HOS, OUTR, BKS, TTWO, TMUS, POST, CFN.to SUM.to BAD.to

ill answer intelligent questions about them best I can







edit: since thread started have sold out of SUM, bought more HOS, sold my TTWO and BKS and CFN was bought out

I see that you've had TMUS in your sights for a while. What's your thesis now and what have you thought of the recent m&a developments?

Regarding TTWO, does the length of the development cycle for their biggest hits (GTA especially) concern you? It seems like as technology advances, the development cycle grows steadily longer. Ten years ago they could develop one of these games in 2-3 years, GTAIV took 4 years, GTAV took 5 years. Each game gets significantly bigger and more detailed than the last and this is something their consumers have come to expect from the series. Do you think this trend is important in forecasting future earnings?

No questions yet but just a big thanks for doing this ahnuld

well original thesis was their either softbank or dish would buy them out, and at the same time they would be raising the floor price by winning subs and building a viable business.

First buyout offer fell through but a new potential buyer emerged in Iliad, who soon may raise their offer, and dish has yet to decide what to do. Meanwhile the business has done much better on its own than I imagined. Theres a good chance its trading at $40 based off 2016 results. The fact that theyve been adding subs so fast kind of masks the potential ebitda they can generate. That will become evident as sub growth slows and laps prior periods of big adds.

Biggest risk right now honestly is Sprint getting very aggressive as the new CEO has claimed he will do. I think hell find it takes a long time to turn it around though as Sprint has the slowest network and poor brand image, but over the next few years its the biggest risk. Given that I would sell in the 36-37 range. At 29$ today the downside is very low.

BKS spun off Nook a few months ago, and expects to close more stores. In the industry, print book sales seem to decline each year. So with that said... what are some positive signs for Barnes and Noble?

Thanks for doing this ahnuld!

Why Badger? I looked at that about 4 months ago, and almost pulled the trigger, but decided against it.

I liked TTWO about a year ago up until about mid march this year, but I don't anymore. What makes your bull case for it now?

Should we infer that you don't like LOY anymore?

GTA releases are obviously what this company is all about, but no I dont think its a new trend that there will be increasingly greater gaps between games. Rockstar is also developing other games between GTA releases which keeps them busy, and I believe TTWO actually chooses their launches when convenient, not when they can get the game out quickest. I think they timed GTA 5 to be out when the new consoles launches so they could sell millions of copies on the old systems and then a year later when the install base is big enough launch the same game on the next gen.

They also seem to be pretty serious now about being profitable each year. In the past it was small losses every year until a GTA came out when they would make a billion or whatever. Now they are trying to smooth it out. I think well see the next Red Dead game come out in april/may 2015 which is right at the start of their calendar year and which would enable them to have a 3rd year of profitability in a row.

4 months ago the stock was at 41 now its at 29. That obviously changes things

no, I didnt post any stock ive already talked about in detail. I figured I would write about new companies I havent written about.

BKS is only spinning out nook in march. sum of the parts gets you to into the 30's

TMUS - did the news the other day about possible goog/msft involvement affect your position size or opinion on this?

POST - this has been such a **** show cause of acquisitions. Optimism based upon actual belief in the company, or just that it can't get much worse?

I am long brk-b, irdm, pkx, c

Yep. I'd love to hear some thought processes, but it's not even necessary. I'm not even going to question Ahnuld, just buying some of whatever he does tbh. Thanks for sharing.

btw, I've had TTWO for a long while as recommended by Shoe and was thinking of taking profits, but I'll actually just hold on to it.

i went along for a product demo of badger daylighting in 1996... hard to believe it's still around as a stock. i'm assuming that's BAD-T....

Thank you.

Thanks Guv

Not trying to be a pedant but just trying to understand, I'm lead to believe by some people that trading on information like this is a fools game because it's largely priced in already?

The TMUS rumors are incrementally positive but dont really change my price target or position size since 33 was never really a realistic sell price for me. They should get to well above that organically.

POST is now only trading for about 9x managements guidance for adjusted free cash flow in 2015. Its really hard to see that due to all the moving parts but if you piece it together thats what you get. They also repositioned themselves into growth markets, and are decently levered, so any growth in ebitda accrues to shareholders. It works both ways but you're betting on Bill Stiritz. This company was always a bet on the horse, and that hasnt changed. Im surprised the market has had such short patience with this one given the mans legendary track record. I used the selloff post earnings to average down.

the fact that its released then is not known, no. They havent announced it, ive just deduced it based off a couple things. But even then its not a big deal as the market knows the next dead will be released should it be in early 2015 or late 2015. Bringing the cashflows up 6 months doesnt really add any value to the stock. I was just pointing out that while TTWO used to lose money in the in between years of GTA I now think they have enough titles to break even/make a small profit in those years.

TTWO isnt going to be a home run at these levels, the fair value is probably 27-29 but the down side is so low with half the marketcap as cash that the risk reward is attractive. Plus I boguth at 17.75 so it was really compelling then.

oh man thats really early, like when they first started. Tor took over as CEO in 2000 or 2001 so thats before even he was involved in the company. Yes its BAD-T

Thanks that's a great explanation!

Why OUTR? I haven't looked closely from this but from what I can put together ecoATM seems like an awful idea and the bull thesis probably depends on it having some value. The most recent note by JPM even says that it can be hard to short this name in case they scrap the capex on ecoATM and plow it towards buybacks/etc.

I'm also assuming there's some play on redbox declines being slower than expected by the market. If this is part of your thesis how did you get comfortable that this is the case (aka what research did you do to convince you)? Also, wouldn't they have inventory issues with multiple formats (blu ray/dvd) given what I assume to be a relatively low income customer base.

Also, if the JPM numbers are correct they see FCF going from 250ish to 140 in FY16. Not saying that it's still cheap there, especially with interm cash coming in but if it does get to 140 FCF the stock will most likely rerate downwards on a lower future expected FCF because of whatever got FCF down in the first place.