Investing Ideas - IPOs and Beyond!

LVS SECONDARY OFFERING COMING SOON

2009-05-29T08:04:00.000-07:00

LVS will announce a secondary by the open or close Monday. Sheldon pulling out "logistical complications" is a clear indication that it will happen seeing how it would be in the firms (and his interest) for him to attend and pump up the financial "strength...more like weakness" of the firm. We see how strong LVS has been around $10 and we know how MGM was trading before it announced the offering (priced 40% below closing price that day) LVS has no other choice but to take such action since an IPO of their Macau assets will take too long (HK IPOs much longer lock up period than in U.S, also will only be able to sell 20-30% of stake, not enough capital prob up weak financials PLUS too long to bring to market!!!) and because they know you LVS lovers/traders will eat it up as if dilution is a good thing. Who cares that their new casino an hour and 45 min North of NY in the middle of know where had a good opening. Attendants said they would not go there to gamble unless it was a special occasion. To far away and we know consumers will not stray far from closer venues (look at ASCA article in IBD today)

http://finance.yahoo.com/news/Regional-Casinos-Shine-While-ibd-15377998.html?.v=1

They could not sell off assets in past because Bids too low so no other way to raise capital other than flooding the mkt with more shares. If you can’t see the logic then you yourself should get out of the mkt and go gamble away your savings at the casino. You’ll save the commission and they may even comp you a room. After all they have tons of vacant inventory. 50/50 chance.

LVS Macau IPO NOT WHAT YOU THINK!!!

2009-05-15T10:31:00.000-07:00

LVS and their decision to float their Macau assets in a HK offering because their "failed effort" to sell its hotels and casinos last month is going to be a disaster for share holders today in LVS and in the HK offering. LVS is the most indebted of all the casinos and as we saw a few days ago, MGMs offering priced over 40% lower than the closing price that day. LVS is going to try to excite investors by thinking they are getting more out of the IPO than they will. When a company spins off a unit or business thru and IPO they are not getting all the capital/cash they day it starts trading. They will sell around 20-30% of the offering and will have to keep the remaining 70%. HK lock-ups are much longer than in the U.S. so will not see the rest of it for sometime. Also, this IPO will take months not weeks to get together. HK and global equity mkts up now but in a few months? Risk for IPOs then? They were unable to sell it off last month because bids were lower than they thought, but that is what it’s going for especially with upcoming open of City of Dreams MPEL new property (more competition). Last month gaming REV in Macau down 11%, and status on travelling visas a black hole. GS raised LVS today to a $8 px tgt from $5 but they are the ones hired for the process.. DUH. We have seen a cracking the market and every company and their dog subsidiary come with secondary’s. The MGM deal was bad and this has been the hottest sector lately (MGM also not as bad off as LVS). Check out these links:

http://www.ft.com/cms/s/1/cb1a2b48-4126-11de-bdb7-00144feabdc0.html
http://www.ft.com/cms/s/1/61842e28-397d-11de-b82d-00144feabdc0.html

Mesabi Revisited

2008-11-02T10:16:00.000-08:00

As previously written, MSB is still a compelling investment in these hard times. The Fed has cut rates to a pathetic 1% and there is future evidence in the fed fund rate futures of a further cut. Barron's indicated this weekend that MSB is yielding 21% and if you look at past insider buys you will see that in the last two weeks there have been been buys at these levels. Mesabi just paid out $1.25 and has been increasing its distribution each quarter at a fast clip.

October 16 - $1.25 vs .48

July 18 - $1 vs .31

April 11 - .12 vs .045

January 11 - 515 vs .315

If you looks at CLF (whom is a very large buyer of Mesabi's Iron Ore) and plot it against MSB over the past 4 months you will see how these distributions are a form of protection against the aggressive market sell off. MSB is still up over 32% against CLF which goes to show how yield rich investment don't necessarily mean that the company is a higher risk investment. In an environment of negative real interest rates id put my cash in such an investment any day over a 1 - 2% gov't bond.

MSB - In Yield we Trust.

