Retail Wisdom

These nuggets of wisdom are from Scott Krisiloff from Avondale Asset Management. I think he spends his days reading filings. I occasionally visit his blog at http://skrisiloff.tumblr.com/

“If a product that we sell is available for less out there, then that’s the price that the market is at, and we need to be there…we think it’s just good customer service and part of earning our customers’ trust that we have market prices. ” —Nordstrom

“we spend a lot of time since we brought on our new Chief Marketing Officer Mary Beth West asking customers what they think rather than the leaders of the company sitting around in a conference room deciding what we think the company should be.” —JC Penney

“We are one of the few major U.S. retailers to have expanded successfully internationally…we go into countries and we build brands and we are constantly increasing our number of vendors in every single country. I think what we have learned prior to going into Germany is to really investigate country for a long period of time before we go in. So, you tread lightly, you are camping, you really understand the mix of the customer, and every single country is very, very different. So, you have to take a long time to study each country before you go in. So, we have lots of learnings. And now we have obviously expanded into many new countries a little bit quicker, but we did a lot of homework before.” —TJ Maxx

Keep Calm And Carry On

Reposted from Seeking Alpha
By Brian Langis

The current stock market correction was inevitable and was long overdue. There were plenty of indicators and smoke signals steaming from overvaluation. But one thing is that market corrections aren’t predictable. You never know when it will happen and what will be the catalyst behind the correction. This time the smoke points straight to China as the main culprit. Well who would have thought that? Wasn’t it not too long ago that China was the place to be? Everybody was talking about China as the next big thing. “The next century belongs to the Far East”. Most financial pundits looking for the trigger behind a potential correction were pointing to the next recession or the day the Federal Reserve finally raised interest rates. Unfortunately it’s never that clear and simple. You never see it coming. One of the worst myths out there is that the market is always rational and makes sense. The market can be totally wacky for reasons that do not make sense. Sometimes stocks go up when they should have gone down, and sometimes entire sectors move for ridiculous reasons. Prices can be volatile over the short-term without much explanation or correlation to underlying business performance. I was ready to blame the market collapse on Apple not meeting Apple Watch sales target (that’s a joke in case my sense of humor is not apparent).

The current correction doesn’t mean we are about to revisit the dark days of 2008-2009, the tech crash of 2000, or the Asian crisis of 1997-98. What’s happening right now is also pale to the one day crash of 25% in 1987. By definition a stock market correction is a 10% drop in the index and has historically happened every 18 months. The fact that the U.S. market went nearly four years without one is historically unusual – it is the third-longest such streak in the last 50 years, according to JPMorgan Asset Management. What’s happening right now has happened frequently in the past and will happen again in the future.

So why are we reacting so strongly about this? One reason is that people forgot what a correction feels like. We forgot what it feels like to be punched. Losing money hurts. When you see a stock plunging like a falling rock it feels like your stomach has dropped with it. It’s sharp and fast. Others can’t sleep. We are very sensitive to losing money. We are emotional beings and we make decisions based on emotions. That’s when the subject of behavioral investing and psychology comes in. This time fear dominates and sometimes it translates into panic. And when panic takes over we do stupid things. “Long-term” investing goes out the window. To cut the pain investors click on the sell button. Funds have massive redemptions because investors demand their money which results in massive sales.

One reason why some people are freaking out more than others is because they don’t understand what’s in their portfolio. In good times the whole market goes up, even poorly understood momentum stocks (I bought company X because it will revolutionize the way we buy shoes). Holding sexy stocks provides good conversational material at a BBQ but it’s not usually good for the wallet. After all you don’t make friends talking about good old GE, that’s why the maker of Candy Crush is now a public company. Voilà the importance of investing in high quality businesses that you understand. Companies that can withstand a tsunami. Ask yourself if this crisis impacts the long term cash flows of the businesses I own? Did the fundamentals change? One trick that helps to stay mentally calm is to visualize the cash flows of the company you invested in. Can you picture the cycle of money going from the customers all the way down to net income and then the dividend. Can you see the cash coupons? When you invest in a bond it’s easy to see the coupon being distributed. Although it’s more complicated with a company, it helps a lot if you understand how the company makes money and what the drivers behind it are.

