Vitreous Glass Inc V.VCI

Wake up!

[EverydayCap]

• With rates soaring, the housing market is freezing up. Taking the marginal buyer out of the market will significantly slow new construction, even in Alberta. Look at commentary from Melcor (MRD) etc. to get a sense of how rough it could get.
• VCI has the obligation to buy all glass from AB depots. How much they sell, and at what price, is the risk in this environment.
• Assume FCF goes from the 38c/share range to 30c/share, which is not unreasonable.
• Now move the FCF yield from the 8% norm with rock-bottom rates (.38 / 0.08 = the near $5 share price that holders have become accustomed to) up to 10% at 30c/share of FCF and the shares could easily drift to $3. 
• What happens if the FCF goes lower and the FCF yield goes higher?

[EverydayCap]

Well, we are down about 10% from my september 29th post. I am here to say that there is another 10-20% of imminent downside. The lack of liquidity and inability to meaningfully short this means there is a lag in stock price vs. fundamentals. Fiscal year end was at the end of September, and results should be out by mid October. Housing in Alberta continues to deteriorate, and fiberglass demand is