2008-10-18T14:30:00.000-07:00

In this time of increasing uncertainty investors are flocking to quality high yielding stocks to lock in some form of income as equities around the world plunge. In the face of severe volatility in which certain sectors are in favor one day and out of favor the next all pundits, whether on CNBC or you advisor, agree that equities with this attribute are worth putting money into. All last week Jim Cramer professed that high quality high yielding stocks was a good place to be because quality stocks have gotten beaten down along with market to where they now have unbelievable yields. MSB at $15.18 is yielding 19%. It currently declared a $1.25 dividend on top of a $1 distribution 7/18/2008. This is a company that has been increasing its distributions in an environment where many firms are either cutting or all together halting payouts. Year over year it increased its pay out by 60% and its prospects still bright. Here is a breakdown of its pay outs quarter to quarter year over year.

October 16 - $1.25 vs .48

July 18 - $1 vs .31

April 11 - .12 vs .045

January 11 - .515 vs .315

Beaten down to $10.50 in the recent market havoc MSB has recovered 50% so far and is still paying out 19%. With an all time high of $31.7, the potential upside is huge!!! Even if it levels off and trades at these levels a 19% yield in this environment with a growing distribution is not too shabby.

Picks and Shovels - 5N Plus (VNP-T)

2008-04-13T14:06:00.000-07:00

Who makes the money? They guys who sell the picks and shovels? Or the ones that use that go out and use them? The guys who sell them do.

This past week an interesting article came out on Seeking Alpha which highlighted the story of a relatively underfollowed Canadian company: 5N Plus (VNP.TO).

http://seekingalpha.com/article/71942-the-tellurium-supernova-has-erupted?source=yahoo

VNP has a monopolistic hold on the Tellurium metals market and are the largest supplier of the refined metal to FLSR. Some worries brought up in the article are whether there is sufficient supply of this material available to FSLR and other users of it this is yet to be seen. VNP is slated to open an additional manufacturing facility by the end of July in Germany to further provide for their customers because the demand is so great. Jim Cramer, despite his antics, is very bullish on the FSLR play. He fully endorsed FSLR two weeks ago on CNBC and that he would continue to talk about out it (pump it) throughout the year. To come out and make such a bold statement would require some serious homework of which would uncover whether FSLR has sufficient supply of Tellurium or not. Analysts on the street have probed both management teams of FSLR and VNP and have been reassured not to worry on shortage or supply issues of the material to meet demand and production. If the analysts cannot come up with any dirt (and they have the brains and the resources to get as much information possible) and if Cramer has done his homework (which I believe is safe to say in this case, YES) then the dynamics for VNP (with its monopolistic position as FSLR affiliation) are exceptionally bullish. Also, they just reported record 3Q earnings, and a second round of bought financing (4 million shrs @ $11.55 CDN) which was pitched to both U.S. and Canadian investors. It would not take much for this stock to start FLYING if it only got some exposure in the media. As the author recommends, check out 5N Plus' prospectus, it has to be one of the hottest solar stories out there. Oh, and they are and have been profitable for a while. How many solar plays do you know turning a profit?

There has been a lot of press lately on FSLR and I believe it speaks volumes on VNP’s potential.

http://seekingalpha.com/article/72029-the-state-of-the-thin-film-photovoltaic-industry

http://online.barrons.com/article/SB120796071412009549.html?mod=yahoobarrons&ru=yahoo

Both articles are extremely bullish on FSLR. Once could treat VNP as a call option on FSLR!!! FSLR May $270 Call Option went out at $29.20 Friday where VNP went out at $12.

With FSLR you area paying up the rear for volatility, I mean this stock can have a $20 trading range in a day no problem. At the end of the day, they take on the risk of performing and managing expenses. Any hit to earnings for this play and you could see a rapid deterioration in the stock price. With VNP you are betting on a relatively unknown company with a monopoly in the market place. Rapidly expanding, just completed a round of bought financing to fuel that growth, and the management has not sold out.

You really need to look into this company to understand what a great play it is.
VNP is a company with a real story, profitable, experienced management team, diversified, with the dominant position in the Tellurium market.

