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5:40 pm
October 8, 2009


kai fann

Member

posts 10

21

How do you make adjustment in the spreadsheet to calculate the intrinsic value of the radio stocks and to see whether there is significant margin of safety?


3:57 pm
October 6, 2009


Jae Jun

Admin

posts 393

22

Another way to look at radio stocks is to look at their interest expense throughout each year and quarter. If you have the premium spreadsheets, the detailed statements will help you in this area.

So with the interest payments, add it back to EBIT to get an adjusted EBIT+interest payment.

Then calculate

(interest payment)/(EBIT+interest payment)

You will get a percentage of how much of revenues is made up of interest payments.

If you look at most of the radio stocks, all interest payments have been going down as well as revenues slightly improving. Another good sign that things are picking up and they are either restructuring their debt to better interest rates or paying it off.

EMMS is another one I like. I've been trying to buy below $0.70 but keep missing out… up 50% today with earnings coming around very soon. I wouldn't be surprised if it goes up further so I'll wait for people to take profits and then start with a small position if it goes below $0.90.

Been watching this since the 50's so it would have been another great cheap value play.

But since the price is still far below intrinsic value, I'll make my move asap.


12:07 am
September 29, 2009


Jae Jun

Admin

posts 393

23

I wrote this on a comment before so I'll just copy and paste it here for now. If you more questions just let me know.

================

If you go through their annual reports you’ll find a lot of information regarding the business.

I won’t be going into too much detail on these picks as these are my pocket aces. I’m trying to keep it quiet while I wait to get a full position so I’ll only leave information in the comments.

On the macro side, radio stocks are very easy to understand. Their business model simply focuses on ad revenue. Play ads, get paid. Easy as that.

What a lot of people don’t see or accept is that terrestrial radio will not go away. I personally will never pay for satellite radio and neither will most of my friends.

So say you listen to the radio in your car. You’ve got 6 or up to 8 channels in a car and you’re going to set it on a preset. How often do you change those presets? Once you find a good radio station, I’m sure you never change right?

You listen to the morning drive and most probably the same station again during the commute home.

So content is what makes radio "sticky" and I can live with the ads, which is where the revenue comes in.

From a macro view, ad revenues drop significantly with the economy. It’s cyclical, yet predictable, and right now we are in a down cycle.

Notice how during the Cash for Clunkers week, car ads started to come back on the radio after a long hiatus? That’s what’s going to happen when the economy lifts up and businesses start to spend again.

I’m sure you get the idea about why I like radio at the moment.

As for fundamentals, look at their free cash flows, whether their writedowns will affect cash, whether cash can pay off debt and you’ll see that the problem with radio stocks isn’t a solvency issue. They had a liquidity issue as the debt they needed to roll over came due during one of the worst years to receive financing.

4:45 pm
September 28, 2009


chiawei8312

Member

posts 18

24

Could you go into more details about the radio stock that you decided to buy?

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