Showing posts with label SeekingALpha. Show all posts
Showing posts with label SeekingALpha. Show all posts

Thursday, May 10, 2018

Time to Short the Most OverPriced Stock in the Market

Titan Machinery has the fundamentals of a PennyStock but trades above $19 a share on NASDAQ.
Insiders Continue to Sell and Officers are getting paid bonuses while the company lays off hundreds of employees in the United States and close nearly 20% of their stores in America.
Company has spent the last years LIQUIDATING INVENTORY at AUCTIONS to generate enough cash to pay themselves and to afford to reward their co-founder and former president a handsome Severance Package after he abruptly resigned.
The Insiders have an equity interest in several outside entities that are being paid via lease agreements with properties that they own.
A CNBC Personality with a huge following who is from the state of Minnesota coincidently appears on twitter with bullish options calls touts on this thinly traded micro-stock that will send stock into a spike higher.
TheStreet website has another guru who also appears to have a crystal ball when predicting this stock's bullish moves is also helpful.
SEC Division of Corporate Finance has made some appearances in TITAN's disclosure filing requesting more transparency from time to time but the SEC and NASDAQ stock trading investigators never seem to take a look at the trading.














SEEKING ALPHA Writer Doesn't See Anything Criminal at Titan Machinery



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Saturday, April 5, 2014

"Its the Achilles heel of a long that produces a short".



In my 25 years analyzing stocks I have never had more conviction in the direction of a Stock as I do in my bearish call on Titan Machinery (NASDAQ: TITN).  A year ago in my February 2013 monthly newsletter my subscribers were given Titan as my top short pick when shares were trading near $30 a share.

Titan Machinery will report Fiscal 2014 year end financials on Thursday, April 10th in the pre-market.

Although shares are difficult to borrow for a short sale, traders can make a bearish bet by getting long puts.

I have written extensively on the stock over the past 14 months and recently Michael Markowski, the founder of OnlineFinancialSector.com has also written reports.

Below are comments both Michael and I have made in the Seekingalpha comment section of an article Mike published this week regarding Titan Machinery.

  • Thomas Renna
      This is no joking matter, be careful on long side. Here's a warning from last April when shares were in $30 neighborhood.

    http://bit.ly/15Mr0rE

    This is beyond a macro-view (Agriculture/Construct... its not simply about the space (sector) , you need to analyze management too.

    Note that the Management that put this company in the mess is still there      
  •  It will be interesting to see if the new auditor allows the company to recognize revenue in Fiscal 2014 in this same manner as Fiscal 2013: (from Fiscal 2013 10K):
    " However, in certain circumstances, and upon the customer's written request, equipment revenue is recognized before delivery occurs" 

  •  Markowski Comments:
  •  Titan according to its 10/31/13 Balance sheet has $1.17 Billion in inventory and it has a tangible book value of $362 million. If it had to mark its inventory down by 10% it would result in $117 million in losses and its book value would also fall by $117 million or by approximately 30% to $245 million.

    The problem is that Titan's inventory consists of new and used tractors and they depreciate with each passing day. If Titan had to mark its inventory down by 30% to raise cash it could potentially wipe out practically all of the company's entire tangible book value. 
  •  However, there is no such thing as a "perfect long". Its because its impossible for anyone including a company's management team to foresee the negative things that can affect a company. No company is immune to this.

    On the other hand a perfect short is much easier to predict due to the perils that not even the predictor would see for a company. Its the achilles heel of a long that produces a short.

    I am an eternal optimist and a long term investor. However, being long defies the law of gravity. Everything that goes up eventually comes down due to changes in consumer habits and technology. Blockbuster and Radio Shack are good examples. Being short coincides with the law of gravity.
  •  Agriculture and seasonality has nothing to do with Titan Machinery's chronic negative cash flow. Titan has not had a single year of positive operating cash flow over its past five years. Almost a year ago the price of corn was a 100% higher. Titan still generated negative annualized operating cash flow.

    Titan's problem is that its increasing its sales or revenue is totally dependent on its ability to get access to an ever increasing supply of capital. At some point a company reaches the point at which they can not sell any more shares or increase their credit lines. I believe that Titan has reached that point and that is why its become a perfect short. 
  •  Just remember that the credit worthiness of both an individual and a business goes down as the debt grows and accounts for a higher percentage of the total enterpise value (market cap plus all debt). The cost of credit increases and at some point there is no additional credit available. You don't want to be buying dips when that happens.


