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  • softdude2000 2017-06-16 05:51
    batbeer2: Hi Softdude,

    Yes and no. This is a pretty simple business with a lot of revenue. They are not generating enough cash now but that IMHO is a choice. T
    SHOS management is investing(in IT infra and rebranding) as if there is no doubt as a going concern for this business. Market is treating as if they are going to close doors.
  • softdude2000 2017-06-15 18:34
    Other than balance sheet, do you see any safety in cash flow statement/income of SHOS.
  • softdude2000 2017-06-03 17:18
    batbeer2: Hi Softdude,

    Bricks and mortar are expensive but so is IT infrastructure.

    I don't think the IT expenses are on the downstream side (webshop). I thi
    Thanks for the reply.

    Is this IT system worth anything if they close down their business?
    I am trying to understand if there is any resale value from IT system in addition to NCAV discount we see.
  • softdude2000 2017-06-03 05:13
    I was reading latest 10-Q for SHOS. what caught my attention is that they spent 10M, 15M in 2015 and 2016 for IT related stuff. They are planning another $20M in 2017 and ~0 in 2018. 1. I dont get this. A company with 70M marketcap spending $45M on IT expenses. Did I understand this right? Did they forget we are in cloud computing era? Is there any referral fee for AWS :) I can charge them. 2. Does this mean huge upside waiting in 2018 that frees up $15M average annual expense? 3 ...
  • batbeer2 2016-06-23 10:24
    Hi brinsley, thanks for the heads-up on Kone. Hadn't really looked at that one for a while and the P/E is not as high as it used to be last time I checked. I don't mnd the currency they report in. If Schindler moves its head office to Luxemburg then they start reporting in euros but the company remains otherwise unchanged. What matters is their costs. I would have to check out the Swiss headcount as compared to the total to determine if I'm worried about currency fluctuations. best, ...

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  • batbeer2 commented on batbeer2's article 01-12 05:56
    Value Idea Contest: Liberty Global PLC
    Business and history Liberty Global (LBTYA) is a holding company. Through its subsidiaries, the company owns cable networks in 10 European...
    View all 8 comments
    batbeer2 01-12 05:56
    • Hi Raj123456789,

      Sorry for the slow response. You ask how I calculate owner earnings. Short answer: I don't. 

      Long answer: While I don't calculate the answer, I think it is possible for me to arrive at a reasonable estimate for the owner earnings of this company. 

      I approach the problem in reverse. Owner earnings is cash you could return to the owner without losing market share, taking on incremental debt or selling stock. As it happens, Liberty Global does return cash to its owners (mainly through share buybacks). It gets a bit complicated because they also sell and buy bonds and they also sell and buy their own stock. 

      Luckily, Gurufocus adds it up for you. It's called "cash from financing" and in this case, red is good. Red means that more cash was taken out of the business than put into it.

      As an aside... you can quickly see that Liberty Global fits Buffett's definition of a wonderful business. It spits out cash and grows. Revenue has gone from 2B to 13B while the company spat out more cash than it absorbed. That's quite rare to see. It's a bit lumpy from one year to the next but the pattern is there.



      You can draw your own conclusions from these numbers, but I'd argue that the pattern here over the last 15 years is that the company tends to return roughly 20% of revenue as cash to shareholders. Some years they invest (higher capex or acquisitions) and in other years they harvest (lower capex and dispositions).



      So that is what they do return which is obviously a conservative estimate of what they could return.  Bear in mind that I spend about 3 minutes doing this and then perhaps 50 hours figuring out if the framework I'm using actually applies to this company. 

      - It's a holding, how does it work out at the subsidiary level?

      - What happens to revenue as a result of (de)consolidation of subsidiaries. How does that affect the numbers?

       - What if interest rates go up?

      - What happens if Capex doubles; how big of a factor is Capex actually? You see, if Capex is just 5% of revenue, it does not matter if I get the ratio of maintenance vs growth expense right. But if it is 50% then it is much more relevant,,,...

      - What percentage of revenue do their main competitors spend on Capex and/or Opex and are they taking market share?

      - If I compare my estimate of owner earnings to FCF as reported under GAAP, does it still make sense? If not, why not?

      etc. etc. etc.

       
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