NICE JOB!! I followed Hayes into this one too and I was too early as usual and timing is everything. You can buy a turnaround story but you need to buy it right.
The float is so small here too. Daily drip down is awful to watch. Such a controlled takedown. Who is selling?
I like your substack and think you make all the relevant points. A weaker USD should also help a great deal.
I love a small float. Allows a stock to just go straight up when the good news comes.
How does a weaker USD help? I thought the CEO said it didn't. It was a point I didn't understand fully and FX was a huge headwind (2% of ebitda I think). Would love for a weaker USD to be a tailwind.
I thought the CEO said the FX was a factor. Profits in foreign countries are greater if the dollar is weaker/ their currency is strong against the dollar.
Valuation wise why do you look at p/fcf? They are highly leveraged, doesn't it make more sense to value ev by (ebidta - maintenance capex) and then adjust to get equity valuation?
Yeah probably. The free cash flow number incorporates interest payments, so it was good enough for me. I just honestly didn't think too hard about it, it's cheap and the potential growth in profits is immense. We get back to peak SAAR this cycle and we have a 5-10 bagger from here.
I think historically P/E has been the best metric, but that requires more sophistication than I have.
NICE JOB!! I followed Hayes into this one too and I was too early as usual and timing is everything. You can buy a turnaround story but you need to buy it right.
The float is so small here too. Daily drip down is awful to watch. Such a controlled takedown. Who is selling?
I like your substack and think you make all the relevant points. A weaker USD should also help a great deal.
Cheers, Purple
Thanks!
I love a small float. Allows a stock to just go straight up when the good news comes.
How does a weaker USD help? I thought the CEO said it didn't. It was a point I didn't understand fully and FX was a huge headwind (2% of ebitda I think). Would love for a weaker USD to be a tailwind.
I thought the CEO said the FX was a factor. Profits in foreign countries are greater if the dollar is weaker/ their currency is strong against the dollar.
Really need rates to come down so people can finance a car at a reasonable cost and the actual price of the vehicle to come down too.
Enjoyed reading.
Valuation wise why do you look at p/fcf? They are highly leveraged, doesn't it make more sense to value ev by (ebidta - maintenance capex) and then adjust to get equity valuation?
Thanks for reading!
Yeah probably. The free cash flow number incorporates interest payments, so it was good enough for me. I just honestly didn't think too hard about it, it's cheap and the potential growth in profits is immense. We get back to peak SAAR this cycle and we have a 5-10 bagger from here.
I think historically P/E has been the best metric, but that requires more sophistication than I have.
My valuation napkin calc in the past (of ev) yielded similiar results anyway, just wandering.
BTW seems like fx could be positive this quarter due to the usd/peso rally on June?
Definitely room for improvement on the FX side