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

To: Madharry who wrote (41113)	1/20/2011 10:11:12 PM
From: E_K_S	2 Recommendations Read Replies (3) \| Respond to of 78516

Re: SVU - One way to value their Supply Chain Business According to the Forbes article I posted, SVU derived 22.2% of their fiscal 2009 sales from their supply chain service business. If you look at their annual report for 2010 their supply chain sales were also running about 22% of their sales. In 2010, their supply chain services earned $299 million or about $1.41/share. My back of the envelope valuation calculation is based on analysts next years earnings estimates of $1.20/share. 22% of this number s/b attributable to their Supply Chain Business or $0.27/share. At a 20 PE (industry is 23X look at FDX & UPS) you get $5.40/share. This division s/b a higher margin business than the general grocery category and should demand a higher PE.. Realistically, you can not separate the Supply Chain segment from the Grocery segment w/o allocating a large portion of the company's debt back to this division. To run as separate companies, the grocery division should have little or no long term debt. What about spinning off their Supply Chain Business and use the proceeds to pay off their long term debt. Shareholders receive shares of the new SVU (w/o debit) and the new Supply Chain Business (post payment of $4 Billion LT debt). If you value their Supply Chain Business at 18x earnings at $1.41 (2010 Supply Chain earnings per share) that equals $25.38/share (Market Valuation of $5.5 Billion). Now subtract out the company LT debt of $20.00/share ($4.0 Billion), you come up with a net value of $5.38/share ($1.5 Billion). With no debt, the grocery business could earn $0.75/share - $1.00/share and could be valued at 10x earnings or $7.50/share - $10.00/share (Market Cap $1.6B-$2.21). New Supply Chain Business - Market Cap $ 1.5B New SVU (w/o debt) - Market Cap $2.0B The combined parts would be worth $12.88/share-$15.38/share. The key point from this review is that their Supply Chain Business is their crown jewel and the main revenue generator for the company. By spinning off the division, you could generate enough money to pay off all their debt and be left with two very profitable operating companies with a valuation of the combined parts 100% higher than the current market price. In summary SVU should probably continue to operate all their stores (making periodic sales/closures based on store profitability), pay down debt and build their Supply Chain Business services. They could however, spin off their Supply Chain Division, pay off all company debt and end up with two profitable operating companies. I would like them to integrate one or more private label brands into their supply chain offerings. This could provide a good growth kicker to this profitable division. EKS

To: Madharry who wrote (41113)	1/26/2011 10:42:03 AM
From: E_K_S	1 Recommendation Read Replies (2) \| Respond to of 78516

Hi Madharry - Re: Ultrapetrol (Bahamas) Ltd. (ULTR) xml.10kwizard.com Zazove Associates, LLC filed a 13G report stating that they now hold (or control) 7.23% of the outstanding shares. They did this through the purchase of the recent convertible offering (2,330,459 shares issuable upon the conversion of Ultrapetrol Bahamas Limited 7.25% Convertible Bond due 01-15-2017 plus 29,901,463 common shares previously held). About Zazove Associates: Zazove Associates, LLC, an Incline Village based investment advisor specializing in the management of convertible securities. The firm has nearly $3 billion in assets under management and is consistently recognized as one of Nelson Publication's "World's Best Money Managers." Zazove Associates offers a broad array of convertible strategies (convertible arbitrage, high-yield, investment-grade, and international convertibles) to a diverse group of clients including insurance companies, pension plans, foundations, public funds, investment partnerships, and select individuals. ====================================================================== What's interesting is that the majority of their shares are common shares (92%) vs 8% from the convertible bond when converted. I would of thought that they would have held more of the convertible bond to generate income for their fund. They must like the risk/reward that the common shares provide. When I checked w/ Schwab about acquiring some of this bond issue, they could not sell it to me as it was a foreign offering that was not compliant with U.S. SEC filings. They said that this was typical for foreign issues of this size. EKS

To: Madharry who wrote (41113)	2/11/2011 11:04:54 AM
From: E_K_S	Respond to of 78516

Hi Madharry - Price target of $10.00/share. Lot's of unrecognized value still in this stock. Jefferies Finds Ultrapetrol To Benefit From Estimated Increase In Soy Production (ULTR) benzinga.com From the article:"...Jefferies is reporting that Ultrapetrol's (NASDAQ: ULTR) growing river business is expected to have a strong year after the USDA predicted soy production increase in 2011. “Yesterday, the USDA Foreign Agriculture Service updated their monthly world agricultural production estimates to include a substantial increase in Paraguayan soy bean production for 2011, which should result in meaningful growth for Hidrovia barge trade, the report notes. “With Ultrapetrol controlling the only barge building facility of any size in the Hidrovia region, we believe the only incremental capacity likely to enter the market will be ULTR vessels. Assuming no older barges are scrapped during the year (likely scrapping should actually be close to 50 barges), Ultrapetrol's jumbo barges should add about 4% to total market capacity in 2011.” Jefferies reiterated Ultrapetrol's Buy rating and $10 Price Target...." EKS

To: Madharry who wrote (41113)	3/16/2011 12:15:11 PM
From: E_K_S	Read Replies (2) \| Respond to of 78516

Re: Ultrapetrol (Bahamas) Ltd. (ULTR) Increased position by 30%. Earnings released yesterday. Company seems set up to take advantage of growth in their River business. Closed out their loosing passenger business, sold remaining assets and booked loss. They have made some large capital investments in both their offshore drill platform support vessels (w/ long term service contracts w/ PBR) and new river barges to build system capacity. Ultrapetrol Reports Financial Results for Fourth Quarter and Full Year 2010 finance.yahoo.com Will explore lightening up on shares in 31 days. ------------------------------------------------------------------------- Closed out shares in Gerdau S.A. (GGB) for $13.32/share. Shares bought 3/2009 at $5.37/share. Moved proceeds into ULTR. Company struggled to book higher profits due to very high commodity input costs. This is a low cost producer and a good play on an expanding world economy. Will continue to watch for a lower entry point (below $10.00/share) to start a small tracking position. EKS