Page | 7 KEDM Back to Weekly Changes
March 6, 2021
www.KEDM.com
Ticker Company Sector
% Down Business Description From 52
High
Short Interest (% of float)
Mkt Net Cap Debt ($M) ($M)
Insider EV Buying
($M) ($ Value)
Kuppy's Notes
BTU
Peabody Energy Corp
Coal
Peabody Energy Corporation mines and markets low
sulfur coal, primarily for use by electric utilities. The Company also trades coal and emission allowances. -24 Peabody owns and operates mines in Arizona, Colorado,
New Mexico and Wyoming, Illinois, Indiana, and Australia.
7 395 905 1,352 -
Large PRB thermal coal producer with Alabama Coking coal and Australian seaborne thermal coal operations. Play on US natural gas and Newcastle seaborne recovering with reflation and global GDP growth. Trades at less than 1/3 of FCF during 2017 and 2018 when coal prices were higher. FCF negative today as key Australian coking coal operation had a fire and US thermal pricing collapsed. Elliot owns 30% and controls it through board seats. Q4 results were atrocious, but they have rolled their maturities and bought time to see if coal turns around.
Pressure pumping is an awful business. However, Calfrac recently exited bankruptcy where they equitized most of their debt (~$575m of debt eliminated). The balance sheet is reasonably clean and the equipment is trading at a fraction of replacement value at a time when there hasn't been much cap-ex and a lot of equipment has been cannabolized. 37m shares outstanding and 88m FD including the converts. There's nearly $1b of equipment at cost and WC offsets most of the net debt. Should be FCF profitable immediately now that the interest expense is reduced. Should trade up to equipment value on a NAV basis as more rigs are added in North America.
Corporacion America Airports S.A. acquires, develops, and operates airport concessions. The Company specializes in airport operations and commercial management, as well as fuelling, cargo handling, and related activities. Corporacion America Airports serves customers worldwide.
-20 2 712
1,022
Highly leveraged airport operator with substantial operations in Argentina.
They've been able to roll some debt and FCF should be roughly break-even 2,119 - once Argentina opens flights again. From there, it may ramp higher. All sorts of hair, but could be multi-bagger if they can pay down some debt. Q3 was a
bloodbath, but showed improvement over Q2 as expected.
CAAP
Corp America Public Airports SA Thoroughfares
CFW Calfrac Well CN Services Ltd
Oil-Field Services
Calfrac Well Services Ltd. provides specialized oilfield services. The Company uses fracturing equipment to increase the production of hydrocarbons from wells drilled in Canada and the United States.
-87 0
151 317 468 -
CRESY
Cresud SACIF y Real Estate A Oper/Develop
CXW CoreCivic Inc
Private Corrections
CoreCivic, Inc. provides detention and corrections services to governmental agencies. The Company designs, constructs, owns, manages, and renovates jails, prisons, government agencies, and inmate transportation companies. CoreCivic operates throughout the United States.
-53 6
926 1,840 2,789 -
Cresud SACIF y A operates as an agricultural company. The Company produces grains, sugar cane, meat, and milk, as well as focuses on acquisition, development, and exploitation of agricultural properties for rental, shopping centers, and hotels. Cresud serves customers in Latin America.
-30 - - -
--
Highly financially leveraged agriculture play. The leverage cuts both ways but agriculture pricing is up and ARS/BRL costs are down. Should have some margin expansion and they have rolled their debt to buy time. There's a lot of land and property ownership, which should work with increased inflation. We all know that Argentina is where capital goes to die, but every few years, there is a sick rally in CRESY when agriculture works. The chart is setting up.
Highly leveraged US prison operator trading at a low single digit AFFO multiple. Risk to cash flow should Biden release all the prisoners who vote Dem. This risk is offset by long-term state contracts and a likely increase in violent immigrants. Company cancelled the dividend and de-REITed, which led to structural selling which should be ending soon. They'll use FCF and asset sales to de-lever. Seems to be a low EV/AFFO multiple for long-term government contracts, even if there is some risk to the contracts. Q4 results were reasonable and they continue to pay down debt. Recent news that US Marshalls will not renew contracts came as a surprise and add substantial risk to the future cash flows.
