Hi James, (re: LWN)
Has anybody done the work on the balance sheet required to address this question?
Very briefly, crudely, and without verification (so far), here's how things look:
Assume all liabilities worth 100 cents on the dollar.
Assume all the assets on their latest 10-Q are worth 100 cents on the dollar, except for the last four items. I think this is fair (only serious fraud or business deficiencies would undermine this)
The last four assets are "Cemetery property, at cost", " Property and Equipment", "Names and Reputations", and "Other Assets", which all together total $3331M.
Equity for Common is $1274M, market cap is $185M for 74M shares at $2.5.
So how much of the $3331M ought to be knocked off, leaving how much of the $1274M nominal equity truly available for the purchase price of $185M? In order for the company's fair value to be $185M, then those assets (the nominal $3331M) must be worth at least $2242M.
Since I am assuming that they overpaid for their acquisitions to some extent, I think what I need to find out is whether they overpaid more than 3331/2242 = 1.48 times. (Of course I have to investigate how much has already been depreciated or charged against the $3331M sum already. I am implicitly attributing these assets to substantially all of the purchase prices they have paid).
At first blush I had been pretty excited about snatching this one up, but now I'm not so sure that they didn't overpay by more than that amount. I think I better look into it a bit deeper.
- Daniel |
