Despite today's drop, CCI shares are up 16% since I called them overpriced on November 3rd. Right or wrong, always honest. I believe now as I did then that this is a leveraged finance company. They have beautiful cash flows, but are levered to the moon. The company's market value is $10.7billion and total debt outstanding is about $7billion.
Looking at the q4 results, gross margin has improved by 1.6%. The firm's operating model is juicy, as the same rental site adds more and more tenants.
Most important for this firm and its investors is the massive debt burden, and its maturity schedule. Less than a year ago, shares traded at levels suggesting a bankruptcy. In 2009, management did a masterful job in the debt markets, pushing off debt maturities and achieving a weighted average interest rate of 5.75%. The extension of maturities did come at a heavy cost, as q4 interest expense of $118.9million was an increase of 35%.
Look - CCI is in a marvelous business, but as I said above they are leveraged to the moon. If they actually paid taxes they would be dangerously close to breaking loan covenants. Not my cup of tea.
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