Source: Kuppy; Bloomberg LP; Company filings
Page | 8
March 6, 2021
www.KEDM.com
Ticker Company Sector
% Down Business Description From 52
High
Short Interest (% of float)
Mkt Net Cap Debt ($M) ($M)
Insider EV Buying
($M) ($ Value)
Kuppy's Notes
BTU
Peabody Energy Corp
Coal
Peabody Energy Corporation mines and markets low
sulfur coal, primarily for use by electric utilities. The Company also trades coal and emission allowances. -24 Peabody owns and operates mines in Arizona, Colorado,
New Mexico and Wyoming, Illinois, Indiana, and Australia.
7 395 905 1,352 -
Large PRB thermal coal producer with Alabama Coking coal and Australian seaborne thermal coal operations. Play on US natural gas and Newcastle seaborne recovering with reflation and global GDP growth. Trades at less than 1/3 of FCF during 2017 and 2018 when coal prices were higher. FCF negative today as key Australian coking coal operation had a fire and US thermal pricing collapsed. Elliot owns 30% and controls it through board seats. Q4 results were atrocious, but they have rolled their maturities and bought time to see if coal turns around.
Pressure pumping is an awful business. However, Calfrac recently exited bankruptcy where they equitized most of their debt (~$575m of debt eliminated). The balance sheet is reasonably clean and the equipment is trading at a fraction of replacement value at a time when there hasn't been much cap-ex and a lot of equipment has been cannabolized. 37m shares outstanding and 88m FD including the converts. There's nearly $1b of equipment at cost and WC offsets most of the net debt. Should be FCF profitable immediately now that the interest expense is reduced. Should trade up to equipment value on a NAV basis as more rigs are added in North America.
Corporacion America Airports S.A. acquires, develops, and operates airport concessions. The Company specializes in airport operations and commercial management, as well as fuelling, cargo handling, and related activities. Corporacion America Airports serves customers worldwide.
-20 2 712
1,022
Highly leveraged airport operator with substantial operations in Argentina.
They've been able to roll some debt and FCF should be roughly break-even 2,119 - once Argentina opens flights again. From there, it may ramp higher. All sorts of hair, but could be multi-bagger if they can pay down some debt. Q3 was a
bloodbath, but showed improvement over Q2 as expected.
CAAP
Corp America Public Airports SA Thoroughfares
CFW Calfrac Well CN Services Ltd
Oil-Field Services
Calfrac Well Services Ltd. provides specialized oilfield services. The Company uses fracturing equipment to increase the production of hydrocarbons from wells drilled in Canada and the United States.
-87 0
151 317 468 -
CRESY
Cresud SACIF y Real Estate A Oper/Develop
CXW CoreCivic Inc
Private Corrections
CoreCivic, Inc. provides detention and corrections services to governmental agencies. The Company designs, constructs, owns, manages, and renovates jails, prisons, government agencies, and inmate transportation companies. CoreCivic operates throughout the United States.
-53 6
926 1,840 2,789 -
Cresud SACIF y A operates as an agricultural company. The Company produces grains, sugar cane, meat, and milk, as well as focuses on acquisition, development, and exploitation of agricultural properties for rental, shopping centers, and hotels. Cresud serves customers in Latin America.
-30 - - -
--
Highly financially leveraged agriculture play. The leverage cuts both ways but agriculture pricing is up and ARS/BRL costs are down. Should have some margin expansion and they have rolled their debt to buy time. There's a lot of land and property ownership, which should work with increased inflation. We all know that Argentina is where capital goes to die, but every few years, there is a sick rally in CRESY when agriculture works. The chart is setting up.
Highly leveraged US prison operator trading at a low single digit AFFO multiple. Risk to cash flow should Biden release all the prisoners who vote Dem. This risk is offset by long-term state contracts and a likely increase in violent immigrants. Company cancelled the dividend and de-REITed, which led to structural selling which should be ending soon. They'll use FCF and asset sales to de-lever. Seems to be a low EV/AFFO multiple for long-term government contracts, even if there is some risk to the contracts. Q4 results were reasonable and they continue to pay down debt. Recent news that US Marshalls will not renew contracts came as a surprise and add substantial risk to the future cash flows.
Source: Kuppy; Bloomberg LP; Company filings
Page | 8
