Using Veritas to Construct the "Per…

29-04-2017 Hits:82092 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

Read more

The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:77729 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

Read more

What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:77299 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

Read more

Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:82045 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

Read more

This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:78637 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

Read more

What is the Value Proposition For Verita…

01-04-2017 Hits:80931 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

Read more

This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:47814 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

Read more

Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:79639 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

Read more

Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:79164 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

Read more

The Country's First Newly Elected Lame D…

27-03-2017 Hits:79712 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

Read more

Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:84684 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

Read more

The Transformation of Television in Amer…

21-03-2017 Hits:81636 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

Read more

My bankruptcy search is finally starting to bear some truly ripe fruit. I have found a handful of companies who face a probably chance of bankruptcy from both cash flow insolvency and balance sheet insolvency simultaneously, in addition to being in industries extremely hard hit by the current macro environment.

I will start sharing some more specific data with subscribers very soon - following are the three likely "bankrupt to be" companies that we have short-listed thus far. Short drill down summaries will be available to subscribers by next week, followed by full forensic analysis of the short list finalists a week and a half later.

Candidate one (You can consider this GGP part 2, but with considerably more leverage, lower quality assets and a lot less cash):

  • The Company is in the process of development of its raw land assets, and has not yet started to earn revenue except on account of agricultural revenue from its undeveloped land reserves (these revenues are very limited). The local government authority's board voted not to accept the right-of-way grant for the company's development project and stopped the company from proceeding. The company filed the suit against the board which is still pending.
  • As a result, the company is continuing to report large losses owing primarily to G&A expenses. It's (almost) entire equity has been wiped out.
  • The company has debt to equity of 251% and debt-to-assets of 70%.
  • Although the company has net debt of just $21 mn, it doesn't seem to have any sources of cash flows to fund its debt obligations.
  • The company's valuation seems to be highly unjustifiable with P/S of 2209x and P/B of 18x.
  • The company's stock price has increased 3% over the last one year and 9% over the last one month.
  • The company has zero-coupon secured convertible term loan of $40 mn due by June 29, 2011. The interest is accrued on the loan but is payable along with loan in 2011.
  • Its current cash position can support only 2 months of its operations (if the board approval is not received). The company has acknowledged that it might have to resort to additional borrowing under the present state of matters (good luck with that).
  • The Company has nearly 45,000 acres of land in three areas of eastern San Bernardino County California. Of this since 1982, it acquired 34,500 acres in eastern San Bernardino County, California. Total value of land as at June 30, 2008 on the company's books stood at $22 mn. However with debt of $40 mn maturing on June 2011 and without any significant cash flows, the company could be headed towards difficult times ahead.
  •  

    A more detailed scrutiny of the state of the legal suit against the muni board could throw more light on the company's future. But, given the information we have obtained thus far, the resolution or the approval doesn't seem to be an early proposition.

     

    A relatively unknown in the financial space that will probably be hurt more than Lehman when the sh1t hits the fan

    • The company has reported negative free cash flow since 2005. Operating cash flows have also been negative during this period except for couple of quarters.
    • The company has high debt-to-market cap of nearly 200%. It's debt-to-assets stands at 77%.
    • The company's financial instruments including derivatives, commodities, corporate and municipal bonds and equities form nearly 46% of its total assets.
    • The company is into the business of market-making and dealing in financial instruments, currencies and commodities, and asset management with principal revenue stream through sale and purchase of physical commodities. With high volatile commodities and financial markets, the company could not be expected to turnaround in the medium-term and report positive cash flows.
    • The company's share price has declined 8.6% over the past one year. The company's share price has declined 35.2% over the past one month. Interesting the company's share price has witnessed a decline of 19% in yesterday's trade. However based on P/B based valuation (for financial companies) the stock still seems to be overpriced with P/B of 3.0x.

     

    Another Real Asset Problem. I have an on the ground, grass roots knowledge of this particular company and its operations and have considered shorting it for some time now.

    • The company has reported negative free cash flow since 2005.
    • The company is highly leveraged with debt-to-assets of 74%, debt-to-equity of 862% and debt-to-market cap of 257%.
    • The company has reported a slowdown in revenue growth over the last 2 quarters and decline in net income since 2007.
    • The company has reported net loss over the last 2 quarters.
    • The company seems to be having problems in servicing its debt with interest coverage ratio of 0.90x, debt-to-EBITDA of 13.7x, and debt-to-OCF of 24.2x.
    • However the stock has witnessed a decline of 43% over the last one year and 21% over the last three months. Given its fundamentals, the situation could get worse for the company, particularly in view of slow-down in economic activities and wide-spread losses in the financial market. (We plan to look at its debt repayment schedule to get more insights into its liquidity situation in the coming periods). It is also facing grass roots community headwinds.

     

     

    We are in the process of looking at 7 other companies, all in various industries and sectors.