CGRdrJoe
Footballguy
truth, only about 40 minutes north of me. Let me know and I’ll make a trip up to ship.Fantasy Football - Footballguys Forums
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Stock Thread (20 Viewers)
- Thread starter St. Louis Bob
- Start date
truth, only about 40 minutes north of me. Let me know and I’ll make a trip up to ship.sporthenry
Footballguy
What better to do on a quarantine Saturday night. My only thing with the warrants is that they account for ~20% of shares. So it is dilutive and 42.5mn warrants add $13.6bn of market cap. The convert is busted and has a $2 conversion price so that thing is way OTM from what I calculate. I'm getting a market cap of ~$67mn. Debt of $115mn. Cash and equivalents of $25mn and warrant proceeds of $8.5mn so an EV of ~$150mn.
On the surface, they own 27.5% of a portfolio with $2.5bn in benefits and $1.1bn in premiums. So net $1.4bn at 27.5% is $363mn versus current market cap of $67mn. Obviously, the biggest thing is the timing of this from an NPV perspective as well as the sooner people 'expire,' the lower premiums they pay and faster they can pay off the majority partner.
So I looked into the waterfall and it's a bit of a cluster and apologies if you already knew this but it's probably important to note that the waterfall is for the entirety of the portfolio. But from that presentation, the first 3 things are pretty straight forward I think. The good thing is they're actually getting $8mn per year to run it. They're running at maturities exceeding premiums for the past few quarters and given the age of their portfolio, I don't think that will change. There could be an uptick in premiums but they can always just stop paying them. They had 18 maturities in 2019. Had 9 in 1Q and 7 in 2Q through April 20th (quarter end is end of May).
But the rest of the waterfall from what I can gather (starting at step 4) is to build up a $30mn reserve in case they need to pay premiums (i.e. maturities don't cover premiums). At the end of Feb, they had $4.9mn in that account so essentially need $25mn to get that up to speed. Had $19mn in pending distributions at quarter-end. So that could get made whole pretty quickly. Then the money starts getting returned to shareholders. I probably need to run a sensitivity around it but essentially the majority investor gets a guaranteed 11% ROI on the entirety of the portfolio before we get anything. So we're subordinated in the payout and only get the 27.5% after the other 72.5% get their 11% ROI. So the equity is essentially the residual claim on a residual claim. Let me know if you interpreted anything differently or had any other thoughts.
Definitely going to throw some money on it but not sure if it's a 0.5%, 1%, or 5% investment.
The Ref
Footballguy
I’d have to guess the TED talk has been posted here by now, probably a few times if I had to guess. I have shared on social media and some other places to raise awareness. No harm in doing the same.
https://www.youtube.com/watch?v=tPMHZiR_htQ
https://www.youtube.com/watch?v=tPMHZiR_htQ
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Charlie Harper
Footballguy
They're already in the middle of Phase 3 trials , it looks effective in ICU patients, and no reported adverse effects. So why is CYDY better when this maybe first to market?
Is the answer CYDY has uses other than COVID?
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It’s only been tested on 12 people so far and the phase 3 end date is September. If CYDY results are great, they’ll have first mover advantage and due to all the other trials LeBronLimeade has a much more proven safety rate. Could be something to watch but the other uses are definitely another factor.
⚡DEADHEAD⚡
Footballguy
If CCL5/RANTES is the problem in COVID, CYDY is the play. HGEN addresses a different cytokine/chemokine, IL1 and IL6.Charlie Harper said:
Each may have value.
eaganwildcats
Footballguy
Yeah the waterfall being a bit of a cluster is my biggest hangup, but also why I am curious about this (feels like something I should be able to understand). My first question is that EMGC isn't on the hook for premium payments - so does it make sense to reduce the benefits by premium payments? I feel like no?sporthenry said:
I tried to mock up what a mostly "full" waterfall looks like assuming they would take in a bunch of maturities in a quarter. Specifically slightly hung up on the 11% bit. Feel free to mess https://docs.google.com/spreadsheets/d/14m5VrBYqWSh-16TexyRy8aCDQ6SzgWGvG8I1gUMskv8/edit?usp=sharing
I also don't understand what this means (from the deck): "Note: In the event that Emergent’s ROI is reduced to fulfill the 11% ROI requirement on Palomino's investment, once the 11% is attained, Emergent’s distribution will be increased to allow Emergent to catch up on any monies contributed to such and then the split will be 72.5% Palomino and 27.5% Emergent."
