Teekay Tankers December 2016 Summary And Comments


Click here to read the full summary of Teekay Tankers management December commentary on rates and my comments going forward on the IIEX website.

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Is The Stock Market Getting Too Expensive?


I’ve written several articles over the past few years where I argued the market was not extremely overvalued when many used the historical average Shiller PE to highlight the market as being, well, extremely overvalued.  The problem with using the historical average, as I see it, is including data from say the early 1900’s to forecast the valuation of today’s market is plain wrong; two different worlds.  I’ll discuss the methodology to give a basic understanding on how a conclusion (market valuation) is arrived at.

This method measures market risk over a set time based on Shiller. The Shiller PE (known for Yale University economist and professor Robert Shiller) is the current price of the S&P 500 divided by the past decade’s average inflation adjusted earnings of the index.

The valuation data is derived from a rolling time frame to the present or the year under examination.  Five median values are calculated for each period at the specified intervals. The interval that best fits the historical record is eight years.  We’ll look at a few examples to get a feel for how it works, specifically 1929, 2000 and 2007 followed by a current analysis.

The following color code definitions are:

  • Green – Market cheap to reasonably priced. Good time to find bargains

  • Yellow – Caution, more of a hold pattern. Bargains not as abundant

  • Red – Expensive. The period before a correction.

1929:

…Click here to continue reading the full article…

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Possible Tax Consequences For The Acquisition Of Level 3 Communications By CenturyLink


Possible Tax Consequences For The Acquisition Of Level 3 Communications By CenturyLink

The IIEX website has moved to a new server at http://www.iiex.club/

The blog is at: http://www.iiex.club/blog-1

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New IIEX Website’s New Blog Page


The IIEX website has moved to a new server at http://www.iiex.club/

The blog is at: http://www.iiex.club/blog-1

 

 

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Level 3 Communications – The Bad And The Good


This article lays out revenue growth (The Bad) and its effect on FCF, EBITDA and earnings (The Good). The article can be read without the notes at the end of the article. The notes are provided if the reader wants to delve into detail for a more in depth account.

Level 3 Communications (NYSE:LVLT) is a global communications provider headquartered in Broomfield, Colorado, that provides communications services to enterprise, government and carrier customers in more than 60 countries around the world. Level 3 operates one of the world’s largest Internet backbones.

Top Line Growth (The Bad):

Is Level 3 Communication revenue falling short? The answer is partially in a 2014 article examining the acquisition of tw telecom. Data from a 2014 S-4 provided long-term financials prepared by Level 3 and tw Telecom as part of the due diligence in connection with the merger.

Projecting the future with precision is impossible so various outcomes should be examined. Two projections were given in the S-4:

  • Management Case; non-public historical financial and operating data prepared by management of Level 3 and tw telecom.
  • Sensitivity Case defined as unforeseen events, changes in technology or any number of events that may prove to be financial bumps in the road.

The following is a summary. This table is not in the filing but a compilation of data found in the filing then combined to produce pro-forma numbers along with our projections labeled “Model”: Click Here To Read The Full Article

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Is The Overall Market Cheap Yet?


SPE2016Recent

View based on a rolling time frame from the end date.

Market Gauge

View based on a rolling time frame from the end date. Green = undervaluation; Yellow = Caution Area; Red = overvaluation.

HistView

ANSWER: Not yet but not wildly overpriced either.

Look at end dates for various historical periods with the interactive model at:

https://iiex.sharepoint.com/Pages/ShillerPE.aspx

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Level 3 Communications metrics; actual & projected


Based on models, articles, management comments developed on the IIEX site. Projected summary slides are as follows:

This slideshow requires JavaScript.

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Market To Level 3 Communications Investors, Do We Have Liftoff?


The complete article has been published on the Seeking Alpha site. The link below will take you to the article:

http://seekingalpha.com/article/3873366-market-level-3-communications-investors-liftoff

The article is an update to the previous article using full year 2015 financial results.

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How I use Excel to analyze stocks


Programs such as Excel, Access, etc. how become incredibly powerful and can be powerful tools in the hands of the individual investor. I’ll share my experience with a program I developed in Excel that has become invaluable for me.  This is not used for day trading but to find long term value under any market conditions by focusing on company fundamentals.

There is an abundance of free information contained across various websites.  The problem is gathering and downloading the information in one place then analyzing the data to make an educated decision.  Excel allows this without any third party add-ins. There are some very good add-ins out there such as the SMF add-in but the problem with a third party add-in is if you work on another computer the add-in must be installed on that computer and in the same location as the original computer to work without any modifications.

There is a learning curve. It takes some basic knowledge of macros.  That said every problem I’ve run into I’ve found solutions by searching the internet.  The biggest headache comes when a website changes their design, format, etc. then you have to adjust your macros to avoid errors.  The good news is this doesn’t happen very often with the bigger sites like Yahoo, Nasdaq and others and when it does it’s usually a simple fix to correct it.  There is always the possibility they will change the site in a way that will not allow Excel to download the data.

Here is a basic video of some features I use Excel to perform.

The video is a few years old and there have been many updates since but you get the idea.  If you just don’t want to get into macros/VBA  you could use the SMF add-in to get similar results but there is also a learning curve. More information on the SMF add-in developed by Randy Harmelink can be found here.  The beauty of this is you can design something that fits your views but it does take a little time.  It’s time well spent learning some programing skills and you don’t have to become an expert or even close to it.  If this is not for you the other option is to learn how to incorporate the SMF add-in which is freely available from Randy’s site.

A recent summary of stocks I have in this template can be found here. This list is usually updated several times a week. Some other applications I use Excel for is group insider transactions and market valuation.  Developing your own application is only limited by your imagination and it doesn’t take a rocket scientist to figure it out. Tools that truly empower the individual investor and cost little if you invest the time to build and test your own, not to mention the time saved by automating the tedious work.

Before any one asks, the file shown in the video is only available through the IIEX website for supporters. More information on templates I use/developed can be found here.

 

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Level 3 Communications Undervalued Regardless Of Possible Outcomes From The FCC Investigation


SUMMARY

Accumulated FCF through 2020 in excess of $7.5 billion

Venezuela deconsolidation is a non-event going forward

FCC investigation could be a huge catalyst for revenue growth

Introduction

Level 3 Communications (NYSE:LVLT) is a global communications provider headquartered in Broomfield, Colorado, that provides communications services to enterprise, government and carrier customers in more than 60 countries around the world. Level 3 operates one of the world’s largest Internet backbones.

Previous articles highlighted Level 3 Communications focus; moving from being primarily a wholesale provider to a company focused on serving the day-to-day business needs of enterprise customers. These changes are driving double digit growth in both earnings and FCF (free cash flow).

This article will touch on the following:

  • CNS (Core Network Services) revenue growth and its components
  • Market potential
  • FCC investigation
  • The effect of deconsolidating the Venezuela business
  • Long term EPS and FCF (free cash flow) growth and valuation
  • Final thoughts

Revenue: (Unless noted otherwise all data is TTM [trailing twelve month] and pro-forma for tw telecom.)

If there is any confusion about the strategic direction this company is going the CEO – Jeff Storey said it best on the conference call.

First of all, we are 100% focused on the wireline needs of enterprise customers. We’re not distracted by wireless, by consumers or by pay television. We do serve wholesale customers, but even then, we’re really targeting the needs of enterprises that those wholesale providers serve. Wireline enterprise networking isn’t a piece of our business. It isn’t an add-on to our business. It is our business…

…Click here to read the full article…

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