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Author: [Investments] Topic: Large Buy!
GOPHERNATION12
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GOPHERNATION12
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#1
Posted: 7/1/2012 2:19:44 PM
LEE = Lee Enterprises 

It closed at $1.62 Friday and is up about 130% for 2012. In a world where print media is supposed to die I expect this print media stock to reach $4.50 at least by 12/2013
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bill702
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#2
Posted: 7/1/2012 5:13:24 PM
Why?
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#3
Posted: 7/1/2012 6:04:50 PM
The board recently voted against a reverse stock spit. They are trying not to be delisted by the NYSE.....  
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#4
Posted: 7/1/2012 10:27:45 PM
Yikes !!!  
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#5
Posted: 7/1/2012 10:30:35 PM
The onus is on you to prove this print media is going to be different than  the rest....
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#6
Posted: 7/1/2012 11:09:52 PM
I knew before I looked but the balance sheet is a crater.

They have 29M in cash and almost 1 billion in debt.

I dont see how or why this should not go BK..
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#7
Posted: 7/2/2012 11:21:24 PM
QUOTE Originally Posted by wallstreetcappers:

I knew before I looked but the balance sheet is a crater.

They have 29M in cash and almost 1 billion in debt.

I dont see how or why this should not go BK..

I by no means am supporting an investment in the Company, don't know enough about it, but I'm just not seeing a huge BK risk here. 

Strong positive operating cash flows each of the last three years, not a very capital intensive business, they've been consistently paying down debt over the past 3 years, they seem to have some room on the covenants, and they were actually just able to refinance earlier this year.

 Not the cleanest balance sheet, questionable industry, but the stock does seem to have a bit of momentum behind it.  The vote against the reverse stock split is a non-issue.  It was only an issue when the stock was trading below a $1, not a reason in itself not to invest.

 

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#8
Posted: 7/2/2012 11:54:30 PM
QUOTE Originally Posted by Wake2002:

I by no means am supporting an investment in the Company, don't know enough about it, but I'm just not seeing a huge BK risk here. 

Strong positive operating cash flows each of the last three years, not a very capital intensive business, they've been consistently paying down debt over the past 3 years, they seem to have some room on the covenants, and they were actually just able to refinance earlier this year.

 Not the cleanest balance sheet, questionable industry, but the stock does seem to have a bit of momentum behind it.  The vote against the reverse stock split is a non-issue.  It was only an issue when the stock was trading below a $1, not a reason in itself not to invest.

 


Look a little closer-

link

Where are the cash flows originating?

Change in liabilities in the 2 positive quarters, depreciation and one quarter of investment gain..

None of this came from operations and two are accounting cash flows (depreciation and liabilities)

Revenues trending down

Interest expense is 10% of sales, that makes it very hard to run positive margins. Earnings are very inconsistent, if you strip out all these accounting gimmicks and swings of non-recurring charges it looks like the longer term margins are in the 1-2% range (revenues less SGA+ other + interest expense).

So if you buy this stock you are betting on a sales recovery..anything under 180 a quarter and they run a loss. I just think their percentage of debt to sales is too high and top line growth long term seems unknown.
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#9
Posted: 7/3/2012 12:12:34 AM

You need to be careful with Yahoo financial info.  I know you know this, but you've gotta go with sec.gov for latest filings.  They already filed 10 March 2012 10-Q, so you have 3 more months of info.

http://www.sec.gov/Archives/edgar/data/58361/000005836112000028/lee10q2012q2.htm

I agree with all you said in terms of interest expense being high, debt being high, margins not being great, etc.  I just don't see the bankruptcy risk (at least near-term).  If they hadn't been able to refinance, would have been a huge risk, them being able to re-finance significantly helped their liquidity.

Even backing out the working capital fluctuations, it is still pretty strong from an operating cash flow standpoint.  I don't see depreciation expense add back as anything negative when evaluating cash flows (especially in the context of potential bankruptcy).  Free cash flow is also pretty good with minimal cap ex.

Obviously a lot of risk in the stock, but that's why its got an $84 million market cap.  I wouldn't dive into it, but I could see a slight argument for it, if you believe in the industry (which I just don't).

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