Total Liabilities were on January 31, 2014.  By January 31, 2015, Titan’s Total Liabilities will have to decline by $30 million as compared to January 31, 2014 for the company to remain under its ratio of 3.0.  The unused portion ($410.7 million) of its Floorplan line of credit will be un-utilizable.

Obviously, the decision that management made to reduce its inventories for the purpose of Titan to begin to generate positive operating cash flow was based on necessity.   However, Titan’s management overreacted in their including a $250 million reduction of inventories by January 31, 2015, in their guidance for Fiscal 2015.  Titan’s management did not do their homework.  They have not seriously considered the ramifications or repercussions from their reducing inventories by 25%. 

There are two issues that Titan’s management should have considered before they calculated the amount of that they were reducing their inventories by for their fiscal 2015 guidance.  If these issues had been considered we believe that they would have made the decision to reduce Titan Machinery’s Inventories by an amount that was much less than $250 million.   

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 table below illustrates and compares the growth rates of Titan’s inventories and revenue for its fiscal years 2010 through 2014.  The decline in the growth rate of its inventories for 2014 to 8.5% from 24.2% resulted in a sharp decline in its revenue growth rate to 1.3% from 32.5%.  

Growth Rates for Titan Machinery’s Inventory and Revenue for Fiscal Years 2010 through 2014

Fiscal Year Inventories Growth Rate Revenue Growth Rate 2014 08.5% 01.3% 2013 24.2% 32.5% 2012 74.0% 52.3% 2011 23.5% 20.4% 2010 44.4% 21.4%

The second issue that Titan’s management failed to consider is the company’s historical Revenue/Inventories ratio.  The table below further illustrates the relationship or ratio between Titan’s revenue and its inventories.  The ratio or multiple of Revenue that Titan has generated has ranged between 2.06 and 2.53 times its inventories since 2010. 

Titan Machinery’s Revenue/Inventories Ratios, Fiscal Years 2010 through 2014

Fiscal Year Revenue Inventories Rev/Inv Ratio 2014 2.23B 1.08B 2.06 2013 2.20B 929M 2.37 2012 1.66B 748M 2.22 2011 1.09B 430M 2.53 2010 838M 348M 2.41

Titan has forecasted that it will reduce its inventories from $1.08 billion to $758 million by January 31, 2015.  It’s the one and only forecast in Titan’s guidance that will be easy for them to achieve.

Since Titan’s $250 million reduction in its Inventories is all but guaranteed it’s much easier for even a novice to project future revenue for the company.  Projecting the minimum and maximum ranges of future annual revenue for Titan is as simple as multiplying the projected amount of inventories by the company’s lowest and highest revenue/inventories ratios over its prior five years.  With the reduction in Titan’s inventories we are projecting its revenue range for fiscal 2016 to be $1.56 billion at the low end and $1.91 billion at the high end.  Our top end number for 2016 is below Titan’s low end revenue number of $1.95 billion for fiscal 2015. 

Titan’s management in providing guidance on its operating cash flows and reduction in inventories has painted itself into a corner.  Its due to them not considering the downside regarding the reduction of inventories by 25% in fiscal 2015 as compared to fiscal 2014.  Its extremely difficult for any company to make the argument that they can continue to increase revenue while significantly decreasing inventories.  We have no doubt that savvy investors and analysts will confront Titan’s management with the same mathematical argument that we are making.  Titan’s severe inventory reductions will result in its generating significantly lower revenue and EPS for both its 2015 and 2016 fiscal years.       

As soon as the stock market starts to price in or discount the increasing probability that Titan Machinery will have lower revenue in fiscal 2016 as compared to fiscal 2015, its share price will begin to head lower and go to a single digit price to earnings (PE) multiple or ratio.  Either actual or projected consecutive annual revenue declines will relegate Titan Machinery to being a cyclical tractor dealership play.  Based on Titan’s minimum non GAAP earning per share projection of $.70 and maximum of $1.00, and its history of guiding forecasts down during prior fiscal years we are projecting that its share price will be trading below $10 by the end of 2014.

Warning: Don't Buy Titan Machinery Guidance

Warning: Don't Buy Titan Machinery Guidance

Titan Machinery has a history of making aggressive guidance and under delivering.  

Titan Machinery's guidance yesterday was laughable. Yesterday Titan Machinery shares went flying higher after the company announced they missed revenue guidance for the Q4 FY2014 quarter by 10%. It was just 8 weeks ago in December 2013 when the company lowered their 4th quarter guidance with only 8 weeks before the quarter ended and they still missed by a wide margin.  

 Titan has proven time and time again that their visibility is weak when they've given guidance in the past looking only 8 weeks out. Making a Bold Prediction 52 weeks out that they will generate $60million to $80 million is reckless. (Note the company will have 8 less locations in FY 2015 to accomplish this)

The guidance on sales and EPS for Fiscal year 2015 both have tight ranges, but the operational cash flow range is $20 million!!!! (that's $130 million improvement vs. FY2014 for a comapny that just reported negative operational cash flow 5 consecutive years.)That's Hype! 