Terra Nitrogen - Strongest Fundamentals

2008-02-12T18:57:00.000-08:00

Well, Monsanto came out today and upped their guidance for the year attributable to a robust global Ag market! It is a Demand driven phenomenon which international superstar investor Jim Rogers has preached for the past 8 years. These days great news from one Ag/Fertilizer company usually bodes well for the others in the sector. They are to a great degree interrelated just as we are painfully finding out with U.S. Sub Prime mess is to the rest of the world. These Ag/Fert Co’s have performed strongly despite a slowing U.S. economy and may be the only sector that could be said to have decoupled. MON stated “the higher commodity prices mean farmers are willing to spend more money on biotechnology seeds and agricultural chemicals since their crops are worth more money”.

Last week, THN reported their 4Q and FY 2007 earnings and blew the estimates away. It is still the sexiest fertilizer story out there with the strongest fundamentals across the board.

-TNH is almost the only fertilizer stock with NO debt. The avg debt of the big three (POT, AGU, MOS) is $1 Billion! Even its parent company TRA has $340 million in debt.
-It is the only fertilizer with a distribution. This quarter they paid out $4.45 a share. More later...
-Highest quarterly Revenue gain in percentage terms (see IBD Mon Feb 11 2008 pg.A20).
-Highest Return on Equity of the Ag/Fertilizer (see IBD Mon Feb 11 2008 pg.A20).
-Highest pretax margin of the Ag/Fertilizer sector (see IBD Mon Feb 11 2008 pg.A20).
-The lowest PE ratio of any fertilizer or Ag stock out there!
-It takes 5 years to open a new plant and have all its production in the heart of the corn-belt like TNH.
-Seeing how it has the highest distribution (some may call it a yield/dividend) of any fertilizer stock in a low interest rate environment, TNH will still provide for a higher return than any or bond could.
-The stock along with the sector is off its highs going into a year where fertilizer demand will be just as robust as last year, makes TNH look ever cheaper.
-Also, with heavy importing of Liquid Natural Gas (LNG) expected this year, TNH stands to recognize lower Natural Gas expense. Nitrogen fertilizer companies largest expense is natural gas and TNH is no different, this is very bullish for the companies margins.-With the U.S. heading into a recession or slow down or whatever you want to call it, Natural gas prices will fall. Natural gas was 1/3 of its current price during the last recession.
-Even during a recession people still need to eat even in an environment with low grain stocks worldwide, high grain prices, a robust global market for nitrogen, and high food demand, TNH stands to benefit.

Distribution

Now in terms of the distribution (TNH is still the only one that has one) the pay out structure is about to change if TNH stands to pay out more than $2.45 in next quarter. It will go from paying out unit holders 99% to paying out 50% of the value (You can refer to their 3Q 10-Q for the latest payout structure seeing how their 4Q 10-Q and 10-K is not available yet). Now at first this may seem bearish, but you have to consider where THN has been, where it is, and where it can go.
1)TNH will always have a minimum payment to unit holders of 0.605 per unit.
2)The split only reaches the 50/50 threshold when the company makes a significant amount of money (take into consideration that the Ag and fertilizer stocks are hitting new highs and will continue to be reflected in the coming quarters. Just look at the double, triple, and quadruple in upcoming quarterly earning projections. See IBD Mon Feb 11 2008 pg.A20).
3)If the company makes $16 per unit in 2008 (conservative estimate) the worst case scenario would be a payment of $8 to unit holders. Considering that the stock hit $168 in the early part of 2008 and using $8 per unit as the worst case scenario makes TNH is undervalued at its current levels (Earnings per unit were $10.90 for FY 2007, if earnings grow only 50% that would be $16.35 earnings per unit. Half of that is $8.175). I say this is a conservative estimate because earnings per unit from 2006 to 2007 grew by over 3X!!!
4)Understand the conservative estimate, earning growth projections of its peers, low interest rate environment, good chance of lower natural gas costs, and a booming agricultural phenomenon around the globe.Bottom LineEven if TNH had no distribution (hard to believe since you will still receive the 0.605 per unit minimum) it would still be the cheapest ag stock with the lowest PE and best fundamentals in the industry.

A Bonus - Short SQUEEEZZZZEEEE!