Tune Out the Noise and Stick to the Plan

“Everybody has a plan until they get punched in the mouth.” – Modern-day philosopher Mike Tyson

In general I’m not too crazy about financial advisors but there are a few good ones out there. But that’s material for another post. Contrary to the popular belief, a financial advisor doesn’t pick stocks for you (god bless). A good financial advisor makes a plan for you and makes sure you stick to it. That’s really what their job is. They need to prevent you from doing anything stupid. You shouldn’t abandon a carefully-constructed investment portfolio in favor of either panic or greed. Actually the plan set in place in calmer times is set up to capitalize on such periods of turmoil.

The financial media is not your friend. If the media preached the advice the financial advisor is giving you they would be out of business. In the next couple days or weeks the financial media will have a plethora of “market gurus” (fortune tellers) in the financial media hitting you with charts and numbers stating their case why the four horses of the apocalypse are coming. Forecasts such as, Dow Dropping to 5000 Starting This Year: Nenner, often hit an emotional nerve, such as anxiety, so investors naturally ask whether they should be worried. My advice is to ignore the fortune tellers. I don’t trust their crystal balls. There’s a joke in the industry regarding permanent bears (people who thinks the market will always decline and bring the apocalypse): “I’ve predicted 15 of the last 3 recessions”. You get the point. Plus, it says a lot about their characters when you try to make living telling people how to time the market.

Here’s the good news: The large majority of gurus are dead wrong. It’s all for show. It’s entertainment. Being loud and bold is their business. That’s how they come back on T.V. It’s not about being right. Being a colorful personality boosts ratings and as a result the network wants you back on. Who cares if you are wrong, nobody is keeping score. Why ruin a good game? It’s not CNBC’s job to protect listeners from bad things. CNBC’s goal is to make money and you make money by having more advertisements which is achieved by having more viewers. Colorful personalities equal entertainment and entertainment equal ratings and good ratings equal more money. And for the few that get a right call once in a while, it’s mostly due to luck, not an uncanny ability to see the future. No one is keeping these guys accountable for the forecasts they make. Here’s the plain and simple true: No one has any clues as to where the market is going and to pretend otherwise is simply madness. My advice: You have to tune these guys out. Their goal is to entertain you (or to scare the crap out of you).

The point is, as an investor, you shouldn’t ditch your financial plan because of some media or self-labeled “gurus” said something outrageous on T.V. If you keep watching they will have another guy on that will contradict everything. The secret about some of these guys is that they make more money off self-promotional strategies than investing ever did. How many fortune tellers are on the Forbes 500 list? Zero. How many economists? Zero. Do you think the world’s best investors are acting on these forecasts?

Opportunity

“Be fearful when others are greedy and greedy when others are fearful” – Warren Buffett

The markets irrationally could be your opportunity for big profit. That’s because falling prices create bargains. You have investors selling solid businesses at cheap prices. For more info on that I refer to Chapter 8 of The Intelligent Investor by Benjamin Graham where he introduced “Mr. Market”, an obliging fellow who shows up every day to either buy from you or sell to you, whichever you wish. The more manic-depressive the lad is, the greater the opportunities available to the investor.

I’m not saying to snap up shares just because they are beaten down. This is no different than selling because it went up. You need to do your research, look at the fundamentals, and figure out its valuation. You should take a private equity approach to valuing businesses. You should seek to buy businesses with a high margin of safety. Right now you should aim to capitalize on the mistakes many investors make based on human nature. Where impatience and emotions lead many to make rash decisions, I believe that a patient, disciplined approach allows you to remain rational throughout our process.

I don’t accept volatility as the definition of risk. It’s normal for prices to go down and have losses but what you don’t want is permanent capital loss. A permanent loss of capital occurs when a stock goes down because of worsening business operations, or its earnings power drops permanently and stays down for a very long time or even forever. That’s why it’s important to do your own homework before investing in a stock. If you find an excellent business at a decent price, these crashes will look like tiny blips over a 10-year period.

