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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: - with a K who wrote (26997)	6/2/2007 12:47:34 PM
From: E_K_S	Read Replies (1) \| Respond to of 78768

Hi - with a K Thank you you for the lead on UGP. This one sounds like it should fit my diversification program and I especially like that they are located in Brazil. I am very bullish on companies in Brazil as I believe there could also be a positive currency kicker return (Real vs the U.S. $) in the next three to five years. There has been a lot of discussion on natural gas producers located in Canada. Many that I have scanned are Limited Partnerships, not pure natural gas infrastructure plays, highly leveraged and have already had significant price appreciation. One that was mentioned in the recent issue of the Resource Investors Bull & Bear newsletter is COPANO (Copano Energy LLC) finance.yahoo.com . I like their business (http://finance.yahoo.com/q/pr?s=CPNO ) They own natural gas gathering facilities, pipelines, and a processing plants located in the Texas Gulf region. The downside is that they are a Master Limited Partnership (ugly K1's) except there is no general partner to take profits off the top. All of Copano's dividends flow through to the shareholders. The company went public in 12/2004 and has shown an excellent cash flow from their operations. The author is looking for 15% per year total return but the company has already delivered over 38% return because of investors interest. The stock is up another 25% since the writing of the article in April 2007 and IMO is not a value at current prices. Have you heard of COPANO and know of any other companies that operate in Canada and/or U.S. with a similar business - hooks up producing natural gas wells, process & distribute product to end users. EKS

To: - with a K who wrote (26997)	6/18/2007 12:08:05 PM
From: E_K_S	Respond to of 78768

Cash Flow is Better than P/E - The TRGL story TRGL is a cash flow story. Their cash flow will triple with the development of their Turkey gas wells. Their free flow cash flow numbers on Yahoo should turn significantly positive next qtr w/ eventually reflecting $4.50/share (in new cash contribution) next year. This money then needs to be redeployed to replace the reserves sold with the balance booked as net profit to the company. The price of the stock should eventually reflect these new income streams and could conservatively be priced at a forward PE of 8. My 2008 price target is $27 to $45 per share. The higher end of the range could be met with new well discoveries and the lower end s/b hit once their Turkey operation is 100% online. No dividend is paid at this time as all the cash flow is being used to finance daily operations. I have started a small position in this company at an average price of $14.95/share and am looking for a double in 18-24 months. Because most of their operations are outside the U.S., they provide my taxable portfolio good international exposure. I may add more shares for a full position if prices dip back into the low $14/share. This position is a story in progress which should get better as time proceeds. EKS =============================================== Cash Flow is Better than P/E From Ken Little, Article from "Your Guide to Stocks". "...Cash flow ratios are a better measurement of a stock’s value than price earnings ratio (P/E). How much cash a company can generate is one of the more important measures of its health. Yet, you will hear more about P/E than almost any other metric on valuation, but it does not give you an accurate picture of a company’s ability to generate cash. P/E represents the ratio of the stock’s price to its earnings per share (EPS). It is an important metric, if for no other reason because so many people think it is. When a company’s P/E is very high or low, it gets top billing on the news. Overlooked by many are the equally important – I would suggest more important – metrics that examine a company’s price relative to its cash position. Importance of Cash The reality is that without cash, a company won’t last long. That may seem obviously simple, however there is a long list of companies that failed because cash was in too short supply. So, how do you use cash flow ratios to see if a company is under or over-valued, which is the same purpose of P/E? Two primary measurements shed light on a company’s valuation. Price to Cash Flow The price to cash flow is determined by dividing the stock’s price by cash flow per share. The reason many prefer this measurement is the use of cash flow instead of net income (found in computing EPS). Cash flow is a company’s net income with the depreciation and amortization charges added back in. These charges, which reduce net income, do not represent outlays of cash so they artificially reduce the company’s reported cash. Since these expenses don’t involve actual cash, the company has more cash than the net income figure indicates. Free Cash Flow Free cash flow is a refinement of cash flow that goes a step farther and adds one-time expenses capital expenses, dividend payments, and other non-occurring charges back to cash flow. The result is how much cash the company generated in the trailing twelve months. You divide the current price by the free cash flow per share and the result describes the value the market places on the company’s ability to generate cash. What they Mean Like the P/E, both of these cash flow ratios suggest where the market values the company. Lower numbers relative to its industry and sector, suggests the market has undervalued the stock. Higher numbers than its industry and sector may mean the market has overvalued the stock. Already Calculated Thankfully, you don’t have to do all of these calculations. Many sites on the Web include these valuation numbers for your consideration. One of my favorite site is Reuters.com. Their detailed quotes offer both the cash flow ratios. Enter a stock in the quote box on the top bar, and then click on “Ratios” in the left column links. Conclusion Like all ratios, they don’t tell the whole story. Be sure you look at other metrics to verify relative value. However, these cash flow ratios can give you significant clues to how the market values a stock..."

To: - with a K who wrote (26997)	9/6/2008 12:57:05 PM
From: E_K_S	Read Replies (2) \| Respond to of 78768

Hi - with a K You posted on 6/2/07 that you started a position in Ultrapar Holdings Inc. (UGP). Do you still own your shares? Would you buy more at current levels? I like the business sectors that the company serves. The dividend yield of 3.4% (at a 33% payout) is attractive given the potential growth of their businesses but the company carries quit a bit of debt. One interesting item that caught my eye is that 49.5% of the company is held by the Igel family (through two holding companies). The special governance features for this ownership block expires on 12/16/09. It's possible that the board will renew these governance terms but more than likely some other arrangement will be made to cash out (all or part) of the Igel family's holdings which should create higher shareholder value. Debt is carried at 52% in foreign currency and 42% local currency with a duration of 6.1 years. At $1,497 million in total debt this represents $11/share or about 32% of the common share price. ultra.com.br Net cash flow was negative in 2008 but should improve substantially through 2011 since their long term debt duration was extended. At current growth rates this debt should become quite manageable as their net cash reserve increase. Business company profile: reuters.com Key company ratios vs sector: reuters.com Is this a value opportunity or one that should be avoided? EKS