Jason:
Sorry, that response doesn't hold up.
< I think you're twisting my words around. I appreciate your respect for my trading abilities, but my position in Winstar has very much to do with questions of fundamental valuation.>
I have tried to be relatively polite. But to be blunt, you haven't done any work in fundamental valuation.
WinStar's market cap is currently $1.3 B. To be repetitious to the point of boredom, lets look at the data.
1. The Teleport comp. Purchased by ATT for $11 B. As stated previously by others, if WinStar continues to execute, they will blow through Teleport's figures for buildings on-net and lines installed in approximately a year.
2. Another comp. Look what WCOM paid for Brooks Fiber. Look at Brooks' fundies at the time the deal was announced. Compare to Winstar. Note that this was prior to the large run-up in the CLEC sector (in part due to this acquisition).
3. Look at spectrum auctions. LMDS, just completed netted $583 million. Gross bids were $828. Not all licenses were purchased. All analysts agree prices held down by LEC and cable exclusion. Gross is better for comparison because large mkt cap companies do not get discount.
4. DCF analysis. All the analysts somewhat agree. If mgt executes, this stock is going up. It is only a question of how much and how fast. All DCF is the present PV of future free cash flows PLUS the PV of the terminal value (which you neglected to include in your "quick calculation") since I can in no way replicate your math.
From your post #5464
<By the way, I did run a quick calculation of the Vogel numbers you so dearly love. My back of the envelope calculation is that based on these earnings estimates, and paying off the debt holders ten years from now, each share is worth about $20 a share, with a 20% discount rate. This of course is assuming Vogel's numbers are correct, including a 5 billion revenue stream five years from now. Hardly the screaming buy you claim it is.>
Go back and put the terminal value in.
5. On a WACC basis, a discount rate of 20% implies a ROE of 32%, assuming a 50/50 d/e ratio, 12% average cost of debt (and that average will fall) and a 35% corporate tax rate. You are claiming the d/e ratio is much worse. Well then, the ROE is significantly greater. What position are you arguing? Of course it is not guaranteed, but I would take anything close to 32% compounded annually over the next ten years.
If you truly prefer to "...look at things a little more analytically." then please do some analysis. |
