Trading Alert : Peabody Energy ( BTU)

A positive Supreme Court ruling mere days ago has done nothing to halt the precipitous decline of Peabody Energy Corporation (NYSE:BTU)’s shares, which are imploding  in trading this morning, down by nearly 26% already.

The sad spectacle has inflated the loss of the company’s shares year-to-date to an ugly 79%. The latest major blow comes after Peabody Energy Corporation (NYSE:BTU) was forced to downgrade its loss estimate for its current fiscal quarter, the results of which it will post on July 28. Among other things, lower coal prices and bad weather have been cited as reasons for the revision, while demand is also weakening in China. The latest blow is bad news for Dmitry Balyasny‘s Balyasny Asset Management, which opened a 27.31 million-share stake in the first quarter, worth $134.34 million at the end of March, doubtlessly feeling he was getting a discount at the time, with shares already down heavily in the first quarter. They’ve done even worse in the second.

TheStreet Ratings team rates PEABODY ENERGY CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

“We rate PEABODY ENERGY CORP (BTU) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.”

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 264.1% when compared to the same quarter one year ago, falling from -$48.50 million to -$176.60 million.
  • The debt-to-equity ratio is very high at 2.55 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, BTU has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PEABODY ENERGY CORP’s return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PEABODY ENERGY CORP is currently extremely low, coming in at 14.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.48% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $3.40 million or 93.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm’s growth is significantly lower.

Save taxes offshore

Trading Alert : Leon Black’s Sell-Everything Call

Depression - an idea whose time has come back!


When financier Leon Black said his Apollo Global Management LLC was exiting “everything that’s not nailed down” amid rising valuations, he made headlines. Two years later, other private-equity firms are following suit — dumping stakes into the markets at a record clip.

Firms including Blackstone Group LP and TPG Capital Management have been capitalizing on record stock markets around the world to sell shares, mostly in their companies that have already gone public. Globally, buyout firms conducted 97 stock offerings in the second quarter, more than in any other three-month period, according to data compiled by Bloomberg.

Since Black made his comments in April 2013, the MSCI World Index has gained 18 percent, stretching valuations even higher. Headwinds that threaten to rattle global equities are everywhere — from the Greek and Puerto Rican debt crises to an eventual increase in U.S. interest rates.

“It’s clear that we are currently in an environment of frothy valuations,” said Lise Buyer, founder of IPO advisory firm Class V Group. “The insiders — those with the most knowledge — are finding this a very good time to take some money off the table.”

This year, private-equity firms sold $73 billion of their buyouts to the public, a record amount over a six month period, Bloomberg data show.

Hilton Deal

The biggest such deal this year came in May when Blackstone sold 90 million shares, or $2.69 billion worth, of hotel-chain Hilton Worldwide Holdings Inc. in a secondary offering. Blackstone took the company private in 2007 for $26 billion and did an IPO in December 2013, raising $2.7 billion. After the latest sale, Blackstone’s stake in Hilton fell to 46 percent from 82 percent before the IPO, Bloomberg data show.

The largest European exit so far this year was the $2.46 billion IPO of online car dealership Auto Trader Group Plc in London, where Apax Partners sold shares. In Asia, private-equity firm China Aerospace Investment Holdings Ltd. sold 2.3 million shares in a $2.12 billion IPO of China National Nuclear Power Co.

While the firms have been trimming their stakes in public companies, they’re doing fewer initial offerings in the U.S. PE-backed IPOs have had the slowest start to the year since 2010, selling $8.2 billion in stock.

The reason: Many of the larger companies that were swooped up during the buyout boom that ended in 2007 have already gone public. Today’s selling is largely private-equity owners getting out of those assets.

Fundraising Spree

“It’s been a lot more about harvesting public positions than creating new ones through IPOs,” said Cully Davis, co-head of equity capital markets for the Americas at Credit Suisse Group AG. “The markets are open and the financial sponsors are pretty astute about timing their exits.”

