just yip-yapping Greetings gang,
It would appear that my bold prediction was as good as cold minestrone.
The recent shareprice (sp) decline amounts to about $5000 worth of self-esteem for me.
Some family members have aked why Torstar? I pretty much responded by saying my gut is telling me something. If I had thought of it, I would have mentioned that I don't worry about this investment at all (I sleep well at night, as they say). Now, just because I don't worry about this investment it doesn't mean that all is well. It could me that I've written the whole thing off in my mind. It could mean I'm ignoring potentially "disturbing" "facts". Maybe. That said, I really don't worry about this investment at all.
The amount of time it is taking for something good to materialize is the only somewhat irksome bit. Even then, just because the sp is tanking doesn't mean that good things are not happening under the surface.
Here follow some disconnected comments...well, maybe they're connected by their optimism.
1) From a technical analysis perspective, we might say we're in a cup and handle formation. I think that's what it's called.
2) The pension matter seems to be closer to resolution. I don't understand the situation in depth, but my basic sense of it is that Torstar's pension obligations are a bit of a burden in terms of their earnings numbers. Soon, it would appear, they'll have nothing to do with said pension and that would mean a serious boost to their earnings numbers. Don has covered this topic in more detail.
3) It dawned on me that you know you're worried about your investment when...you're listening
to the company's conference call!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
4) I think it is a good sign that Torstar is quite open in terms of how it held its AGM. Such openess can be seen as signs of confidence and integrity.
5) Great question asked previously.... Who ARE the other shareholders?? Forkliftguy have you been buying more shares?
6) I've developed a theory. I call it the Breakers and Makers theory. The Breakers and Makers refers to types of CEO roles. Basically, a company for whatever reason will need to break a company. By break I mean deliver quarter after quarter of horrible results. The motivation might be just to depress the shareprice or it might be legitimate restructuring that is painful on an earnings basis. For Research in Motion, the Breaker CEO was Thorsten Heins. As you perhaps know, the sp tanked during his tenure. The Maker CEO for Research in Motion (now called BlackBerry, right?) is John Chen...and that was the reputation/role that he was publcized to have...a turanaround specialist, and he has delivered the goods more or less. The Breaker CEO for Torstar was Holland and the Maker is Boynton. If this theory holds, which it should, because it is somewhat insightful, and dare I say it, brilliant, then Torstar's fortunes should improve materially within a few years. These things do take time.
7) Winnipeg Jets! I was rooting for you (as the last Canuck squad)!
8) Dividends:
Here's a quote I got from a website: (https://www.moneychimp.com/articles/valuation/dividend_discount.htm):
"The dividend discount model is a more conservative variation of discounted cash flows, that says a share of stock is worth the present value of its future dividends, rather than its earnings. This model was popularized by John Burr Williams in The Theory of Investment Value. Williams wrote his book in the 1930s, when people were trying to establish a science of investing after getting burned by the irrational exuberance and accounting tricks of the previous decade. (Plus ca change, Jack.) Williams decided that reported earnings were way too nebulous to be trusted, like buying "bees for their buzz" instead of their honey, and that the only return you could really believe in was an actual check in the mail:
... a stock is worth the present value of all the dividends ever to be paid upon it, no more, no less... Present earnings, outlook, financial condition, and capitalization should bear upon the price of a stock only as they assist buyers and sellers in estimating future dividends.
Short version: you buy "a stock, by heck, for her dividends." "
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A conservative calculation/valuation (using a 5% discount rate) based on the 10 cent dividend gives Torstar a $2.00 sp value...on the dividends ALONE! So, Torstar is trading at a value below what it is worth on its dividend value alone. We're not even including the cash on hand. Wow and wow. Before I had sense that Torstar's was undervalued, but now I have some calculations to prove it. I might even say that I know Torstar is undervalued by AT LEAST $1.50 per share.
Any action on the dividend (decrease/increase) would be very telling.
9) Speaking of valuations, who nailed the valuation of Workoplis? Thank you...thank you.
10) To end, you might or might not know that I have this theory that Torstar had to polish itself prior to selling itself...to Fairfax. Step one was tossing Harlequin which I think was too racy in content for the Fairfax culture, and step two was getting rid of the pension situation which could have been cash draining vampire for Fairfax. I can easily imagine a scenario where pension liabilities would have had access to Fairfax's coffers that had nothing to do with Torstar. The safest thing ( kind of like prenuptial agreements) would be to sequester and separate the entire pension problem so that it could NEVER siphon Fairfax's non-Torstar-related cash. When that is completed (slated for the end of this year I believe), then things get even more interesting. Specfically, there would be nothing holding Fairfax back. It would appear that while the pension ducks are lined up, the sp can languish and those in the know, are free to scoop them up...for assured dough!