Anytime a company answers my questions with a question that is irrelevant, a big red flag goes up. The company in question,
, operates funeral homes and cemeteries. If you heard my interview with Marc Cohodes of
, on www.vcall.com, you heard his firm's analysis of Stewart's accounting.
Last week Cohodes' partner, David Rocker, had passed along to me his valuation of Stewart, which isn't really that much different than it was when we last talked a few months back. (The stock's been largely flat since then.) He thinks it's worth less than 4, compared with the stock's close yesterday of 15 1/2. His analysis is based on what Stewart itself said it recently paid or agreed to pay for 79 mortuaries and 21 cemeteries.
The price, $167.5 million, translates into an average of $1.7 million per facility. Stewart owns 782 properties. Multiply $1.7 million by 782 and the total value of Stewart (in theory, at least) is $1.33 billion. Subtract $925 million in debt and you get $405 million. Divide that by Stewart's 112 million shares outstanding and you get (kaching!) a whopping $3.61 per share.
So, armed with that, last Thursday, I called Stewart's spokesman and asked why the short-sellers were wrong in their analysis. I really wanted to know Stewart's response. I also asked how it was the company met Wall Street's earnings estimate in its latest quarter ended in April while its top line, or revenue, came in short.
Rather than answer the question, he said he'd have to have someone higher in command get back to me (nobody called by yesterday) and he then wanted to know why my "boss" had been fired by
. The subsequent conversation went something like this:
"My boss? Fired? Huh?"
"Yeah, the bald-headed guy? What's his name? He used to be on
Good Morning America
. Why'd he get fired?"
Actually, it was Cramer who gave
the heave-ho last year. Furthermore, Cramer's not my boss; he's a columnist who doesn't even work out of
offices. I could see where this guy was headed and simply told him that I'd await the call that never came. I wasn't surprised, based on the company's reaction to items I've written in the past.
And by the way, if you guys ever do decide to get back to me: Why do you think the shorts are wrong in assuming that with $900-plus million in debt and $34 million in cash and a penchant for acquiring funeral homes, you'll have little choice but to raise additional cash in the debt markets? (Interest rates aren't getting any lower.) And why do you think the shorts are wrong when they say the banks are likely to be leery to lend to a big acquirer in an industry where one of the leading names,
, is selling off its properties as part of its bankruptcy reorganization? And finally, why do you think the shorts are wrong to think it's in their best interest, not yours, that you continue to buy as many homes as you can?
If you've got answers, I've got plenty of space to print them.
An item here
yesterday mentioned that
owned 9.3% of a semiconductor fab being bought by
. Should've said it
own that stake until April, when it sold it for no profit. The ownership position was included in the company's latest 10-Q. However, in doing our research, we failed to read the very next paragraph that mentioned the sale.
Another Iomega sayonara:
An item here
yesterday mentioned that two
honchos -- the treasurer and the chief spokesman -- had quit. Add the chief operating officer, Scott Flaig, to the list. The company announced his departure yesterday. (And it still hasn't hired a permanent CFO.) Yesterday Iomega closed at 3 15/16. But even as a $4 stock, the critics like to point out, it still has a market value of slightly more than $1 billion.
Strumming a song:
chat Monday, somebody, under the screen name jss888, wanted to know what I had against
. "I am starting to think it's personal," he wrote. Personal? Sorry to disappoint, but I didn't cause the company to botch its own strategy and report (its words, not mine) that some of its new stores are cannibalizing existing stores. When you see multiple items about the same company in this column, it merely reflects an evolving story. Just so happens that a few months ago an item
here suggested that Guitar Center's growth would slow. As it turns out, it did!
Stampede to the exit:
Just For Feet
down 22% to 4 7/8 after warning it may default on its credit facility. Last one out, shut the door.
Sabratek (SBTK) :
The company disclosed this morning that it has received an amendment to a class-action lawsuit. For details of what's in that lawsuit, see yesterday afternoon's extra
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
email@example.com. Greenberg also writes a monthly column for Fortune.