-The float is 25% of outstanding, of which 9.3% of that is held by institutions, and 3% shorted. That makes for an extremely thin float.-Every Quarter, the shorts have to pay out the distribution, making it painfully expensive to be short this stock.-It is a hard stock to borrow for the above mentioned reasons, and you are charged a high borrowing fee.-My broker told me to transfer all my shares from my Margin account to my Cash account. This will make it nearly impossible to short the stock further and will result in the short stock out there being called in.

Bottom Line

Even if TNH had no distribution (hard to believe since you will still receive the 0.605 per unit minimum) it would still be the cheapest ag stock with the lowest PE and best fundamentals in the industry. Hey why not benefit from this Ag BULL market and ride the short squeeze along the way.

Google GPS PLAY!!!

2007-11-29T10:39:00.000-08:00

The Behemoth GOOGLE is developing a navigation system to compete with the hot GPS market currently monopolized by Garmin (GRMN). Now, why and how can they take market share from Garmin and pals…. Google will target the plethora of cell phones out there not currently equipped with GPS technology (industry research determines to be 85% of cell phones out there). Now, who knows what will end up happening with Google and their ambitions for the cell phone market. Some say they will develop the hardware other say they will most likely link up with a Verizon Wireless or something. Either way, Google being the undisputed search engine with their array of free applications (Google Desktop, Google Earth,…) their GPS play named My Location (part of the latest beta of Google Maps) will likely be free and a hit. Being the vanguard they are, Im sure it will be a hot application and will easily take market share (Tech pundits out there are already speculating on how hot the GPS navigation systems and applications will be during the holiday season, just imagine it packaged under the Google brand at no monthly fee). Imagine what this will do to the big wigs such as GRMN, SIFR, and TRMB all of whom don’t offer their GPS service for free. Ahh… Behemoth GOOG, what will you get into next. Im sure the techies who work in the ultra lax confines of GOOGLEMERICA are busting brain cells to come up with how to make it sexier than any GPS play right now. *Scenario: You decide to go spend the evening at The Shore Club in Miami Beach but you don’t want to waste your time in line. Click on the GOOG system and you get a live shot of what the traffic looks like.* Those satellites in the heavens are always watching. Ohh… the My Location application is absent from the ultra slick iPhone. Oops.

Alvarion - Buy Rating Reiterated!

2007-10-29T11:14:00.000-07:00

All you who want to get out, by all means get out and let me benfit from the stocks ascent when they report better than expected earnings. We have seen it his above $15 on buyout speculation, now it will hit it again on its own results.

Israeli Technology and Communications

Alvarion Ltd. (ALVR: $13.13, Positive)

3Q Earnings Preview

In this note we preview ALVR's 3Q earnings. We are maintaining our numbers for 2H07 and 2008, and adding 2009 estimates to our model. We also maintain our thesis that ALVR has a defensible position in the WiMAX access market, and that the company is on track to grow into meaningful operating leverage.

HIGHLIGHTS

Maintaining estimates; adding 2009 estimates to model. We are maintaining our thesis that Alvarion will be able to meet or exceed our numbers of $59.2 mln and $0.04 for 3Q. As mentioned in previous reports, we are modeling significant leverage over the next six quarters, and expect operating margin to reach 4.6% in 2008, and 8.8% in 2009. We expect 26% Y/Y growth in 2008 and 25% Y/Y growth in 2009, based on WiMAX revenue growth of 50% and 42%, respectively, and flat non WiMAX revenue. Positive Factor Cisco's acquisition of Navini is positive for industry and a net neutral for ALVR. Last Tuesday, Cisco announced its acquisition of privately held Navini Networks for $330 mln. This acquisition was rumored in the market for sometime, appearing in Unstrung on October 15. We believe that this acquisition is a positive for the industry, reaffirming Cisco's commitment to WiMAX; we would also point out Cisco's intent to address emerging markets (meaning fixed WiMAX). We view this acquisition as neutral to Alvarion. While
ALVR has been partnering with Cisco, we would note that it has been ALVR bringing Cisco in for network components, so this does not represent the loss of a channel. Furthermore, we believe that mutual current deployments and trials will continue as planned, and that ALVR and Cisco may selectively work together in the future. Lastly, while Navini has a WiMAX product, its installed base is still deploying proprietary technology. Neutral Factor WiMAX hype may have cooled, but ALVR's near-term performance is not dependant on mobile WIMAX and/or any specific deployment. The resignation of Sprint's CEO may have cooled WiMAX hype, especially as it came on the heels of a successful and highly publicized WIMAX World. Again worth noting, ALVR is not
a part of the Sprint roll-out, and does not expect any meaningful revenue from mobile WiMAX in the next six quarters. Positive Factor
Valuation. Shares of ALVR trade at 44x our 2008 estimate of $0.30 and 22x our 2009 estimate of $0.60. PEG ratios are 0.4 and 0.2, respectively.

