Wednesday, July 22, 2009

Recent Insider buying (GBX, TIER)

AlphaNinja -

Greenbrier (GBX) CEO William Furman bought shares last week, giving a significant boost to the stock.

On July 7th the railcar builder reported dismal earnings for the Fiscal 3rd quarter. One can understand that times are very tough in this freight-dependant sector, but the company's results are simply horrendous. Case in point - the manufacturing segment's 4.8% gross margin was an IMPROVEMENT over last year:

Not helping matters is a contract dispute with a slightly important customer, GE :

"Earlier this year, General Electric Railcar Services Corporation ("GE") advised us of their desire to substantially reduce, delay or otherwise cancel deliveries under a multi-year contract to build 11,900 tank cars and covered hopper cars over an eight-year period, with a current value of $1.0 billion. We are currently in discussions with GE. We believe GE is in breach of its obligations under our contract. GE has recently instructed us to slow our production of railcars to a rate of production less than that required under our agreement and does not allow for efficient operations of our manufacturing facility, also as required under our agreement. GE has also unilaterally begun reducing the number of railcars they are willing to accept for delivery despite the fact they have inspected and approved the railcars as conforming to the specifications."

Greenbrier received a capital "injection" of $75million from WL Ross a while back, helping its financial position through this downturn. Actually a pretty interesting financing, the loan has no debt covenants, though WL Ross gets 3.4million warrants....pretty hefty dilution.

"The new secured term loan provided by WL Ross contains a feature by which Greenbrier and WL Ross may jointly agree on conditions to increase the loan to $150 million. The initial $75 million investment is in the form of a three-year, non-amortizing, term loan with no financial covenants and a favorable interest rate of LIBOR plus 350 basis points. In connection with the loan, Greenbrier has issued warrants to purchase approximately 3.378 million of Greenbrier's common shares, representing 16.5 percent of Greenbrier's common shares on a proforma basis, at $6.00 per share. WL Ross also plans to purchase, at a minimum, $1.5 million of Greenbrier common stock in the open market and will be subject to certain transfer and hedging restrictions associated with the warrants. The Company's Stockholder Rights Agreement has been amended to allow WL Ross and its affiliates to acquire the warrants and purchase shares, provided that if their ownership exceeds 19.9% of the Company's voting stock, the additional shares will be subject to a voting agreement."


Tier Technologies (TIER) CEO bought 20,000 shares on the 14th of this month. The Virginia based electronic payment systems company has been restructuring lately, and hopefully this positive buying signal from management is on target.

Revenues were up in the most recent quarter, but they're still producing operating losses...

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