Maxar Technologies Inc. T.MAXR

A bit of an explanation

[Dacom]

I&rsquo;m sure that many people on these boards have a good understanding why MAXAR has such a low share price and market capitalization, but, for anyone who hasn&rsquo;t figured it out yet....here are a couple of things to be aware of (simplified a little to allow more people to understand)<br /> <br /> 1 Under normal circumstances, when you are looking at the market capitalization fo a company to see if is reasonable (based on some market cap vs sales volume or market cap vs profitability) you don&rsquo;t worrry too much about debt or cash on hand. However, Sometimes it is important to take these things into account. In truth, when you say but the market cap is only XXX?”, you are assuming that the market cap is the only proper measure of the company&rsquo;s value. However, let us imagine two companies, both with $100 million in non-cash assets, $100 million in sales, $10 million in profit and are growing profit at 10% per year. Let’s say that Company A has net debts (cash minus debts) of $100M and Company B has $100M of cash on hand and no debt. Are they both worth the same amount of money? Obviously not. Most professionals would realise that, if you could buy company A for $100 million you would actually be getting it for free...since, when you have bought it, you could pocket the $100 million they have in the bank. However, if you paid $100 million for company B, you would still owe the banks $100 million. The way to resolve this connundrum is to DEDUCT the net cash or ADD the net debt position from the money you pay to figure out what you are really paying for the company. In the case of Company A it is zero. In the case of Company B, it is $200 million. The technical term for this number is the Enterprise Value. If you are going to buy a company (or the shares in a company) you really should know what the real purchase price (or Enterprise Value) would be if you were going to buy it and figure out if that still makes sense.  In the case of Maxar, they have a very low share price (and book value), but they have lots of debt, so, in reality, when you buy the shares, you are taking on board that debt too. Maybe those shares aren’t so valuable after all.

In rough terms, if MAXAR has a market cap of $300M and net debt of $3B, the shareholders have valued the activities and other assests within the company at $3.3B, but discounted it down to $300M because of the  net debt (and their assessment of risk)

It takes a fair amount of time to understand how this really works and you need to do your own due diligence to see what makes sense for you. Bear in mind that the value of the company (whether you use Market Cap or Enterprise Value) is only one small part of the equation. There are lots of other things to figure out as well.

2 In order to get a glimpse (even if a potentially biased one) about some of these things, you might want to read Spruce Point Capital Management’s report on Maxar. They are currently shorting Maxar big time and have a vested interest in seeing the share price go down, but they have carried out a very extensive review of the financials and the forward looking position of the company. You may not agree with all of their findings and think that they are exaggerating, but they are worth a read, so at least you know the risks you are taking if you choose to invest in Maxar. More importantly, it’ll give you a clue about how complex it really is to fully understand a large, diverse, complex company. If it is your hard earned money at play, you owe it to yourself to discover as much as you can so that you can make informed jusdgements. Many of the issues raised by Spruce Point are useful in judging not only Maxar, but other companies tat you might be looking at in the future.

This has been pretty long winded, but I hope it is of value to at least some of you.
https://www.sprucepointcap.com/maxar-technologies-ltd/">https://www.sprucepointcap.com/maxar-technologies-ltd/</a>

[Jasio0]

spruce estimated 20 to 25$ share price. Do you think now that maxar is trading at a fifth of the value spruce point suggested it is currently undervalued?

[SignorAnderson]

Yes, what you described is enterprise value and it is actually not difficult to understand.  My original comment stands in that relative to where the company’s price has been the equity component has almost been erased entirely considering the equity component has traded over 20x the current value.  Spruce Point and the recent drama have taken advantage of managements misteps, cutting

[BIGMOE]

Major Holders Currency in USD Breakdown 1.76% % of Shares Held by All Insider 85.50% % of Shares Held by Institutions 87.04% % of Float Held by Institutions 204 Number of Institutions Holding Shares

[Rosmorduc]

That is what people said when Nortel was in the 6$ range.  Best case scenario was a four bagger and worst case scenario was 0$. We all know what happened. Although I think it did have one last run to 13$ first before fully collapsing and at that point daytraders had taken over like termites and it was game over.  Companies go under for one reason and one reason only: when it gets

[Jasio0]

unfortunately you forgot the fact that maxar has government contracts with both Canada and the United States. They are too important to the government to just go bankrupt unlike Nortel. Worst case scenario is the gov bails them out...

[Rosmorduc]

Nortel had a lot of government contracts to.  Don't kid yourself. Government won't be bailing anybody anytime soon.  They can't even get the XL piepline mess straight, let alone putting all the Windsor factories/employees back to work nor helping the Canadian oil and gas companies.  If MAXR goes under, it will be on its own merit and nobody will throw a lifeboat

[Jasio0]

there it is... the man is nothing more than a fearmongeror.

[BlueHorseshoe02]

A comparison to Nortel is hilarious and shows you are only out to slander the company. They couldn't be more different. For one Nortel issued shares like candy to buy the #10 company in sectors repeatedly so they had hundreds of business lines but were not #1 or #2 in any of them. In the end they had billions of shares outstanding so even though it was a penny stock it was still the largest

[SignorAnderson]

You still haven't answered, what is your position in the stock? Do you have one?

[SignorAnderson]

I've already acknowledged fully the risks here but I get the feeling you're nothing but a fear mongerer. If I recall there was a little more to the Nortel collapse including outright fraud. Having said that, you are free to take whatever position you wish, of which, what exactly is your position currently with the stock? Do you have a position?