Silverado
I am calling you out. How is it that you ask for everyone's best idea, and then opt not post one? Come with it, what is your best idea right now? Pennies are an acceptable answer. Did you go back to Europe and fall off the map?
MK
MK
posted by MattKelly54 at
10:20 AM
1 Comments:
RGC. Paying a $2 dividend on april 13 for all shareholders on record by 3/28/07.
Summer box office will be biggest ever.
RGC owns 22.6% OF RGC = $4 / SHARE AND will go up as this business continues to grow.
Back out the $6 of NCMI and $2 a share of cash on bs and you have an EV/EBITDA of 7.3x, which is ridiculous for the best operator in the land. This core level implies a dividend yield of 8% and a value below the perpetuity value of the dividend. You just got another$.30 of dividend.
Top that off with a bullish view on the theater space as 3-D film and digital projection begins a new golden era for theaters that is similar to that of the 90s w/ the stadium seating rollout.
I estimate that RGC can do at a minimum $300m in FCF in 09 as it will conservatively grow FCF at 10% annually in its core biz + it gets a fixed payment of $7m in after tax FCF + 22.6% of NCMI's FCF, which is growing at 20%+ annually. Thus, cutting out cash and NCMI equity value and valuing core theater biz on FCF basis it looks like 6x FCF.
I wish I would have checked this earlier I would have put all of you on the Yen Straddle that I had on prior to the whole market downturn we had two weeks ago. That was a value play that encompassed a short global liquidity, long volatility in a market that was assuming that volatility was essentially dead, and basically a short dollar play, which all of you know that I love more than anything.
Finally, we had a professional investment communication guy in this morning working with us in small groups (yes, i do work for a big firm that has silly shit like this) anyways, I pitched silver to these people.
Silver actually might be the best investment idea.
Production gap of 200m oz that has been filled by 2.2bn oz of above ground inventories which have now been depleted to roughly 100m oz.
Demand Factors are Bullish:
First, Silver usage in India and China is 1/70th per capita relative to that in the US. A convergence to 1/50 represents a 300m increase in demand. As reference, annual industrial demand is only 400m meaning that asian growth could likely double industrial demand.
Second, Silver usage in Solar Energy will go to 50m oz in annual demand (5% of current supply) from 5m in current demand. (These numbers are via TopTick's source and the background work that I have done that suggests similar #s).
Third, water treatment platforms will represent 50-75m in incremental demand through 2010 as water issue continues to grow in importance and in amt. spent on solving it.
Fourth, silver as an investment will actually accelerate as ease of investment has been solved by barclay's etf and monetary/geopolitical uncertaintly continues to motivate people to invest in precious metals. At the end of 06 there was 120m oz increase in silver held as investment in vaults globally on record - probably higher if off record inventory is included.
SUPPLY Factors:
Annual supply is about 630m oz, which has steadily fallen short of demand to the tune of 200m oz.
Looking out, by the end of the decade two of the largest mining operations that supply silver globally will be going offline. Don't expect new supply to offset this as '05 and '06 saw record E&P on gold and silver fall short of bringing any new meaningul supply on - line.
Finally, and most importantly, the supply item that has filled the gap - above ground private and gov't inventories - has been dwindled down from 2.2bn oz to an estimated 100m oz from 1993 thru 2006.
Ok, one bearish factor is declining demand for 35mm film, which is why EK's stock has been destroyed in the last couple years. However, even though photography demand is decreasing, it is being offset on the supply side as it is the largest supplier of scrap silver. Scrap silver represents 1/3 of annual supply, and has remained steady at 185m oz level for the last 3yrs despite 25% CAGR in industrial demand.
SO IN SUMMARY:
I LIKE A VALUE DIVIDEND COVERAGE STORY IN AN OUT OF FAVOR INDUSTRY ON THE BRINK OF A TURNAROUND.
I LIKE(D) and STILL LIKE, a LONG VOLATILITY PLAY THAT ESSENTIALLY IS A SHORT ON THE GLOBAL LIQUIDITY GLUT AND BELIEVES THAT RISK PREMIUMS WILL RETURN AS BOJ INCREASES ST RATES IN THE NEXT 12M.
I LIKE PERIODIC TABLE TICKER AG - BEST LT IDEA. I PLAY THIS 2 WAYS. FIRST I BUY BARS OF SILVER AND PUT THEM IN MY SAFE. SECOND, I HAVE A SHORT GOLD AND LONG SILVER PAIR TRADE ON IN THE FUTURES MARKET, WHICH SHOULD PRODUCE SERIOUS MONEY AS SILVER WILL SEVERELY OUTPERFORM GOLD IN PRECIOUS BULL MKT. (FOR EXAMPLE, LAST YEAR GOLD WENT UP 25% AND SILVER WENT UP 49%) I TARGET A GOLD TO SILVER RATIO OF 16X VS. CURRENT LEVEL OF 48X, IMPLYING A 3 BAGGER W/OUT INCLUDING GOLD PRICE APPRECIATION.
SO THERE - ONE STOCK, ONE CURRENCY DERIVATIVE PLAY, AND ONE COMMODITY IDEA.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home