CONTRA CASE

The main risk to our thesis on ALVR lays in market perception and eventual uptake (not expected until 2H08 of mobile WiMAX services once those are offered.

Alibaba!!! How to Play it on the way UP!!!

2007-10-28T19:10:00.000-07:00

Global Source (GSOL) is the best way to play Alibaba seeing how most investors do not have access to the Hong Kong market and what is turning out to be the most heavily anticipated IPO of the year after (VMWare aside).

As all of you no doubt have noticed, Alibaba is set to start trading November 6th. The books closed earlier than scheduled in Asia and the U.S. NO surprise that it is MASSVILY oversubscribed and will no doubt price at the top of the range 13.50 HK dollars if not higher ($1.74 USD).

Enough about Alibaba and the price numbers for now and consider the P/E ratios and where Global source fits into the pie. Alibaba’s P/E multiple is currently at 55 2008 earnings. Global Sources P/E is at 34!!! That is unbelievably cheap considering it is a Chinese growth stock that is also in B2B business. A great comparison to Alibaba. Hey its even got 10% of the B2B market, while Alibaba dominates with 70% mkt share. Hummm.

http://online.wsj.com/article/SB119360839052074184.html?mod=hps_asia_whats_news

Earlier this week on CNBC David Faber gave a break down of the Alibaba deal and as soon as he mentioned Global Source, the stock took off. Now, Global source has already been on a tear since it has been mentioned in releases tied to Alibaba Oct 5th. Now, chances are (as David Faber so delicately put it) Alibaba will probably open in the high 20’s (HK Dollars).

http://www.cnbc.com/id/15840232?video=573782444

This will award it a 110 P/E!!!!. BIDU has a P/E of 83 (210 trailing PE) and you have witnessed its ascent! Give that global sources P/E is significantly lower than Alibabas and Bidus, Global Source could easily command one at 100. This would easily give it a 10-15 point upside. Listen, it is a volatile market where speculation is the name of the game and a move like this is not beyond any stretch of the imagination.

If you’re still not convinced, there is a recent article that will appear in tomorrows Wall Street Journal underlying investor’s appetite for China. E-House P/E 87, Home Inns & Hotels P/E 250, Longtop Financial P/E 85, and the Solar’s Yingli and LDK both TRIPLED since their IPO. If Alibaba does anything like these Chinese mentioned Issues than I suspect it reaching a P/E vastly higher than 110.

http://online.wsj.com/article/SB119360779520974156.html?mod=hps_asia_whats_news

Watch it rise, or take part in the profit. Either way, it’s an interesting trade. Would not be surprised if one of the trading masters, or what ever you want to call them on Fast Money, or even our wacky friend Jim Cramer (recommended it 10/17/2007) brings up Global Source. The odds are in your favor. Risk/Reward is high, and downside is not that much. It’s got a low float, NO DEBT, $4 a share in Cash. It has a 104% Net Income growth and 39.5% sales growth over the past year. And, if you read through their reports you’ll see that they are poised for further growth with their sourcing fairs. Yes, I am long the position; I have been since the beginning of October and after rereading this post, I might just hang on the Global Source for a much longer time. Think about it.

EFUT, Poised To Continue Its Ascent!

2007-10-03T20:55:00.001-07:00

If you check out some of the other Chinese stocks out there traded here in America, JRJC, CHNR, RCH, CDS, WX, EJ, and KUN you will notice that they are all up on average 300-400% in the last 10 days!!!

