MCP, value play or value trap

C

Chuck E. Cheese

Anyone got anything on this one? I currently have a long position open (been trying to average down via buying the dip and sell some against the rally).

I've done some research and my take is the company has some future but the stock is one of the favorite for the bears as it went from $79 to $11 and the management has diluted the shares through several acquisitions and financing so the share count went from 50 mill to 120 mill (but the company is now is more diverse and more intergrated as well).

I'm expecting some more pain ahead here but the risk and reward is well worth the bet at this price. I believe that this is a long term play, but I'm concern that the bears could take this down another couple bucks. Buying miners is not exactly the smartest play, I know. But I expect this one to pay off.

Your thoughts are welcome.
 
Wow, what's wrong with them? I really like the insider buying around this price and the high short interest.

I will buy some and then you won't die alone :p
 
My entry has been average around $11.30ish (not full position) so no significant loss to write home about.

My issue is insiders cashed out 20 million shares or $ 1 billion during height or RE bubble. Now they're buying back in at $10 for only a few million shares (not including purchases made by Molybdenum Metales SA). It might seem that they're only trying to instill confident but nothing else.

Short interest now is about 25% whereas in the past it was as high as 40% percent. I used to short stocks before and my opinion is this is not a good short in comparison to NFLX, GMCR or FB etc...I suspect the shorts are just momentum players.

I've been doing my homework on the company and the share price is now even below book value. With NFLX, the price to book value ratio is over 4 and that company has more liabilities than assets.

Most of the argument against the stock has been the glut of RE flooding the market and crashing the price to the point of making the miners bleeding cash to death. But in reality, MCP's goal is to be a low cost RE producer on par (or lower) than Chinese prices and they have other products mix than just simply RE. Plus, they haven't fully operational yet, so it's too early to be the judge on them (But WS seem to like worthless tech stocks more than undervalued miners).

The fundamentals is not bad, but how often do stocks move on that? I will continue to average down via selling on weak rally and buying on the sell off to get a better buy in price.
 
I think MCP is too hard to figure - (I have owned it and made some money via CC's, but was happy to get called away.)

I think you'd be better off in ACI & ANR - still have lots of option premium and more upside then downside IMO
 
This will probably be a dog for some time to come. Based on my estimation, it could be anywhere between $15-30 next year due to the production increase projection, but not before dropping to below $10 in the near term. I still see great value at around $8-9, if it get there (I'm sure it will).

But due to their diversification, they're not that susceptible to RE price swings as before. But it came at a cost in the form of debt. The company has $1.3 billion worth of debt and I'm sure they might seek another round of financing before long. So any earnings will be weighted down by that. All in all, the down size risk is still here while the upside have yet to materialize.
 
Earnings are in for today. The earnings miss has been priced in previously so MCP is currently up 6% AH. With 60% of float short, it's poised for a big short squeeze. It's a steal at under $10. I've been trading on and off in this. My current average buy in price it's in the 9's. 20-30% gain is doable for the next couple weeks.
 
while there might be short squeezes in the ST, the LT trend is down. price is below the 20, 50 and 200 DMA. if price can at least make it above the 20 dma and stay there i'd get long w/ a small stop.
 
I've read a suggestion that insiders have been buying at $10 so they can take it private at not much more than that, then resell it at a big profit. Have there been cases elsewhere where management intentionally drives down the stock price by understating the company's health so they can buy shares for cheap?
 
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