sporthenry
Footballguy
Thanks for sharing. I'm working on my own so will share with you when it's in a presentable way. I think the easiest way to think about it is the Palomino investment is essentially a convert. They're guaranteed an 11% return first, so that is the debt portion. So at $400mn, they're essentially getting paid $44mn per year and as long as they don't pay that interest, that is building a higher principal and compounding the amount they get. So while the $400mn is obviously less than the $1.5bn residual value of the portfolio, if they don't pay interest (and hopefully principal down), that will be worth $550mn by year 3 and $600mn by year 4. Obviously, something would have gone horribly wrong if that happens and the equity is likely worth 0 in that scenario but guess that shows the time / value of this equity.
But the thing I'm working (and struggling) on modeling is that after Palomino gets that 11% return, then Emergent get's its 27.5% share, of the entire amount (i.e. not the amount left after Palomino gets its 11% return). So for example, if Palomino had loaned them $100mn, their guaranteed return would be $11mn. So if the amount left on the waterfall to return to Palomino/Emergent is $11mn, Palomino gets it all. If it's $15mn, then Emergent essentially get's the next $4mn since that is 27.5% of $15mn. And if it's $20mn, then EMGC gets $5.5mn and Palomino get's $3.5mn on top of its $11mn guaranteed. So that is how I'm reading the catch-up.
On the first question, I'm not entirely sure what you mean by reducing the benefits by premium payments? Do you mean like should they stop paying premiums? Or should you not take them out of your model? For me, I'm modeling out the portfolio as pretty much completely separate from EMGC. If they decide it isn't economical to pay some premiums, then that may accelerate the money returning. But that would also reduce the value of the portfolio. The portfolio seems to be in a place where maturities should exceed premiums so that reduces the need for capital. They need to build back up Premium Reserve Account (was $30mn) so that will give them a little breathing room if premiums exceed maturities for a quarter. Otherwise, if they need to pay premiums, someone will need to contribute capital and that likely means a 0 for the equity. I probably won't spend a ton of time on those downside cases. Thesis is built on things accelerating. The downside on a $0.30 case, is pretty obvious and there won't be any residual value.
⚡DEADHEAD⚡
Footballguy
ex-ghost
Footballguy
⚡DEADHEAD⚡
Footballguy
I love how on Janet Woodcock's pinned Twitter page describing her role leading the FDA's Center for Drug Evaluation and Research, followers are nudging her toward leronlimab.
dkp993
Footballguy
Can’t expect much more interesting then last week, though I would happily take a repeat (though that’s certainly not expected)Looking forward to a very interesting CYDY week.
DJackson10
Footballguy
Question and this is for a coworker of mine more so then me. I have a co worker still in HS (We work in a food market) and he's thinking about possible owning some stocks at some point (He's pretty smart kid) but he also wants a stock he can maybe sell some shares fast and make some quick $$$ while also keeping part of it for himself.
Anyone have any suggestions what to start off with? With my lack of knowledge I thought I'd at least tell him to start off small. Also to invest in a local or bigger company that sell Marijuana because if and when it becomes legalized across the US he'd be ahead of the game and could start earning quick $$$ after those go up. I also told him small share if the stock is between $10-$20 like Pepsi or something is also good.
Were these good suggestions and if not why? What should he invest in an where? Should he hold off until he's out of school to start? Wait till college?
I figured I'd help him out a bit as he's a good kid and you don't see a lot of kids in his age group interested in investing in their future especially that early.
Anyone have any suggestions what to start off with? With my lack of knowledge I thought I'd at least tell him to start off small. Also to invest in a local or bigger company that sell Marijuana because if and when it becomes legalized across the US he'd be ahead of the game and could start earning quick $$$ after those go up. I also told him small share if the stock is between $10-$20 like Pepsi or something is also good.
Were these good suggestions and if not why? What should he invest in an where? Should he hold off until he's out of school to start? Wait till college?
I figured I'd help him out a bit as he's a good kid and you don't see a lot of kids in his age group interested in investing in their future especially that early.
matuski
Footballguy
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matuski
Footballguy
CGRdrJoe
Footballguy
What I asked him is if he wants still be mad he missed in the 3’s now or will he be mad when it’s double digits and he still has 0.
matuski
Footballguy
I'm guilty of jumping in and out too many times myself.