EFUT, is only up around 95% over the last few days and is Poised to Sky Rocket in the next few days for a few Key Reasons. All you longs…. Hold on Tight!

-On Oct 2nd there was a buy in alert on the stock of about 219K shares,

http://www.tradingmarkets.com/.site/news/Stock%20News/663201/

this has pushed up the stock price as you have seen. With a float of about 450k and 219k short, the uncovered shorts have to cover their positions at what ever price is available. Basic supply and demand and scarcity theory are being played out before your eyes. This is how the stock can go up $15 in 2 days (66% today alone).

Some other documented cases of explosive stock moves:

- CHNR went from $12-$ 48 in 3 days. This was done on a larger float which is harder to do than EFUT. This is why the upside potential is so great. And CHNR only has $1.7 in cash.

-JRJC has gone from $15 to $45 in the past month! 300% again! This company has a bullish story and has also been lifted by the ADR craze lately. Here is an interesting posting on JRJC where the author outlines its prospects

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=25123&tid=4466&mid=4466&tof=13&frt=2

Look at what BIDU did. It went from $50 to $300 in 18 months. Hot Chinese stock with outrageous earnings and gross margins! BIDU didn’t just move because of its prospects but also because of investor’s appetite for foreign exposure, especially anything Chinese.

-In their latest quarterly report they project 59% revenue growth for FY2007. So they are not slowing down any time soon. They just announced a huge deal with the Beijing Tourism group and there is speculation that further announcements will be made. Seeing how the Olympics are around the corner as well as a big fair that takes place in Shanghai annually, more announcements stand to be made like today’s.

-Ohh, I forgot to mention that EFUT has $10 in cash, the highest of all the Chinese ones. That’s a pretty darn good cushion.

Bladelogic (BLOG) - Overlooked Potential

2007-08-27T13:39:00.001-07:00

Finally, some traction on Bladelogic (BLOG) by our foolish advisors at the Motley Fool!

http://www.fool.com/investing/small-cap/2007/08/27/bladelogic-in-overdrive.aspx

Bladelogic reported a strong quarter last week highlighting key points:

-109% year over year quarterly Revenue growth,
-104% year over year quarterly Licensing Revenue growth,
-Conference call suggested that their sales force can not keep up with the demand in the market place. They are increasing their sales force accordingly, but in a responsible way to ensure that the quality of the sales force stays strong.
-With every newspaper, TV network, and financial/IT pundants out there touting VMware (VMW) for the past few months, and the past two weeks post IPO, Bladelogic stands to gain from the increased industry attention (In conference call, Bladelogic management provided further color on their relationship with VMware as an authorized partner to the Virtualization Goliath)
-HP acquisition of OPSWARE had added and will continue to add attention to this sector and Bladelogic.
-Virtualization phenomenon will open up a new Mississippi of pipelines for Bladelogic as virtualization creates the need to further manage provision and compliance of information (No other product in the market takes this unified approach to this problem as Bladelogic does. Management made a point to inform investors and customers of this point in both the IPO road show as well as the current conference call).
-The list goes on and on.

Check out the conference call!
-Another BULLISH signal, insider buying a few days after Bladelogics float.

http://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=blog&filenum=&State=&SIC=&owner=include&action=getcompany

-Ohh, and if you care to further speculate... (and Jim Cramer would love for you to do so) Government budgeting is set to reset as their FY2008 begins October 1 2007. A lot of money has to be spent if these firms want to receive at least what they were given last year. No firm will report any excess budgeted monies!
-Ohh, I almost forgot, last Thursday the RSA, (the Security Division of EMC) (8/23/07) released a report highlighting the dire and increased need to get IT departments up to code on their internal and external security exposure.

http://biz.yahoo.com/prnews/070823/neth011.html?.v=18

EMC has also fared well during VMwares flotation and will undoubtably benifit from this secutity beef up:

http://finance.yahoo.com/q?s=emc

This fits right into Bladelogics domain especially as virtualization scales out from servers to personal computers!!! Scale will require additional security tightening and further pressure on the IT departments do ensure security and consistent performance.

Read between the lines and you might be able to make yourself some money.