same format as the last thread. Figured good time to start before trading begins in 2016

In the states I like DDS, CF, NICK, RYCEY and STRZA

In Canada I like NTS, IBG.DB.B, NAL, EFN and ATH debt

did you relocate your blog (freenpv) or is it down permanently?

down permanently. Im too restricted and busy at work to have it make sense to continue with the site. But I do tweet occasionally under the same name (freenpv)

Do you still like the stocks from the last list, in addition to these? I'm still holding HOS and OUTR.

Yes and still own them both. but this is a new thread for new ideas so not going to spent time on them

whos ahnuld

Subscribed & followed on twitter. All the best for 2016

Non twitter cliffs on strza/CF? (apologies if you posted them in the trading thread, I'm only a casual noob donk in this board, don't get in here that often) The others either i generally get or are in industries I feel extremely uncomfortable with (mainly that nick one...). Just want to learn and improve my own thought processes thanks. (mostly want to see where we differ after I had to look them up-- at least we were similar on lol amaya)

Short AYA for 2016?

STRZA is probably the simplest. Theres nothing fancy here, its also an extremely easy business to understand. All their revs come from subs * rate and the rate is negotiated to climb at roughly inflation + 1 or 2% per year. So that leaves management to drive subs.

They are doing a strategy of creating more originals, just like everyone else. The difference here is the man running the show, CEO Chris Albrecht. He was in charge of original programming at HBO when they redefined TV by greenlighting shows like Sopranos, Sex and the City, 6 feet under, Entourage and my favorite the Wire. So the man has a demonstrated talent in this art.

Since he`s joined Starz has a couple decent sized hits in Power and Outlander and some other smaller successes. They will continue to build up their stable of originals by diverting money being spent on movie output contracts with Disney which rolls off after 2016. Thats a big thing I think people arent looking at correctly. In 2015 abd 2016 Starz is carrying 2 movie output deals and financing a whole slew of originals. In 2017 the disney deal ends and those high programming costs come down which drops straight to EBT. Should help juice eps.

Some other reasons to like the stock:

- Its not expensive trading about 12x earning, that business should probably trade about 15x.
- Its not exposed to the netflix/google effect. Disintermediation of the cable bundle will help as starz has a very easy product to sell directly to consumers, similar to HBO. It gets hurt by cable bundling, not helped. Also it doesnt have advertising dollars that google is stealing away from the TV ecosystem
- Buys back shares aggressively
- Rumored takeout candidate
- Well off highs as they had an original in Q4 2015 be converted from a series to a limited run (due to not loving the end product). this means they have to expense the entire production cost in the quarter as opposed to over a few years. Drives up programming costs for the q, making everyone take down their eps numbers. Also shows management doesnt bs the programming cost depreciation which is a big fear when evaluating the industry
- I think american gods premiering next year can be a decent sized sleeper hit. In the mean time they have a ton of material with outlander to keep going and the power audience is only growing

So its not the most exciting company and it won't double overnight but it should be a solid steady performer.

im short it still but the short is getting played out. Risk reward a lot less compelling at 17 cad than when I shorted it at 31.50 cad.

every portfolio manager in Canada who touts Amaya drools over their ability to cross-sell sports betting & casino games to their poker clientele.

Would you mind giving your thoughts on why you think NAL is a good buy?

Can you share your thoughts on NTS

Is DDS a turnaround play for you or is it just a case of stock to cheap at these levels.

Hello,

If you do not mind the question -- what makes you optimistic about dillards? Seems like they have taken quite the beating as of lately. This stock historically has been all over the place, after going no where it in a trading range for 20yrs it has a bullish surge starting in Jan 2010 (from ~18 ) and subsequent free fall from its all time high in april of 2015 (~143) to its current price (~65).

As consumer spending migrates online and the demand to meet consumers ever changing taste has been a struggle with respect to future earnings, but I am aware dds also has a general contract construction company. The company sells brand name clothing at discount pricing, which is a common strategy, but its almost as if the holidays which often requires good deals to get the consumers in the doors is a bit overbearing for their business model causing the recent outlook on earnings, maybe just in the short term, to be a bit more pessimistic. Some analyst and hedgefunds as of recently, have changed their outlook from sell to neutral.

