I have been following this stock for a while, all of its financial metrics look quite strong compared to its airline peers, especially the ROA and Net Margin, and on top of that it looks quite undervalued. I am having difficulty deciding what this firm’s “edge” is…what gives them the higher profit margins and good cash flow etc. Anyone have any ideas?
TSUNAMI RISK >>> AVOID
ugh airlines. That has got to be one of the worst sectors to invest in…
I think you should also look at efficiency measures; this stock looks quite volatile. Plot the sharpe ratio on a graph for 10 years of data(daily) and compare to peers. Also, they just issued 75 million in convertible senior notes = possible future dilution; why are they issuing this? Is the market accurately pricing in this information? Also, is there a possibly that another carrier could purchase HA?..just a few questions that need to be answered.
Zesty Wrote: ------------------------------------------------------- > Also, they just issued 75 million in convertible senior notes = possible future dilution; why are they issuing this? Are they planning/discussing a share repurchase? If management agrees with Palantir could be a good opp. to lower their cost of capital using convertible funding.
@lpoulin, To answer your question, I would have to read through the recent sec filings and I’m definitely don’t have that much free time. My point was that they have a 320M market cap and a 75M issuance of convertible senior notes is definitely a significant event that needs to be investigated; if you plan on purchasing the stock (if half of the senior notes convert to common shares, you have approx. a 10.5% dilution). Maybe someone could look through the recent filings but regardless some homework needs to be done (this is not a slam dunk stock).
Zesty Wrote: ------------------------------------------------------- > My point was that they have a 320M market cap and a 75M issuance of convertible senior notes is definitely a significant event that needs to be investigated; if you plan on purchasing the stock (if half of the senior notes convert to common shares, you have approx. a 10.5% dilution). I don’t disagree - could be a positive or a negative. A cursory look at their website shows conversion without stipulations isn’t possible until 2015 (at a 30% premium to current prices), there should be increased demand for shares, and they’re (presumably) paying down more costly debt. Seems positive to me, then again I know practically nothing about the issue or the company, so grain of salt and what not. http://investor.hawaiianairlines.com/phoenix.zhtml?c=82818&p=irol-newsArticle&ID=1540608&highlight=
HA is down 4.4% right now; I wonder if the market is viewing the issuance in a negative light or the possible loss of tax exemptions? Either way, this stock is too volatile not to do your homework.
Zesty Wrote: ------------------------------------------------------- > I think you should also look at efficiency > measures; this stock looks quite volatile. Plot > the sharpe ratio on a graph for 10 years of > data(daily) and compare to peers. Also, they just > issued 75 million in convertible senior notes = > possible future dilution; why are they issuing > this? Is the market accurately pricing in this > information? Also, is there a possibly that > another carrier could purchase > HA?..just a few questions that > need to be answered. Appreciate your thoughts, It is indeed volatile but I’m not really too worried about volatility as long as long term prospects are good, however that share dilution is a problem. According to the note published there are some safeguards via some offsetting contracts that will protect against share dilution, but my knowledge of convertible debt is elementary. HA was indeed down 4% today, however other airlines were also down with AMR down 3%.