* Excluding non-cash items, totaling $7.8 million (or $0.37 per share), adjusted net income attributable to common stockholders for fiscal 2014 was $0.41 per diluted share.

Last April 2013 the company made the following guidance:

• Income forecast of $2 to $2.30 per share. It reiterated its revenue forecast of $2.35 billion to $2.55 billion.

The Next month, May 2013 guidance was changed: 

•  The company now anticipates earning $1.70 to $2 per share, down from its prior forecast of $2 to $2.30 per share. It reiterated its revenue forecast of $2.35 billion to $2.55 billion. "  

The Next Month, June 2013, guidance:

•   For the full year ending January 31, 2014, the Company anticipates revenue in the range of $2.35 billion to $2.55 billion, net income attributable to common stockholders in the range of $36.4 million to $42.8 million, and earnings per diluted share in the range of $1.70 to $2.00

• For the full year ending January 31, 2014, the Company now expects revenue to be in the range of $2.25 billion to $2.45 billion compared to the previous range of $2.35 billion to $2.55 billion. The Company expects net income attributable to common stockholders to be in the range of $25.4 million to $31.8 million, and earnings per diluted share to be in the range of $1.20 to $1.50 based on estimated weighted average diluted common shares outstanding of 21.2 million, primarily reflecting the lower expected equipment margins. This compares to previous net income attributable to common stockholders guidance in the range of $36.4 million to $42.8 million, and earnings per diluted share in the range of $1.70 to $2.00 based on estimated weighted average diluted common shares outstanding of 21.4 million. 

December 2013 the following guidance

• The Company is adjusting its annual guidance based on increased visibility of market conditions. For the full year ending January 31, 2014, the Company now expects revenue to be in the range of $2.15 billion to $2.35 billion compared to the previous range of $2.25 billion to $2.45 billion. The Company expects net income attributable to common stockholders to be in the range of $11.6 million to $15.8 million, and earnings per diluted share to be in the range of $0.55 to $0.75 based on estimated weighted average diluted common shares outstanding of 21.1 million, primarily reflecting the lower expected equipment sales and margins. This compares to previous net income attributable to common stockholders guidance in the range of $25.4 million to $31.8 million, and earnings per diluted share in the range of $1.20 to $1.50 based on estimated weighted average diluted common shares outstanding of 21.2 million.

The Actual Results for FY2014 that the above guidance refered to 

 In June 2012: After giving a $2.55-$2.75 range guidance company reported $2.00 EPS for year ending January 31,2013. Instead of earning $53.8million to $58  million for year the company only reported $42million. But Management's Mission was accomplished by getting stock up to $30 so they could sell shares @ $30.

• The underwriter Cherry Tree (owned by director Tony Christianson, the brother of CEO, was compensated for the $150 million indenture offering in April of 2012. In June 2012 TITAN gave the following guidance in a press release:   

 7/13/2011

  INSIDER SELLING:

On June 9,2011 Chairman David Meyer appeared on Jim Cramer's MAD MONEY  and touted TITAN MACHINERY's future. 30 days later DAVID MEYER SOLD 300,000 shares @ $27.80 and received proceeds of $8,340.00.00 and CEO Peter Christianson sold 200,000 shares $27.80 for proceeds of $5.56 million.

  INSIDER SELLING:

On June 9,2011 Chairman David Meyer appeared on Jim Cramer's MAD MONEY  and touted TITAN MACHINERY's future. 30 days later DAVID MEYER SOLD 300,000 shares @ $27.80 and received proceeds of $8,340.00.00 and CEO Peter Christianson sold 200,000 shares $27.80 for proceeds of $5.56 million.

  INSIDER SELLING:On June 9,2011 Chairman David Meyer appeared on Jim Cramer's MAD MONEY  and touted TITAN MACHINERY's future. 30 days later DAVID MEYER SOLD 300,000 shares @ $27.80 and received proceeds of $8,340.00.00 and CEO Peter Christianson sold 200,000 shares $27.80 for proceeds of $5.56 million. 

TITAN Guides Operational Cash Flow of $60 million to $80 million for Fiscal Year 2015 is HYPE

How do Experts at generating negative cash flow, all of a sudden make such a statement? 

Titan Machinery yesterday announced Negative Operational Cash Flow for the 5th consecutive year. Over the past 5 years the company has generated a total of $431,000,000 in NEGATIVE Operational Cash Flow.  When the company announced yesterday that they were guiding for FISCAL Year 2015 Operational Cash Flow of Positive $60 million to $80 million, $3 to $4.00 per share in OPS, I couldn't believe they said it!!! 

September 2013 they made the following Guidance: 

•Fiscal 2014 Full Year Results 

For the full year ended January 31, 2014, revenue increased 1.3% to $2.23 billion from $2.20 billion last year. Gross profit margin for fiscal 2014 was 15.6%, compared to 15.4% last year. Pre-tax income for the fiscal 2014 was $18.4 million. Excluding the aforementioned non-cash impairment charge of $10.0 million, adjusted pre-tax income was $28.4 million, for a pre-tax margin of 1.3%. This compares to pre-tax income of $70.7 million, or a pre-tax margin of 3.2%, last year. GAAP net income attributable to common stockholders for fiscal 2014 was $8.7 million, or $0.41 per diluted share. Adjusted net income attributable to common stockholders for fiscal 2014 was $16.5 million, or $0.78 per diluted share. This compares to $42.0 million, or $2.00 per diluted share, last year. 