I've made thousands... should have made tens of thousands.
So I can't talk.
eaganwildcats
Footballguy
I've been talking myself into "if I still had the 15K I had at one point would I be selling?" If the answer is no (which it is) why not buy more here? Missing $3.50-$7.00 won't really hurt if its sitting at $20. Just gotta find some capital
Bob Sacamano
Footballguy
djmich
Footballguy
Yes, as long as within proper risk management.I've been talking myself into "if I still had the 15K I had at one point would I be selling?" If the answer is no (which it is) why not buy more here? Missing $3.50-$7.00 won't really hurt if its sitting at $20. Just gotta find some capital
Im excited, there’s lots of people excited here. This stock was $0.30 seven months ago, understand the risk.
Not meaning to preach to you or be a Debbie downer, cause I got a lot riding on this and am optimistic ...just starting to get a Vegas vibe and people forgetting about all the questions from 2 months ago.
#notselling
Agreed. Luckily, it doesn’t mean squat to us who actually owns each share, but I wouldn’t tell my family to jump in because I’ve got enough skin in the game. Last thing I’d want is to cost family thousands.
eaganwildcats
Footballguy
Oh yeah, the "feeling of listening to a conference call" indeed has been fading but is a ..... concern.
Sounds like he has earned income, so whatever he decides to invest in, he should do it in a Roth.
DJackson10
Footballguy
I heard someone suggest that and he said his parents were about to with him till the pandemic hit. What is a Roth anyway? I've heard of it but never knew what it was
cosjobs
Footballguy
cosjobs
Footballguy
cosjobs
Footballguy
cosjobs
Footballguy
I'm shorting casinos. Probably MGM and CZR
May buy more UVXY depending how things look Monday
eaganwildcats
Footballguy
CR69
Footballguy
I've avoided messing with CZR because of the buyout from ERI. Seems like it's got a pretty safe floor, right?
ex-ghost
Footballguy
CR69
Footballguy
It's money that you contribute after taxes and the earnings are not taxed when you withdraw them. It's especially key when you're young and in a low tax bracket.
The one thing I would warn this guy about is that investing in stocks is a marathon, not a sprint. It's possible to make money quickly but you need to know what you're doing or get lucky. Either way, the risk of ruin is much higher. I would buy him a copies of The Richest Man Babylon and The Simple Path to Wealth.
CR69
Footballguy
Sure he can. He just would pay taxes, just like any other tax advantaged retirement account.
cosjobs
Footballguy
I considered that, but would up deciding it could just as likely be artificially propped up by the merger. imo ElDorado is no prize
CR69
Footballguy
Oh it is 100% propped up but wouldn't it be safer to buy puts on ERI? Not doubting you, I just don't really understand the mechanics of this scenario so hoping to learn from you
DJackson10
Footballguy
DJackson10
Footballguy
I worded this poorly after looking back on it. Basically he wants to put his money in some stocks. He wants something that he can maybe sell some shares off within a few yrs and make some money. Not like I need money now type thing but something to gain. I don't know exactly what it's for and maybe I should ask him. I also wasn't sure if what I suggested was right or not
caustic
Footballguy
Not at all -- I'd recommend opening one if you want to invest for retirement. Regarding your original question, I think some the best advice is the most boring advice: open a Roth IRA, pick an S&P 500 index fund (VOO, SPY, IVV are popular), and make regular investments in that. It's no get-rich-quick strategy, but in the long run you'll beat a lot of the folks who try picking individual companies.
DJackson10
Footballguy
Cant say I disagree with that. It's useful info especially for people not aware of how stocks are used or are
hooter311
Footballguy
DJackson10
Footballguy
Big Cat seems like the only cool guy there. Former Eagle/Ram/Pat DE Chris Long does a podcast or something with Big Cat.
As for Portnoy he's an absolute tool. I remember last year when there was talk of Unionizing Portnoy made threats to his employees about it. Some guy who is a lawyer came out tagged Portnoy and said any employee at barstool who wants to unionize and afraid of backlash from their boss please email me for free legal help. You have a free right to unionize and if your employer is not giving you that right you can take action against them
DJackson10
Footballguy
Portnoy also went after someone last year because Barstool used a video on their twitter without consent from the original. They harassed the person and tried to cut a deal with them. Someone told me they believe it's because Barstool had a twitter copyright already against them. Another 1 would greatly harm them as a 3rd would have them banned from Titter for good.
