Wednesday, July 1, 2020

July 1st Links

  • The analyses that I have seen are pretty complacent about EBITDA. They take a >$3 billion level as a given and then assume that since CBB and CNSL's debt (which both trade close to par) create those enterprises at >5x EBITDA, FTR will do the same. The problem is that if the ice cube continues to melt, not only will EBITDA be lower, but it will probably be worth a lower multiple. In the 2x2 matrix of unsecured recoveries above, there's really only a line of realistic outcomes: low EBITDA, low multiple; or high EBITDA, high multiple. Unless you can have reason to believe that the decline in customer losses is about to stop, there does not seem to be a margin of safety in the unsecured debt. If 13% of customers (net - more after figuring churn) left over the past two years, they probably went somewhere, since they are not likely just canceling their internet entirely. There must be competitors in Frontier's markets that are better or cheaper and are eating their lunch. For all we know, the most alert or savvy customers are the ones who just left and it is the beginning of an S-curve of the slower to react customers leaving too. [CBS]
  • According to a study in 2015, the Provo-Orem metro area is about as dissimilar to the rest of America as possible. Weighing factors such as race, housing, income and education, the study ranked Provo-Orem 376th of 381 of the United States' largest cities in terms of resemblance to the country. [wiki]
  • So to sum up, here is a woman who was (but for luck and heroic medical intervention) a murderess. Someone who was clinically insane. Someone who advocated death for half the population and then when pressed on it, allowed as how sterilization would be adequate. Someone who died alone in a flophouse, half eaten by worms because no one cared if she was dead or alive until the stench alerted the other residents. And this woman is lauded in our supposedly greatest newspaper as an overlooked hero, someone who should be a role model for young women. Her feminist work is separate from her insanity and not a manifestation of it. Girls, don't you want to be a feminist like Valerie Solanas when you grow up, so that you too will die alone and friendless in the world instead of surrounded by your loving family? (Her only mistake was not getting a cat (or a bunch of cats) so that they could eat her decaying flesh before the maggots got to it, but maybe the flophouse didn't allow pets.) But, OTOH our statues of truly great men – Grant, Lincoln, Columbus, Jefferson, etc. should all be torn down and destroyed. The portraits of the medical giants who conquered infectious disease should all be taken down. A society with such ass-backward values deserves to die and it WILL die. [Sailer]
  • I've listened to a couple of interviews with Moldbug. Haven't picked up anything of interest, can't pinpoint a single idea or position he is advancing, seems intentionally obscurantist and adds unnecessary complexity to every answer, constant smugness. Why is he rated so highly? [twitter]
  • In Crane the New York Court of Appeals made it abundantly clear that the statutory right of inspection, originally adopted in 1848, was intended to expand the common law right of inspection "by omitting the 'proper purpose' requirement." The statutory right of inspection provides a minimum threshold which a shareholder must meet in order to be entitled to inspect the materials in issue. That is to say, if a shareholder meets these minimum requirements, and requests the information in good faith, the court has no choice but to grant the inspection request. The shareholder has an absolute right to the information. In any event, as originally adopted the statutory right of inspection was intended only to supplement rather than replace the common law. Section 624, the present inspection provision, was not intended to work a substantive change in the law. Thus, the statutory right of inspection emerges as a supplement to the common law right which survives today. Given that a common law right of inspection exists, there is no question that plaintiff has demonstrated a "proper purpose" for requesting the shareholder information. Indeed, in Crane the Court of Appeals observed that the basis for the right of inspection is to permit a shareholder to protect his investment. This is precisely what plaintiff hopes to do by proposing an independent slate of directors for the SCM shareholders to consider. But in order to do so, he must have access to the list of shareholders entitled to vote. Absent the ability to communicate with his fellow shareholders, plaintiff's attempts to elect an independent slate of directors would truly be futile. The question remains whether plaintiff is entitled to all the materials requested. I think not. Plaintiff is entitled to inspect only insofar as is necessary to ascertain the names of his fellow shareholders who are entitled to vote at the October shareholders' meeting (shareholders of record as of September 11, 1980). This includes the most recent list of SCM shareholders, and transfer sheets reflecting all transfer of SCM stock subsequent to the date of the list up to and including September 11, 1980. Access to the other materials must be denied. Accordingly, defendant is directed to grant plaintiff access to the above materials as soon as possible from which materials plaintiff may copy or extract information, at his own expense. [Rockwell v. SCM Corp., 496 F. Supp. 1123 - Dist. Court, SD New York 1980]