Conclusion

“You are your own worst enemy” – Brian Langis and a bunch of people

Stay calm. The worst thing you can do is to panic. Acting out on panic will cause more damage. What’s happening right now happened frequently in the past and will happen again in the future. A correction is normal and is ultimately healthy for a market because it removes some of the froth and speculation. If you can’t stand these kinds of fluctuations then the stock market is not for you and that’s ok. If you haven’t figured out your temperament, the stock market is a very expensive place to find out. Stick to the plan. Long-term investing also works in falling markets. It allows you to dollar cost average. For the long-term investor, a stock market correction is often a great time to pick up high-quality companies at an attractive valuation. What do you think Warren Buffett is doing right now?

TransForce: Time To Get Rolling

Reposted from Seeking Alpha
By Brian Langis

Summary

  • TransForce, Inc. is one of the largest logistics and transportation companies in North America and the leader in Canada.
  • The company generates strong, growing free cash flow. It’s actively repurchasing its shares.
  • Alain Bédard, the CEO, is a wise capital allocator.
  • TFI should benefit from the weak Canadian dollar and the growing U.S. economy. Exports in Quebec and Ontario have started to pickup.
  • TransForce fell 27% since management slightly lowered guidance.

TSX: TFI

U.S./OTC: TFIFF

TransForce, Inc. is primarily traded on the Toronto Stock Exchange under the sticker TFI (Editors’ note: with average daily volume of ~$CAD 6.5-7M)

Note: Dollar amounts are in Canadian $ unless mentioned otherwise. USD-CAD 1.3094 Price of 1 USD in CAD as of August 21, 2015.

TransForce, Inc. [TSX:TFI]; (OTCQX:TFIFF) is a company that I’ve been following for many years, and the recent drop in the stock price finally provided the entry point I was looking for.

TransForce is one of the largest logistics and transportation companies in North America and the leader in Canada, which was achieved mainly by acquisitions (it has acquired over 140 businesses since 1998). The company’s main operating segments include Package and Courier, Less-Than-Truckload (LTL), Truckload (TL), Waste Management as well as Logistics and Other Services.

Investors have been dumping TransForce mainly because management has lowered guidance due to economic concerns in Alberta and the lack of economic pickup in Ontario and Quebec. On top of that, the market is in a correction. Regarding the weak Canadian economy, when a currency devalues there’s usually a lag between the drop and a revival in exports. Latest data suggest that Ontario and Quebec are starting to see the benefits of the low dollar. Trade numbers from June 2015 suggested exports are up versus the same period in 2014. Exports are up 15.2% in Ontario, 11.8% in Quebec, and Canada as a whole is up 6.3%. Most of the increase in exports is led by sales in the U.S. which directly touch TFI.

For 2015, management now expects adjusted earnings per share to be in the range of $1.97-$2.12, down from its earlier projection of between $2.15 and $2.30. Revenues are revised down to $4.3b; adjusted EBITDA is revised down to $510m-$530 from $550; and free cash flow should exceed $300m. From the EPS guidance’s midpoint to midpoint, that’s an 8% revision downward. However, the market didn’t digest the revised forecast well. TransForce’s YTD return is down 17% and is off 27.4% from its 52-week high of $31.60.

TFI ChartTFI data by YCharts

Investment Thesis

TFI is a stock you should have on your buy list, and it’s now for sale at an attractive valuation. TransForce is a serial acquirer in the highly fragmented trucking industry and is currently taking a pause to digest some massive acquisitions in 2014. As it grows, the company looks for ways to cut costs and make its operations more efficient in a bid to boost margins.

TransForce is a catalyst-rich name led by Alain Bédard, Chairman and CEO, who has proven to be a wise capital allocator. TFI generates growing free cash flow; it distributes a growing dividend; it’s active on share repurchases; and it has near-term catalysts. The company is well positioned to take advantage of the weak Canadian dollar and a recovery in the Canadian economy when that day comes. After all, a weak CAD and a growing U.S. economy should stimulate imports from Canada. TFI gets approximately ~30% of its sale in the U.S. and there’s plenty of room for growth since the U.S. economy is continuing to expand and trucking companies have had to keep up with the ever-growing freight demand.

