Money and Finance
- Seth Klarman Ebitda Example
From Margin of Safety:EBITDA Analysis Obscures the Difference between Good and Bad BusinessesEBITDA, in addition to being a flawed measure of cash flow, also masks the relative importance of the several components of corporate cash flow. Pretax earnings...
- Adam Weiss And James Crichton Of Scout Capital Management To Present At The 7th Annual New York Value Investing Congress
Adam Weiss and James Crichton of Scout Capital Management are scheduled as to present at the 7th Annual New York Value Investing Congress. In their December 2010 interview with Value Investor Insight (currently available as the sample issue HERE), they...
- Oak Value Fund - Letter To Shareholders
One of the most important factors we consider in making investment decisions is a company’s ability to generate cash, and we believe the Fund’s portfolio is filled with companies that either have buckets of cash or are generating it. At the end of...
- Wintergreen Fund: Semi-annual Report
The market has not discriminated between high-quality and low-quality companies; virtually every stock has declined. Generally, markets reward solid, stable companies, but this year even the best companies have suffered. The movement from easy credit...
- Olstein Funds Annual Report
Olstein's Top Twenty Quality of Earnings Alerts - 1. Material deviations between net income and free cash flow 2. Material differences between the tax books and shareholder books as measured by deferred taxes 3. Material changes in balance sheet debt...
Money and Finance
Arne Alsin: No pretty bow, but still a gift
Here is a new stock idea: recently I said “bargains don’t arrive at the market in pretty packages wrapped with a bow”. While my gift to you, Tecumseh Products, is an amazing bargain, it is far from being wrapped in a pretty package. It is not only a messy package, it is also complicated – there are a lot of moving parts. Here is the story, in brief.
-
A few months ago, Tecumseh had compressor, engine and electrical businesses. It was struggling with a potential liquidity crisis because of a significant debt burden. The company has just finished selling off its engine and electrical businesses for $260m, using the proceeds to pay off all of its domestic debt. Now the company can concentrate on maximising the potential of its global $1.1bn (annual sales) compressor business.
A few months ago, Tecumseh had compressor, engine and electrical businesses. It was struggling with a potential liquidity crisis because of a significant debt burden. The company has just finished selling off its engine and electrical businesses for $260m, using the proceeds to pay off all of its domestic debt. Now the company can concentrate on maximising the potential of its global $1.1bn (annual sales) compressor business.
-
Today, the market values Tecumseh at about $400m. By my calculations, the company will not only be debt-free, but also will accumulate $150m-$200m in cash over the next few quarters from non-operating items such miscellaneous asset sales, a tax refund, monies from an over-funded pension and assorted other items. My calculations also indicate that if the dollar is stable, the company can generate $90m in annual free cash flow beginning in 2009.
Today, the market values Tecumseh at about $400m. By my calculations, the company will not only be debt-free, but also will accumulate $150m-$200m in cash over the next few quarters from non-operating items such miscellaneous asset sales, a tax refund, monies from an over-funded pension and assorted other items. My calculations also indicate that if the dollar is stable, the company can generate $90m in annual free cash flow beginning in 2009.
-
Based on these numbers alone, you can recognise a bargain. This gift does not need to be wrapped in a pretty package tied with a bow.
Based on these numbers alone, you can recognise a bargain. This gift does not need to be wrapped in a pretty package tied with a bow.
- Seth Klarman Ebitda Example
From Margin of Safety:EBITDA Analysis Obscures the Difference between Good and Bad BusinessesEBITDA, in addition to being a flawed measure of cash flow, also masks the relative importance of the several components of corporate cash flow. Pretax earnings...
- Adam Weiss And James Crichton Of Scout Capital Management To Present At The 7th Annual New York Value Investing Congress
Adam Weiss and James Crichton of Scout Capital Management are scheduled as to present at the 7th Annual New York Value Investing Congress. In their December 2010 interview with Value Investor Insight (currently available as the sample issue HERE), they...
- Oak Value Fund - Letter To Shareholders
One of the most important factors we consider in making investment decisions is a company’s ability to generate cash, and we believe the Fund’s portfolio is filled with companies that either have buckets of cash or are generating it. At the end of...
- Wintergreen Fund: Semi-annual Report
The market has not discriminated between high-quality and low-quality companies; virtually every stock has declined. Generally, markets reward solid, stable companies, but this year even the best companies have suffered. The movement from easy credit...
- Olstein Funds Annual Report
Olstein's Top Twenty Quality of Earnings Alerts - 1. Material deviations between net income and free cash flow 2. Material differences between the tax books and shareholder books as measured by deferred taxes 3. Material changes in balance sheet debt...