Buyout firms were also motivated to exit older positions as they seek investments for new funds, said Klaus Hessberger, co-head of equity capital markets for Europe, the Middle East and Africa at JPMorgan Chase & Co. The funds raised $438 billion last year, a post-crisis record, according to an April report by research firm Triago.

Selling to companies or other buyout shops was still the more popular way for private-equity firms to unload assets over the quarter. They sold $57 billion of assets in 284 sales in the second quarter, compared with $39 billion for stock sales, according to data compiled by Bloomberg.

In an echo of Leon Black, Frank Maturo, vice chairman of equity capital markets at UBS AG, said, “Private equity is selling everything that’s not bolted down. With the robust valuations in today’s market, they are accelerating monetizations of companies they own.”

Patient Home Monitoring (PHM) Update Aquisition


June 09, 2015 15:41 ET

PHM Announces Execution of Final Binding Purchase Agreement to Acquire Louisiana-Based Sleep Management

Increases Annualized Run-rate Revenue to over $115,000,000 and Annualized Run-rate Adjusted EBITDA to over $30,000,000

LOS ANGELES, CALIFORNIA–(Marketwired – June 9, 2015) –


Patient Home Monitoring (PHM) (TSX VENTURE:PHM), a profitable company focused on rolling-up annuity-based healthcare service companies in the U.S. and Canada, announced that today it executed a final, binding purchase agreement to acquire Sleep Management, a company operating in 19 states and headquartered in Louisiana.

The business had annualized revenues of more than $42,500,000 and Adjusted EBITDA of more than $18,000,000. PHM retained its external auditor to conduct an independent financial review of Sleep Management.

When combined with existing operations, PHM expects annualized run-rate revenue to exceed $115,000,000 and Adjusted EBITDA to exceed $30,000,000, before any potential revenue from organic growth and cross selling.

Sleep Management currently provides home based medical services in 19 states across the US. The Company focuses on providing high margin ventilators to patients with chronic pulmonary obstructive (COPD) conditions. The business has a substantial amount of active patients that PHM will now offer new services and products. PHM plans to start immediately cross-selling its existing service lines across all of the acquired locations.

Final Terms of the Agreement

PHM will increase revenues by nearly 60% and increase EBITDA by more than 150%. Total consideration paid is $36 million in cash and 42.75 million shares, representing less than 15% of PHM’s total outstanding common shares. The shares will be released from holds over a three year period. Closing of the acquisition will be subject to approval by the TSX Venture exchange and other standard conditions.

All three owners are taking a portion of their consideration in stock and will stay on with PHM as senior executives post-acquisition.

“We wanted to focus on closing our largest deal first,” said Michael Dalsin, Chairman of the Board for PHM. “When you take into consideration the size of this company, in terms of patients, geographical spread, growing revenues, and significant profits, we have doubled the run rate profitability of PHM overnight with this transaction. It gives PHM immediate access to more than a dozen new states to start cross-sell additional services. Additionally, we have two more LOIs we are working to close with combined trailing 12 month revenues of $35 million, along with several smaller deals that have combined revenues of $15 million.”

“When closed, this acquisition will be EPS accretive. It is expected to increase run rate EBITDA by more than 150% before any organic growth,” continued Mr. Dalsin. “We continue to invest in M&A activities and are, with each additional deal, getting closer to our exit revenue run rate goal for 2015 of $175 million.”

Additionally, the PHM Board of Directors approved the issuance of performance stock compensation in the form of options to several key personnel. PHM issued (a) 3,000,000 options each to Michael Dalsin and Roger Greene as Chairman and Vice Chairman, respectively; (b) 500,000 options to Nitin Kaushal as non-executive Director; and (c) 250,000 options to David Costine as non-executive Director; all options are issued at a market strike price of $1.46.

The transaction with Sleep Management is arms length.