“If we want to be at C$5 billion, it’s going to have to be south of the border…For sure over the next few years our growth will be mostly in the U.S.”Alain Bédard in a Bloomberg phone interview in 2012

The average exchange rate used to convert TransForce’s business generated in U.S. dollars was $1.2297. Today, the USD/CAD is around $1.31, a 6.5% rise, which should have a positive impact of a few million on sales and EBITDA.

“The relatively healthier U.S. economy and weaker Canadian dollar should provide more favourable conditions to improve return on capital employed on both sides of the border.”Outlook in the Q2-2015 MD&A

Also, there are potential near-term catalysts. In the past, TFI has mentioned divesting its Truckload business and more recently its Waste Management business. The Truckload business is too capital intensive, and TFI prefers an asset-light business model. The Waste Management business with ~$195m in revenues in 2014 is a high-margin operation that could be sold to a strategic player in the medium term hence crystallizing its value (which is not being captured fully as part of TFI’s operations). The Truckload business is also being discussed to be a spin-off. Alain said we should expect some kind of an announcement before the end of 2015.

Other catalysts are potential acquisitions. Acquisitions are part of Bédard’s push to remake Canada’s largest trucker into a continent-wide company selling transport, logistics and energy services.

My valuation doesn’t take into consideration any spin-offs, acquisitions, or an economy recovery in Canada. If any of the scenarios mentioned occur, TransForce is worth north of my current valuation. In the short run, the company is worth $29.35 per share, which implies an upside of 27.9% excluding the dividend. While you wait, TFI distributes a growing $0.68 annual dividend per share at a yield of 2.9%, which sounds better than leaving your money in the bank.

You can read the rest of the article here.

Crisis = Opportunity

Smooth seas make poor sailors.
History

The Black Monday Ride

Wall Street

Black Monday

Market Opinion

This is what Jim Tisch, CEO of Loews Corp. (L), had to say on the market, back in May on the Q1 2015 Results Earnings Conference Call. It’s the smartest statement on the market I’ve read so far. Loews Corporation is a holding company with with interest in many sectors. You might be familiar with Loews hotels, which they 100% own.

“I think that, after all of these years of low interest rates and quantitative easing, what we have is markets, both fixed-income and equity markets, that are priced for perfection. When you look at companies that are auctioned in the private-equity world, what I would say is that 10x [EBITDA] is the new 6x.

And, yes, interest rates are low, but still it seems to me that even though you can finance at low rates, there just isn’t enough room for return for the equity holder at these kinds of valuations. So, my guess is that for the time being businesses look like they’re priced too high for us.

Now one of the things that I always remember is that the world is cyclical. And it’s easy to lose sight of that because we’re now in – firmly in year six of an upcycle for equity prices.

But at some point in time something will happen, people will lose all the confidence that they have and my guess is that opportunities will present itself. Like I said for offshore drilling, it could be a while and offshore drilling it’s the next several quarters in the market for businesses, it could be in the next several years.

But I’d rather be patient and get a good business at an attractive price rather than lose patience and buy a business at too higher price.”

– Jim Tisch, CEO of Loews Corp. Q1-2015 earning call.

I couldn’t agree more. It’s incredibly tough to find attractively priced opportunities in the current market.

And They Keep Bringing Him Back For More

Nenner-Veterans-July-2010-600x386
Publish Date: July 15, 2010 (Dow 10,359)

Charles Nenner is the brain behind the “Nenner Cycle”. He previously worked for Goldman Sachs and a number of other firms. He now has his own research center, named the Charles Nenner Research Center. His job is to look at his crystal ball and predict major movements in the stock market. The market call above was made 2010. The Dow has added almost 8,000 points since that prediction. That is one call but maybe his crystal ball was cloudy that day. He never claimed that he was ever wrong on a market call and continues to make outrageous predictions. Oh and he’s always on T.V. doing his fortune telling scaring the crap out of people. The media outlets are happy to host him since his crazy predictions drives ratings. If you like to be entertain you can also subscribe to his newsletter.

