Author Topic: Ask Packer - No Seriously, Ask Him Anything (AHA)!  (Read 295554 times)

JoelS

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #330 on: December 14, 2014, 10:05:09 AM »
Packer, how do you compare first world markets v second tier? i.e. If you have a 70c dollar in the US v a 30c dollar in Greece, which do you choose? How do you assess the country risk? It seems time is often not on your side with these second tier market investments because the country may default implicitly or explicitly. TIA. 


Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #331 on: December 14, 2014, 04:11:44 PM »
I think it depends upon the situation.  There are many corporate credits in Greece that are higher quality than the sovereign.  This is not a typically situation.  Some examples are Intralot and Coca Cola Hellas.  These bonds trade at a tighter yield than the sovereign and in some cases have large portions of their revenue not in Greece.  If Greece goes to the drachma, some companies would be hurt less or even helped including firm who have sales abroad and cost in Greece.  Intralot and Lukoil (as oil and refined product prices are set by world markets not just Russian markets) are examples of these types of companies.  Ones where there would be issues are banks as they are directly exposed to devaluation issues.     

I try to stay away from the basket cases like Venezuala and Argentina but still think the Greeks will pull this one out. 

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plato1976

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #332 on: January 01, 2015, 05:50:03 AM »
Hi, Packer, Happy new year!
A general question on maintenance CAPEX.
For companies with high debt (usually that means these companies/industries need significant CAPEX), how do you decide the maintenance CAPEX level. Companies tend to understate their maintenance CAPEX and attribute their high CAPEX to growth, which doesn't materialize eventually and turned out whatever supposed to be growth was indeed maintenance CAPEX. Sometimes, so called growth CAPEX is actually mandatary to replace the old business which is declining, so all these CAPEX should be treated as maintenance CAPEX at the best.

I think it depends upon the situation.  There are many corporate credits in Greece that are higher quality than the sovereign.  This is not a typically situation.  Some examples are Intralot and Coca Cola Hellas.  These bonds trade at a tighter yield than the sovereign and in some cases have large portions of their revenue not in Greece.  If Greece goes to the drachma, some companies would be hurt less or even helped including firm who have sales abroad and cost in Greece.  Intralot and Lukoil (as oil and refined product prices are set by world markets not just Russian markets) are examples of these types of companies.  Ones where there would be issues are banks as they are directly exposed to devaluation issues.     

I try to stay away from the basket cases like Venezuala and Argentina but still think the Greeks will pull this one out. 

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Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #333 on: January 01, 2015, 06:39:23 AM »
One way is to look at history, has cap-ex created growth or just a slower decline of cash flows.  GNCMA is a good example of a company in a declining industry that has been able to increase revenues and cash flows while others have been in slow the decline mode.  In that case you can look at the slow the decline cap-ex/sales versus the grower and select some number between these two.

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JoelS

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #334 on: January 20, 2015, 06:05:27 PM »
Packer, one of your key criteria seems to be private market value/takeout value.. Would that be fair to say? If so, is this something that you have worked out over time through experience, or something that you have recently begun to look for based on theory? How do you incorporate it into your analysis?.. Toby Carlisle's book 'Deep value' indicates that a key driver of performance is to purchase stocks at or below an acquirer's multiple.

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #335 on: January 21, 2015, 07:26:20 PM »
Comp takeover multiples in certain industries can provide nice benchmarks if a takeover is a viable exit strategy.  In the TV/radio business this is true along with the telco/cable companies.  These are typically used in with comp companies to estimate a fair multiple for company under study.

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muscleman

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #336 on: January 24, 2015, 08:59:42 AM »
Packer, I see you track a lot of teleco/cable companies. Some of the stocks did well last year, like GNCMA. Some didn't, like ALSK and PT.
In hindsight, would you be bullish at the beginning of 2014 for these companies? What went wrong with ALSK and PT?
I am muslceman. I have more muscle than brain!

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #337 on: January 24, 2015, 10:16:53 AM »
PT/Oi was invovled in fraud so much the CEO of the combined firm resigned.  This was a highly levered equity that was cheap without fraud.  With fraud who knows.

ALSK is an interesting one in that its leverage with be reduced with the AWN sale and is amongst the cheapest telcos.  It is at disadvantage to GNCMA.   It should trade in line with other RLECs like LICT and New Ulm who trade for 3.5x and 4.5x, respectively.   

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JAllen

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #338 on: January 24, 2015, 03:28:25 PM »
Packer:


Do you think LICT should trade at a 2X-3X EV/EBITDA discount to RLECs like Frontier, that have declining revenue and higher debt?

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #339 on: January 24, 2015, 05:06:50 PM »
The RLEC story is dependent upon revenues and EBITDA increasing over time.  LICT and some of the RLEC have steady to slightly up revenues at this point.  If this is an industry wide trend (which I think it is) you will see FTR and others follow.  In some of my day job work, we have seen some evidence that industry insiders think the decline is over and they are buying based upon that premise.

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