About PHM

The explosive growth in the number of elderly patients in the US healthcare market is creating pressure to provide more efficient delivery systems. Healthcare providers, such as hospitals, physicians and pharmacies, are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control costs. PHM fills this need by delivering a growing number of specialized products and services to achieve these goals. PHM is a positive cash flow and profitable company that serves patients with heart disease and other chronic health conditions, this operation is a platform for acquisitions and organic growth. PHM is focused on a highly fragmented and developing market of small privately-held companies servicing chronically ill patients with multiple disease states caused mainly by age and obesity. Because of the new and highly fragmented nature of the market, PHM is actively working to identify and evaluate profitable, annuity-based companies to acquire their patient databases and technical expertise at favorable prices. PHM’s post acquisition organic growth strategy is to increase annual revenue per patient by offering multiple services to the same patient, consolidating the patient’s services and making life easier for the patient. The expected result is growing EPS with each acquisition and growing revenue and profits from the cross selling efforts.

Trading Alert : PHM Gains on volume in the last 30 minutes



Below Average
As of 05 Jun 2015 at 3:47 PM EDT.



Open 1.48 P/E Ratio (TTM)
Last Bid/Size 1.57 / 557 EPS (TTM) -0.05
Last Ask/Size 1.58 / 210 Next Earnings
Previous Close 1.47 Beta -0.21
Volume 993,612 Last Dividend
Average Volume 1,424,839 Dividend Yield
Day High 1.58 Ex-Dividend Date
Day Low 1.45 Shares Outstanding 236.4M
52 Week High 2.01 # of Floating Shares 214.4527M
52 Week Low 0.2550 Short Interest as % of Float
DRIP Eligible No

Trading Alert: CXV Volume and Price Moving


Above Average
As of 01 Jun 2015 at 11:45 AM EDT.



Open 0.5700 P/E Ratio (TTM)
Last Bid/Size 0.6100 / 68 EPS (TTM) -0.02
Last Ask/Size 0.6200 / 3 Next Earnings
Previous Close 0.5700 Beta
Volume 1,340,434 Last Dividend
Average Volume 2,295,332 Dividend Yield
Day High 0.6200 Ex-Dividend Date
Day Low 0.5700 Shares Outstanding 159.1M
52 Week High 0.8200 # of Floating Shares 154.8618M
52 Week Low 0.2300 Short Interest as % of Float
DRIP Eligible No


Convalo Health International, Corp. is a Canada-based company, which is engaged in operating in the United States outpatient addiction rehabilitation market. The Company through its center located in Hollywood, California, offers treatment for addictive and co-occurring disorders under the brand name BLVD Centers ( BLVD also offers additional insurance-reimbursements


Trading Alert : Convalo – Making money from addicts



Above Average
As of 20 May 2015 at 10:31 AM EDT.

Convalo Health International (Convalo) Announces Plan to Acquire Two Southern California Treatment Companies


LOS ANGELES, CALIFORNIA–(Marketwired – May 20, 2015) –




Convalo Health International, Corp. (Convalo) (TSX VENTURE:CXV), an acquisition-oriented company focused on rolling up the US addiction rehabilitation market, announced that it has come to terms to acquire two profitable southern California companies, Hollywood Detox Center and Accredited Rehab and Treatment Services (“ARTS”).  As part of the acquisitions, Convalo will retain the three top executives in key positions at the national level, strengthening Convalo’s existing management team in the area of operations, admissions and executive management.  As part of the acquisition, these executives would take over operational management of the current BLVD Treatment Centers portfolio of outpatient centers.


The acquisitions, expected to close very shortly pending a final purchase agreement, provide a fully vertically integrated platform in Hollywood and, within the next year, serve as a platform for the greater Los Angeles metropolitan area, offering detox services, men’s and women’s residential treatment services and aftercare services in West Los Angeles subsequent to Convalo’s acquisition last month of the outpatient center announced March 30th, 2015.


For the Hollywood area, the acquisition will immediately give Convalo the ability to provide services that fully encompass the entirety of the patients’ needs throughout the course of recovery, resulting in improvements to overall quality of care, a higher revenue per patient, and a more fluid patient experience at every level.


The accretive acquisitions will have an immediate and positive impact on earnings per share (EPS). The final terms of the acquisitions will be announced upon the execution of the final purchase agreements. The sellers will take both stock and cash as consideration.


