GREY:FTPLF - Post by User
Post by
OptsyEagleon Apr 05, 2011 2:03pm
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Post# 18388300
Will Need to Look A Little Further
Will Need to Look A Little FurtherI think investors need to look out a lot further then where the share price will be by Friday. We had about a 300% return in 2010. When you consider all the momentum investors that must have piled on (that inevitably pile off), chart watchers who trade only from their rear view mirrors and everyone else whose FTP positions have gotten a little large with respect to the rest of their portfolio, I don't think a 30% correction is abnormal.
We are in a bit of a news void, but the Thurso acquisition came out of a similar void and here we are about 200% higher. You would have paid at least 25% more if you tried to get in after that announcement.
Fundamentally, not only does FTPs future look great with EPS ranging from $7 to $10, but every other pulp producer out there is doing great. Upgrades and target increases have been announced, not only for FTP but for Buckeye, Mercer and many other pulp producers. Price increases for NBSK have been going through for the 1st quarter and 2nd quarter of 2011. Now NBSK prices may not mean much for Fortress after September of 2011, but it does slow down and even eliminate many producers from switching over to dissolving pulp, when they are making money hand over fist in NBSK.
The lawsuit unfortuneately did everything that Sateri wanted it to do. It drove down the share price which they hope will slow down expansion and increase the cost of acquisitions for Fortress. My question is, why is Sateri so concerned about slowing down Fortress? Are they losing in acquisition and expansion negotiations? Are they losing some customer loyalty? Who knows. All I know is something got them worried and it is a great acknowledgement to the business model of Fortress Paper. The suit itself will not amount to anything. Difficult to prove much in these cases and since the courts were not born yesterday, they pretty much understand what they are. A delaying tactic and a distraction for FTP management and it would seem also for some FTP shareholders.
Personally I am looking forward to 5 years from now, not 5 weeks from now. By then Fortress will be earning at least $7 to $10 per share, since their forward contracts guarantee this amount. They will have put about $500million to $600million of earnings on the board and I am really looking forward to what our CEO does with this money. He started Fortess with about $20 million, can you imagine what he can do with $500 million.
In the mean time if someone decides to sell me some shares at these prices, I add a little. I mean if I sold FTP, where would I find a company with better prospects to put the money into? That is the real question.