• "Net income attributable to common stockholders is expected to be in the range of $53.8 million to $58.0 million, resulting in earnings per diluted share range of $2.55 to $2.75". In July 2012 director Tony Christianson and director Irwin James both sold shares of TITAN (TITN) in the market place above $30 per share. 

 7/13/2011

  INSIDER SELLING:

On June 9,2011 Chairman David Meyer appeared on Jim Cramer's MAD MONEY  and touted TITAN MACHINERY's future. 30 days later DAVID MEYER SOLD 300,000 shares @ $27.80 and received proceeds of $8,340.00.00 and CEO Peter Christianson sold 200,000 shares $27.80 for proceeds of $5.56 million. 

Olstein Says "Cash is King"

In the New York Times this weekend, Jeff Sommers published an article "Beating the Market, A Reachable Goal" , where he interviews money manager Bob Olstein.

"Mr. Olstein looks for stocks that are under appreciated, and that are strong in a metric he has always favored: “free cash flow yield.” (It is cash, after subtracting capital expenditures and working capital, divided by market capitalization.) “Cash is king,” he says. “That’s what you’re paying for when you buy a stock — the ability to generate cash. But few people even bother with it these days.” He says he prefers “boring companies” — if their free cash flow excites him"

Equities Research archives of Bob Olstein articles 

• OLSTEIN Earnings vs Cash Flow

• Olstein Shareholder Letters 

• (Olstein)Eight Warnings you want to See by Herb Greenberg 2000

• There are Nice People on Wall Street

• Olstein BullishOn Dupont & Cisco

• Olstein Eyes Microsoft & Intel

• Olstein: "Free Cash Flow is Air of Corporations"

 

Stockdiagnostics Examines Titan's Q3 Financials

Stockdiagnostics' chief market strategist, Michael Markowski, published the following report Knobias this morning @ 9:56am.

Probability of 2014 Bankruptcy for Titan Increases After it Files Quarterly Report

By Michael Markowski

The probability of Titan Machinery (NASDAQ:TITN:$15.00) having to file for bankruptcy by the end of or sooner than the end of 2014 has increased significantly based on its 3^rd quarter 10/31/13 financials that it filed yesterday.  In a report “Tractor Pull for Titan Machinery May be Over by Tomorrow” which was published on December 4, 2013, I had predicted that Titan would file for bankruptcy by the end of 2014.  

Titan’s Income Statement, Balance Sheet and Cash Flow Statement data deteriorated over the 90 day period.  Titan’s revenue for its 3^rd quarter increased by less than 1% from $582.1 million in the year ago quarter to $588.0 million.  It also reported that its inventory increased by 10% to $1.2 billion from its quarter ended July 31, 2013.  Finally, Titan operating cash flow for the quarter was a negative $59.8 million.  Titan has generated negative quarterly operating cash flow in nine of its last 10 quarters.

Titan is following a similar script that I have seen played out by numerous companies that StockDiagnostics.com has diagnosed as having “The EPS Syndrome”.  Notable companies who were previously diagnosed with this negative operating cash flow anomaly include Bear Stearns, Merrill Lynch and Lehman Brothers.  Here is the typical script:   

1.                  Company utilizes archaic SEC accrual accounting standards to report growing cashless earnings.

  

2.                  Wall Street analysts recommend shares based on earnings growth.

3.                  Wall Street investment bankers who are affiliated with analysts raise capital for company to generate commissions.

4.                  Commercial banks and suppliers provide loans and credit lines based on the increased equity.

5.                  After the company maximizes its ability to raise additional debt and equity capital revenue growth flattens.

6.                  Company sells inventory at losses and creates declining revenue and EPS losses.

7.                  Company loses option to sell or issue equity to raise capital due to both fundamentals and share price momentum turning negative.  Also loses ability to increase borrowings.

8.                  Company’s fundamentals and share price continue in downward spiral as it liquidates inventory at declining prices to raise cash.

9.                  Company has no choice but to file for bankruptcy since it has debt and can not raise cash.

Titan was first diagnosed as having The EPS Syndrome on September 8, 2011 at a price of $26.41.  Its among several institutionally held public companies who have Wall Street analyst Buy Ratings that StockDiagnostics.com has diagnosed with extreme or severe cases of The EPS Syndrome or cashless earnings. 

There have been 93 companies diagnosed with The EPS Syndrome during 2013 and more than 2,500 since 2002.  The share prices of approximately 70% of the companies diagnosed are below their diagnosis price.  Share prices have fallen by at least 50% for half of those companies that have been diagnosed as having the EPS Syndrome.  A four minute video that explains The EPS Syndrome is available.