“With this deal, we have a full service platform in Los Angeles,” said Michael Dalsin, Chairman of Convalo. “We wanted to announce this deal pre-closing to ensure that the respective staff members at BLVD Centers, ARTS and Hollywood Detox could openly work together to integrate and begin cross selling all services to clients. We plan to announce full financial details of the acquisition at closing, both in terms of expected positive impact on our annual revenues and profits, as well as the amount of cash and restricted stock paid to the sellers.”

“We are particularly excited to be retaining Keith Fowler and Brent Ortner from Hollywood Detox and Ryan Newport from ARTS as senior executives of our nationwide strategy and I welcome them as future shareholders and partners in our acquisition model. We expect to have a substantial amount of cash after we close this deal and are focusing on deals in New York, San Francisco, Miami and Chicago to create a nationwide network of addiction treatment centers offering the full range of addiction services from detox all the way to aftercare.”

Subsequent to listing, the Convalo Board of Directors approved the issuance of performance stock compensation in the form of options to several key personnel. Convalo issued (a) 3,000,000 options each to Michael Dalsin and Roger Greene as Chairman and CEO and Vice Chairman, respectively; (b) 500,000 options to Nitin Kaushal as non-executive Director; (c) 250,000 options to David Costine as non-executive Director; and (d) 100,000 options to Dennis Wilson as VP of Corporate Affairs. All options vest equally over three years at a market strike price of $0.55.

Convalo currently has 198,996,353 issued and outstanding common shares and 2,344,635 performance stock options available and yet-to-be assigned.

Convalo anticipates that the expiry date of the warrants outstanding exercisable for 43,125,000 common shares of Convalo at $0.50 per share, will be accelerated to November 11, 2015 pursuant to the terms of the Warrant Certificates. The acceleration is a result of Convalo’s share price achieving a volume-weighted average trading price greater than $0.60 for 20 consecutive trading days since closing. The warrants were originally issued pursuant to Convalo’s bought deal private placement of 43,125,000 units (each unit consisting of one common share and one warrant), for gross proceeds of $17,250,000, which closed on April 22, 2015.

About Convalo


Convalo is an acquisition-oriented company focused on rolling up the US outpatient addiction rehabilitation market led by seasoned management with experience in both US healthcare acquisitions and healthcare service asset management. In May 2014, Convalo made its first acquisition of a small, local addiction rehabilitation center in Los Angeles. Since May, the business has operated under the brand name BLVD Centers ( in a luxury Hollywood, California location. BLVD offers patients access to a wide range of services, including addictive and co-occurring disorders, helpful to the recovery process. In conjunction with the 12-Step approach, BLVD also offers supplemental insurance-reimbursed services catering to a variety of communities: gender specific, creatively- oriented, meditation/mindfulness, trauma and LGBT affirmative.


Stock Market Top ? : The Q Ratio Indicator Says Watch Out Below


If you sold every share of every company in the U.S. and used the money to buy up all the factories, machines and inventory, you’d have some cash left over. That, in a nutshell, is the math behind a bear case on equities that says prices have outrun reality.

The concept is embodied in a measure known as the Q ratio developed by James Tobin, a Nobel Prize-winning economist at Yale University who died in 2002. According to Tobin’s Q, equities in the U.S. are valued about 10 percent above the cost of replacing their underlying assets — higher than any time other than the Internet bubble and the 1929 peak.

Valuation tools are being dusted off around Wall Street as investors assess the staying power of the bull market that is now the second longest in 60 years. To Andrew Smithers, the 77-year-old former head of SG Warburg’s investment arm, the Q ratio is an indicator whose time has come because it illuminates distortions caused by quantitative easing.

“QE is a very dangerous policy, in my view, because it has pushed asset prices up and high asset prices, we know from history, are very dangerous,” Smithers, founder of Smithers & Co. in London, said in a phone interview. “It is very strongly indicated by reliable measures that we’re looking at a stock market which is something like 80 percent over-priced.”