I am not sure what kind of long time horizon you are suggesting when you say that you like stocks and I am sure nothing is set in stone and it varies with the underlying, but just curious, for those who are a bit unfamiliar with your background, how much time you are spending analyzing these companies and looking at management, forecasting, technicals (?),etc

Thanks

subbed, thanks Ahnuld for doing this

so the stock is cheaper. thats good. I invest, not trade.

same could be said of 2010 to 2014 time period (amazon existed then too) yet dillads excelled.

management owns a ton of stock and will eventually privatize. They already buy back 10% of total shares per year while never selling. Family run business.

Dillards already went through a turnaround form 2005 to today. Right now they (and the rest of retail) are suffering from a warm fall, high inventory levels and soft sales. Hopefully they managed to clear excess inventory during the holidays, but if not im sure they will get it done in Q1. Makes for 2015 being a soft year, its not terminal.

More importantly DDS makes about 400mm a year in fcf with little debt. stock trades for 6x that. This year will probably be more like 300mm, big whoop.

They also have about 2 billion in real estate they can monetize. sell that and lease it back you are down to normalized 300mm fcf and an ev of 900mm. thats about an ev/ebitda of 1.5

ill get to CF at some point but im not at the office and thats where all my numbers are so I need to refresh on them first

similar to HOS its a bet on oil prices recovering but with very asymmetrical payouts.

NAL is an oil services company, focusing on oil sands tailing ponds cleanup, waste water disposal and landfills, tank cleaning ect. Some of its business is drectly tied to drilling activity and some shouldnt. I say shouldnt because things like waste water should be generated even if new wells arent driled by older wells having greater and greater water cuts. Yet in Q3 and Q4 they are even seeing a drop off in this business. How is that possible?

Well E&P companies are so stressed right now that they are retaining waste water on site, delaying cleaning out tanks, anything to conserve cash. This can only continue for so long as oil companies have a limited ability to do this in house and after a few months need to utilise 3rd party guys like NAL. So were looking at Q3 and Q4 being worse than most peoples floor expectations purely due to short term stuff that cant be deferred much longer. Thus results in 2016 can be better than second half 2015 even if oil doesnt recover.

Now im not betting on oil staying under 40$. I think thats pretty much impossible past one more year as producers will start going bankrupt en masse. But its not that relevant as what matters for NAL is really activity levels. So when activity picks up a bit so will NALs revenues. When does that happen? My guess is towards the end of 2016. So its some time to wait but luckily NAL mostly has termed out debt and very little bank debt (which they already got waivers on the covenants until 2017) so there is no immediate risk of bankruptcy.

If oil goes back towards a 55-60 level I think its pretty likely this becomes a $15 stock again and something like 45-55 should see it back to $10. worst case is bankruptcy in 2 or 3 years obviously but just run out a probability analysis and it becomes very compelling.

Best guess in 24 months is:

oil at $30 = 0 stockprice = 20% odds
oil at $45-55 = 10$ = 25%
oil at $55-65 = $15 = 40%
oil north of $65 = 20 = 15%

means target price is = $11.50 vs $3.50 today

If it's not asking too much, perhaps you can write a thing or two on why did you decide to short AYA at it's peak? What were you looking for and what did you find before making the decision?

just gonna focus on the stocks I mentioned in the OP. Amaya was discussed in this thread at the end of august

http://forumserver.twoplustwo.com/30...5/index15.html

hey ahnuld i appreciate the value add to the forum by creating this thread.
I too would like to hear your notes on CF. wondering if its company specific or do you like the whole sector. I've been waiting to buy AGU which has held up better then the rest of the sector.
thanks

Thank you Ahnuld. Very much appreciate the detailed response!

You are giving an 80% weight to oil price gaining 20-80% in 2 years. Is that reasonable?