corleckcapital

It has been a long time since I wrote anything, a few months back started a new position with a hedge fund. Will try to post here despite the fact that no one reads this but need to limit it to only external links or articles for now. Maybe this will change in the future.

EMBI Spread

test number 2

Test of Page View Updater

GRGR

Let's say the CEO is not a crook-

According to the press release and his statement, they will book the China Revenue in '08. About $28 MM / year so lets use following assumptions:

CONSERVATIVE
$20 MM in '08 Revs
10% Average Margin
= $2 MM net operating profit
50% corporate tax rate = $1 MM earnings
60 MM shares outstanding

$0.02 EPS * 7 P/E = $0.14 (current price)


Now more aggresive

$30 MM in '08 revs
15% Margin
= $4.5 MM net operating profit
35% tax rate = $2.9 MM earnings
55 MM shares

$0.05 EPS * 10 P/E $0.50

So lots of potential upside if the operations deliver and management keeps costs under control....very interesting.

XLE vs. Crude Update

Spread has come in a few points, should be some more to go:

CALPNIE :(

On 11.20 I was unpleasantly surprised by a valuation analysis conducted by Miller Buckfire (??) revaluing the current equity from between a whopping $0.00 to $0.43 from a current price ~$1.00. I took a beating needless to say. A few days later the equity comittee released their own analysis from Perella Weinberg (??) valuing the equity anywhere from $8.00 to $11.00!!!

Ok so someone is smoking something here. Looking through the reports its easy to find how these two companies can have such significant differences. The bullish report utilized an EBITDAR multiple of 12 - 13 and a discount rate of 8% whereas the bearish forecast utilized 8.5 - 9.5 and a discount rate 9 - 9.5. Not to mention there was a discrepancy between the number of shares outstanding too!! DCF analysis solely relies on your assumptions so this is really a 'he said/she said' kind of story which will ultimately be determined by a bankruptcy judge. I really really dislike taking headline risk....