Dissenting Views

Acceptance of Tobin’s theory is at best uneven, with investors such as Laszlo Birinyi saying the ratio is useless as a signal because it would have kept you out of a bull market that has added $17 trillion to share values. Others see its meaning debased in an economy whose reliance on manufacturing is nothing like it used to be.

Futures on the S&P 500 expiring next month slipped 0.1 percent at 9:36 a.m. in London.

To Smithers, the ratio’s doubling since 2009 to 1.10 is a symptom of companies diverting money from their businesses to the stock market, choosing buybacks over capital spending. Six years of zero-percent interest rates have similarly driven investors into riskier things like equities, elevating the paper value of assets over their tangible worth, he said.

Standard & Poor’s 500 Index members last year spent about 95 percent of their profits on buybacks and dividends, with stock repurchases exceeding $2 trillion since 2009, data compiled by S&P Dow Jones Indices show.

In the first four months of this year, almost $400 billion of buybacks were announced, with February, March and April ranking as three of the four busiest months ever, according to data compiled by Birinyi Associates Inc.

Slow Spending

Spending by companies on plants and equipment is lagging behind. While capital investment also rose to a record in 2014, its growth was 11 percent over the last two years, versus 45 percent in buybacks, data compiled by Barclays Plc show.

With equity prices surging and investment growth failing to keep pace, the Q ratio has risen to 58 percent above its average of 0.70 since 1900, according to data compiled by Birinyi and the Federal Reserve on market and asset values for non-financial companies. Readings above 1 are considered by some to be too high and the ratio has exceeded that threshold only 12 percent of the time, mostly between 1995 to 2001.

That’s nothing to be alarmed about because the American economy has become more oriented around services than manufacturing, according to George Pearkes, an analyst at Harrison, New York-based Bespoke Investment Group LLC. Nowadays, companies like Apple Inc. and Facebook Inc. dominate growth, while decades ago, it was railroads and steelmakers, which rely heavily on capital.

Mean Reversion

“Does that necessarily mean that the Q ratio should be as high as it is right now? I don’t know,” Pearkes said by phone. “With those sorts of long-term indicators, they can sometimes mean that the market is overvalued. But the reversion to the mean on them is usually going to take a lot longer than most people’s time frame.”

Any investors who based their investment decisions on the Q ratio would have missed most of the rally since 2009, according to Jeffrey Yale Rubin, director of research at Birinyi’s firm. The measure rose above its historic mean three months into this bull market and since then, the S&P 500 has climbed 131 percent.

“The issue we have with Tobin Q is that it does a very poor job at timing the market,” Rubin said from Westport, Connecticut. “The followers of Tobin Q never told us to buy in 2009, yet now we are warned that we should sell. Our response is sell what? We were never told to buy.”

Bond Yields

Everyone from Janet Yellen to Warren Buffett has spoken cautiously on stock valuations in the past month. Both the Fed chair and chief executive officer of Berkshire Hathaway Inc. said prices are at risk of getting stretched should bond yields increase. The rate on 10-year Treasuries slipped last week to 2.14 percent while the S&P 500 gained 0.3 percent.

“It’s probably a sensible configuration for the stock market to be overvalued because competing investments are so poor,” Robert Brusca, president of Fact & Opinion Economics in New York, said by phone. “As an investor, you’re not just looking at the value of the firm, but the value of the firm relative to other things you can do with your money.”

At 2,260 days, the bull market that began in March 2009 this month exceeded the 1974-1980 rally as the second longest since 1956. While measures such as price-to-earnings ratios are holding just above historical averages, the bull market’s duration is sowing anxiety among professionals who watched the previous two end in catastrophe.

“We’re still close enough to that prior experience and that hold-over effect is still there,” Chris Bouffard, chief investment officer who oversees more than $10 billion at Mutual Fund Store in Overland Park, Kansas, said by phone. “When you start to see prior cycle peaks on the chart like Tobin Q and any other valuation metrics that people are putting up there, it looks dramatic, stark and scary.”

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