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

To: Paul Senior who wrote (38102)	5/29/2010 1:40:07 PM
From: Jurgis Bekepuris	Respond to of 78714

I took a look at the spreadsheet. The risk with ATPG is that the good things (like positive FCF) start happening only in 2011 and later. Meanwhile the bad things - possible well delays, cost increases, etc. - are happening right now. ATPG will have to navigate these issues and possible cash outlays like they did in 2009. Obviously they are in a better situation right now but the price is also 2.5x 2009 lows. I bought a small tracking position on Friday.

To: Paul Senior who wrote (38102)	5/29/2010 2:38:26 PM
From: Spekulatius	1 Recommendation Read Replies (2) \| Respond to of 78714

re ATPG model - this is an interesting valuation model. one thing I noted was is that he seemingly did calculate ATPG value in different ways. I also think that the way he did is on 3/30 does not fully account for the risk. ATPG capital structure is 2/3 debt and 1/3 equity and debt get paid first. His model estimates for capex seem way too lower as well. In a way his model does not account for a variation of outcomes (safety margin). the way do do this is not tto add a variance to the end product - the NPV but too look at a variety of scenarios because if they make a mistake along the way the equity will never get the FCF, but the bondholders will. This might be the case where the true believer buys a mix of bonds and stock.