Author Topic: ASCMA - Ascent Capital Group Inc  (Read 8154 times)

usdtor05

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Re: ASCMA - Ascent Capital Group Inc
« Reply #10 on: October 03, 2014, 01:15:05 PM »
I like to keep a little model on these to be able to play with the numbers a bit. Nothing fancy but hopefully this helps. Note that this is just meant to see if anything is jump off the page cheap, there is not detailed analysis of cost models, etc.

I like to look at what the market is putting them on from a take-out value (what could they sell theirs for) and also from a SSFCF perspective (levered).

The other way would be to look at them just from a liquidation perspective. ADT would be especially interesting there as the margins could change on the costs just to service.

I did a number of these deals in my former due diligence life. I still feel it is somewhat disingenous to called it steady state FCF and exclude interest (and taxes which could turn around over a number of years if profitable as the DTLs come off, net of any NOL).


Picasso

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Re: ASCMA - Ascent Capital Group Inc
« Reply #11 on: October 03, 2014, 03:19:54 PM »
I like to keep a little model on these to be able to play with the numbers a bit. Nothing fancy but hopefully this helps. Note that this is just meant to see if anything is jump off the page cheap, there is not detailed analysis of cost models, etc.

I like to look at what the market is putting them on from a take-out value (what could they sell theirs for) and also from a SSFCF perspective (levered).

The other way would be to look at them just from a liquidation perspective. ADT would be especially interesting there as the margins could change on the costs just to service.

I did a number of these deals in my former due diligence life. I still feel it is somewhat disingenous to called it steady state FCF and exclude interest (and taxes which could turn around over a number of years if profitable as the DTLs come off, net of any NOL).

Cool thanks, I'll play around with it and see if I run into any questions for you.

Picasso

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Re: ASCMA - Ascent Capital Group Inc
« Reply #12 on: October 03, 2014, 04:00:48 PM »
So when I apply a 11.5% churn, RMR of 45, and a 36x multiple I am getting $40 million of levered free cash flow.  My original back of the envelope was pretty close even though I had a couple inputs wrong since they were wrong in opposite directions (lowered churn and raised the multiple paid).

Doesn't seem that cheap after all is said and done other than this is a pretty tax efficient compounding machine if they can keep it up.  It really is like going back in time to TCI with a small security company that happens to have John Malone as a major equity holder.  I would be more interested if it ever traded for a 7-8% levered free cash flow yield.

Till then, it was nice knowing you ASCMA....

I appreciate everyones help.

Picasso

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Re: ASCMA - Ascent Capital Group Inc
« Reply #13 on: February 07, 2016, 08:51:34 AM »
Wanted to bump this now that the share price has completed imploded.  Convertibles are trading at $55 with 20% yields and churn rates have continued to move up.  They also bought LiveWatch which has much lower average revenues than the core Monitronics business.  Seems to be an admission that the core business is most likely screwed.  New CEO as well. 

At this price there is a massive amount of operating and financial leverage.  The stock will have a lot of sensitivity to churn rates and it looks like there is an activist in the high $30's (ouch).  A melting ice cube for sure but I'm curious if anyone is still looking at the name.  I was thinking about calling some Monitronic's dealers and getting a better idea of what's going on with all the home security disruption. 

DTEJD1997

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Re: ASCMA - Ascent Capital Group Inc
« Reply #14 on: February 07, 2016, 09:21:32 AM »
This thing looks like a complete dumpster fire at this point.

The debt level looks kind of alarming.  What looks even more alarming are the analyst estimates for next year's earnings.  Estimated earnings are anywhere from -$4.50 to -$7.00.  If they are anywhere near accurate this company could have severe problems fast.

The convertibles seem safer than the common with 20% yields...but even they might get impaired...

Huge losses with huge debt, seems like a losing proposition....

Picasso

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Re: ASCMA - Ascent Capital Group Inc
« Reply #15 on: February 07, 2016, 09:38:16 AM »
I don't think EPS is the way you want to value this business.  Plus those analysts have price targets between $26 and $40.

Seems like Okumus (the activist) is attracted to a lot of dumpster fires in tech and consumer. 

Also surprisingly low short interest from a company getting priced for failure (equity @ 6% of total capitalization) and relatively stable shareholders (Chou, GAMCO, Malone, etc).  But like I said of leverage on the operations as well so I couldn't sleep at night shorting at these levels even though it could end up a donut.
« Last Edit: February 07, 2016, 09:47:26 AM by Picasso »

Picasso

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Re: ASCMA - Ascent Capital Group Inc
« Reply #16 on: February 16, 2016, 07:53:15 AM »
Shares up over 30% today, Apollo buying ADT.  Like I said before there's no real short interest so this isn't some short squeeze.  It seems like Apollo paid a really full price for ADT so not sure what to make of that comp but I could see ASCMA trade back into the $20's.

Grey512

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Re: ASCMA - Ascent Capital Group Inc
« Reply #17 on: February 16, 2016, 07:59:54 AM »
I don't really get what Apollo is doing with ADT at that price. Just wow.