  • In attempting to sustain its burden of proof, appellant contends that inspection should not be compelled where the stockholder desires to obtain the identity of other stockholders to convince them to sell their stock, since this does not involve the business of the corporation. Anaconda argues that a "proper purpose" should be determined with respect to the corporation and not in light of the interest to all the shareholders in relation to their stock holding. It claims that this position is supported by the explicit language of the Business Corporation Law and applicable precedent. We read this authority to compel the opposite conclusion. Although everything affecting the shareholders will not affect the corporation, the converse is not true. Whenever the corporation faces a situation having potential substantial effect on its well-being or value, the shareholders qua shareholders are necessarily affected and the business of the corporation is involved within the purview of section 1315 of the Business Corporation Law. This statute should be liberally construed in favor of the stockholder whose welfare as a stockholder or the corporation's welfare may be affected. To say, as Anaconda would, that a pending tender offer involving over one fifth of the corporation's common stock is a purpose other than the business of the corporation is myopic. Since the pendency of such an exchange offer may well affect not only the future direction of the corporation but the continued vitality of the shareholders' investment, inspection of the stock book should be allowed so that qualified shareholders may have the means to independently evaluate the situation. Nor do we consider it significant that the petitioning shareholder precipitated that which may affect the corporation or shareholders; the right adheres as one of property in the shareholder and one for the protection of that interest. [Crane Co. v. Anaconda Co., 39 NY 2d 14 - NY: Court of Appeals 1976]
  • For present purposes, the scope of Buckeye's right of access under the Lease is ambiguous. "In light of the general principle which gives the tenant free use of demised premises, any restrictions are construed narrowly against the landlord and ambiguities are resolved in favor of the lessee." This interpretative canon favors Buckeye. The extrinsic evidence at this stage of the case also favors Buckeye. The parties' past practice, before any dispute arose, provides strong evidence of how the parties themselves understood the provision. For at least twelve years, Buckeye and its customers have used Sico Road to access the Tanks. A barrier gate separates Sico Road from the adjoining public roads, so GT (or Diamond State) had to take action to allow Buckeye (or Magellan) and its customers to travel through the barrier gate to reach Sico Road and the Tanks. The fact that Buckeye and its customers have accessed the Tanks via Sico Road for twelve years is strong evidence that the Lease includes a right to use Sico Road to access the Tanks. GT observes that "[i]n giving sensible life to a real-world contract, courts must read the specific provisions of the contract in light of the entire contract." Reading the Lease as a whole indicates that the parties contemplated that the Tenant would have the right to access the Tanks via Sico Road. Under the Lease, the Tenant leases the dock "for the transportation and storage" of liquid petroleum. The storage function takes place at the Tanks. In the Lease, the Landlord committed to grant the Tenant an easement for the pipes that run under the Port and connect the dock to the Tanks. Customers retrieve the liquid petroleum from the Tanks using tanker trucks. The tanker trucks can only get to the Tanks using Sico Road. The business arrangement relies on the seamless transportation of liquid petroleum from the dock to the Tanks and from the Tanks to customers. If customers cannot use Sico Road, then the commercial arrangement unravels, and it becomes impossible to give sensible life to the real-world contract reflected by the Lease. [Buckeye Partners, L.P., et al. v. GT USA Wilmington, LLC]
  • Wouldn't it be nice if you could automate the discovery of competitor claims that read on to your prior patent specifications, even if an Examiner hasn't appreciated this fact? This can be done using deep neural network sentence encoders. [JDBIP]
  • I picked up my curbside grocery order during the COVID-19 pandemic in AZ, where we are having one of the worst outbreaks in the world on a per-capita basis. In a state of 7.3 million, there are over 70k confirmed cases. Just based on those numbers, there is more than a 50% chance that a person with COVID-19 is at an event with 90 or more people. The grocery store forgot to take off the security caps from some of the beverage bottles that I ordered. Instead of going back to the store and potentially expose myself to COVID-19, I took magnets from an old hard drive, 4 m3 screws, and 2 m4 screws, and made this security cap opener. [Thingiverse]


Mark said...

Can you point to an exercise approach/philosophy that you like? I've dabbled in some Rippetoe but I have the same reservations that you have. Lifting weights is of course good but he seems to go with bigger is always better everything else be damned.

whydibuy said...

Don'T be so sure about complacent ebit. 2/3 of my portfolio is down from the June 8th spike. And I mean down as in bear market resuming down 20% plus. This market is mega cap happy. All else is being ignored. It's a bad sign but who knows. When I think it usually launches higher.

CP said...

Bodyweight exercises seem like a good idea, and typical weightlifting exercises done with dumbbells, more slowly and under better control.