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Strategies & Market Trends : Roger's 1997 Short Picks
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To: Druss who wrote (8922)12/27/1997 5:24:00 AM
From: Pancho Villa  Read Replies (1) of 9285
 
Druss, WDRY: Nothing wrong with having us jump in early in the research process, while you are doing your own. I do it myself. Still working... The reason for raising equity, is that they are so leveraged that they can't get any more funds through debt financing. So it is surprissing that beeing in such extreme need to reduce debt they are instead putting money into the stockholders pocket. Haven't yet looked at the financial statements in detail but the extreme leverage is going to chuckle growth. IMO this is a shop trying to show exhorbitant revenue, it appears as if they charge very high [above market] lease rates which go into revenue and then turn around and give back to the people leasing the equipment a very substantial chunk of this money which is then showed as an operating cost. If revenue is taking as the net amount (revenue - all the kick backs) revenue gets reduced by about 50%. Now, on this reduced base the company seems to be capable to produce a decent profit margin before debt service of around 10%. Which then gets totally sucked by bedt service expenses (i.e. interest payments). Need to hit the books in a serious way. IMO the difference with BFIT is that BFIT margins are much worst and the growth prospects are also much worst(i.e., WDRY business is a better business). I will go back to work and report.

Pancho
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