"Its the Achilles heel of a long that produces a short"
...Michael Markowski, founder of OnlineFinancialSector.com

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Monday, May 13, 2013

After the Close: Stratasys Reports (Negative) Operational Cash Flow

Stratasys Ltd (NASDAQ: SSYS) released a 1st quarter 2013 press release this morning before the market opened, followed by an 60 minute conference call at 8:30am est.

 The Press Released focused on positive NON GAAP performance and attributed their weak GAAP performance due to merger expenses.
(from the press release:
  • "Non-GAAP net income of $17.6 million for the first quarter, or $0.43 per diluted share, represents a 40% increase over the pro forma non-GAAP $12.6 million, or $0.32 per diluted share, reported for the same period last year.
  • GAAP net income for the first quarter was a loss of $15.5 million, or ($0.40) per share, versus a pro forma loss of $8.4 million, or ($0.23) per share, for the same period last year."
The stock opened up @ $85.57, and after trading over 2.3 million shares closed the day @ $85.34. Shares are trading at 9 TIMES SALES! 

There was approximately 20 Bullish Press Releases made throughout the trading day from Investor's Business Daily, Motley Fool, TheStreet.com and SeekingAlpha.
All the headlines spoke about : "IS A BUY", "EARNINGS BEAT", "Unusually High Volume", "Price Target Increase", "ADVANCE",  "Upgrade", "Price Target Increase", "Unleash", "Craze", "Monster Volume", "Solid", Rally" to name a few..It sounded like the Internet Bubble Age when Wall Street was enamored with the DOT.COM Hype.

 What bothered me all day is that all the press releases and conference call made no mention of the company's statement of cash flow. A dozen analyst participated in the Q & A on the conference call and not one asked about cash flow.

 It wasn't until 6pm this evening that the statement of cash flow was disclosed, and oh boy, it was WEAK!

Operational Cash Flow for the 1st Quarter 2013 stayed negative for the third consecutive quarter. 
Q1 2012 + $6,878,000
Q1 2013 -$12,252,000 (-278%)

 Q4 2011  +$9,551,000
Q4 2012  -$815,000 (-109%)

 Q3 2011  +$5,935,000
Q3 2012  -$9,629,000 (-262%)

 Trailing Twelve months ending March 31,2012 : + $25,782,000
Trailing Twelve months ending March 31,2013   - $17,637,000 (-168%)



On April 13, 2012, the day prior to announcing the merger, shares of SSYS were under $35.00, with 21 million shares outstanding (for a $735 million market capitalization.)
 
So this is more than a stock going from $35 to $82 per share, this is about a company market capitalization going from $735 million to $3.2 billion in 1 year...when all they did was merge with another company to have the combined entity report $1.4 million Operating cash flow for 2012!



  • April 2012 : 21 million shares outstanding at $35 a share.

Market cap was $775 million


  • March 23,2013 38.5 million shares outstanding at $72 a share. Market cap was $2.7 billion


  • Today 41.1 million shares outstanding @ $84 a share. market cap is $3.4 billion


Carrying $822 million of GOODWILL is another great line item. and the HALF BILLION DOLLAR increase in INTANGIBLE assets

  • Company will add 4 million shares outstanding on January 1st 2014 for authorized issuance of stock to management.



Today's numbers included a $300,000 tax credit. no mention of it anywhere.
  • From March Year end SEC disclosure:Q1 will have this $300,000 tax credit,
    •  In January of 2013, the President of the U.S. signed into law The American Taxpayer Relief Act of 2012, which contained provisions that retroactively extended the U.S. research and experimentation tax credit to 2012 and 2013. Because the extension did not occur by December 31, 2012, the Company’s effective income tax rate for 2012 did not include the benefit of the credit for 2012. However, because the credit was retroactively extended to include 2012, the Company expects to recognize the full benefit of the 2012 credit in the first quarter of 2013. The Company estimates that its credit for 2012 is approximately $300,000. That amount will be reported as a discrete income tax benefit in the first quarter of 2013.


(THe original deal of the combined entities was valued at $1.4 billion,  changed to $2.2 billion in Piper Merger disclosure during Q3 2013 in this DEF Proxy, and was changed again December (according to most recent 20F annual report, where Objet alone was valued at $1.4 billion:.

  •  
    As described in note 2, in December 2012, for accou
    nting purposes, Stratasys, Inc. was deemed to have
    acquired Objet for a purchase price of
    $1,341 million, and as a result, the Company recogn
    ized $797.1 million in goodwill.

Only problem now is OBJET shareholders will need to get liquid. 6 month period is June 1,2013 (December 3rd 2012 was close of deal). Expect 45% of shares outstanding to be registered within 3 weeks.
Older Posts:
Stratasys Reminds me of the Chanos breakdown of HPQ
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