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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (71651)12/3/2022 12:51:15 PM
From: E_K_S  Read Replies (2) of 78672
 
Re: LUMN

I agree w/ you that management has been slow to implement their 'At-The-Edge' Enterprise services. The positive is there is a new CEO 10/8/2022.

On Sept. 13, Lumen announced Storey's retirement. In his place, Lumen's board appointed former Microsoft executive Kate Johnson as the new CEO.
I continue to hold shares w/ an avg cost around $9.69/share and higher costs in the ROTH/IRA. The value proposition is still very good but I am not sure I want to move more $'s into the investment until I see the new CEO's results over the next few quarters.

PE & Price/Free Cash Flow very low. That w/ the elimination of their dividend s/d help them get that debt paid down and/or buy back shares. In their last conference call that was their plan. The company recently called in some debt using the proceeds of selling some of their legacy phone/broadband user accounts (I believe Private Equity acquired those).

Here is the link to LUMN's Quarterly Free Cash Flow. Notice the size of the quarterly Debt Repayment. It adds up but needs to be larger. I will be watching common stock repurchased too.

LUMN does have some hidden assets in some dark fiber backbone lines that many of the Cell companies and cloud services use (buying long term contracts) to link servers & Cell towers.



Their Price/Cash flow is <1x, so we need to see that Debt/Equity at 2.29x get at/below 1x.

That said, many of the value investors at Investor Village, now see the value proposition thru an acquisition. That would value the stock somewhere around $9.50/share.

I am tempted to take some of my cash (now almost 30%) and Buy an oversized position during December (s/d see tax loss selling) and see if next year (2023) stock rebounds and/or we see a low ball acquisition offer (say $9 Billion = $9/share). Worst case, I could sell my high cost shares in 2023 and harvest a long term capital loss.

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I feel much more comfortable holding companies that have Price/Free Cash Flow <= 4x than many of these high growth tech stocks w/ no earnings that continue to burn cash.
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