This goes right up there with this classic, Dow 36,000 (image below), published in 1999, shortly before the dot-com bubble burst, and predicted that the Dow would rise to 36,000 within a few years. By the way, as the cover suggest, it deserves to be on the same bookshelves with the work of Benjamin Graham, Peter Lynch, and Warren Buffett. I wonder how do they feel about having their name on that book. You can find it on sale for $0.01 a copy. It’s too bad we don’t have the penny anymore in Canada.

Dow 36000

The World By Market Capitalization

1- America
2- Japan
3- United-Kingdom

Except for the U.S., the order doesn’t exactly follow the size of their economy. The reason China is not up there is because there’s still work to do to develop their capital market, which is relatively young.
The World by Market Capitalization

The Siege of Mecca

The Grand Mosque in Mecca
The Grand Mosque in Mecca

Fourteen years following the events of 9-11 and the invasion of two Muslim countries the world is not safer. The threat of terrorism is as high as ever and ISIS is now a household name. Today’s parents have to check their kid’s youtube history to make sure they are not watching ISIS propaganda videos. Oh the things you didn’t have to worry when al-Qaeda was #1 on the most evil chart. I often wonder how did it get to bad?  In the Western world history starts on 9-11. That’s the event where the story starts. Yet, what is largely under reported are the events that lead to 9-11 and the current war on terror.  I remember 9-11 like it was yesterday and all I could ask was “why”. The government’s answer and the one the media paraded was overly simplistic: “they are evil people and they hate us for our freedom.” Really? That’s the answer to justify why a bunch of men would hijack a plane and crash it in a tower, killing themselves along the way (there’s something about a bunch of virgins in Muslim heaven but that’s for another post). Yaroslav Trofimov’s book, The Siege of Mecca, delve into a widely ignored but major event that is largely responsible for the state of today Islamic terror. Where did it really all begin?

The seeds to 9-11 were planted on November 20, 1979, when a group of Islamic radicals lead by Juhayman al Uteybi invaded the Grand Mosque in Mecca. In the West the event was barely noticed and was considered an isolated incident. Plus western media had their plate full with the Iranian hostage crisis. A closer examination of the Grand Mosque seizure is in large part responsible for the modern day Islamic terrorists we live in. The seizure was basically an uprising against the Saudi regime which at the time was slowly deviating away from old school Wahhabism, a branch of Sunni Islam that demanded a return to a pure and harsh faith of the kind once practiced by Prophet Mohammed and his early companions. King Faisal was trying to slowly modernize Saudi Arabia. He removed some of the more anachronistic Wahhabi structures such as outlawing slavery in 1962, he had plan to introduce education for women, and he created Saudi television, a move that cost his life. Plus Saudi Arabia discovered they had a lot of oil and with it came unimagined wealth. Americans are addicted to oil and the Saudis royal family got addicted to American money.

Juhayman and his group didn’t like the direction Saudi Arabia was heading towards and wanted the country to go back to its old Wahhabi ways.  So they took over the Grand Mosque in an uprising to get their message across. We know today that his plan didn’t go down as planned. The Saudi government’s tackling of Juhayman on its holiest shrine showed cruel incompetence and arrogance. The royal family’s image was sullied and many Muslims around the world were repulsed by the carnage in Mecca. Among those disgusted is the young Osama Bin Laden which over the years has drifted toward open opposition to the House of Saud and its American backers. Juhayman might be history but his ideology lived on and mutated with time into al-Qaeda’s death cult. After the attack on the mosque, fearing that more attacks could hit the kingdom which would lead to the collapse of the House of Saud, Saudia Arabia reverted back to its old ways.

The book also explains many geopolitical events that resulted from the Grand Mosque seizure, such as American embassy burning and Russia’s invasion of Afghanistan. After Russia’s invasion the gates of jihad were open. The royal family was funding mosques around the world to recruit jihadist to fight the Russian. Saudi Arabia was afraid of a possible Russian invasion and they hated communism. One of the person to join the jihad is Osama Bin Laden. He was a protégé of Prince Turki, the head of Saudi Arabia’s intelligence agency (he resigned on September 1, 2001…bizarre timing). Prince Turki working with the CIA closely supervised Osama’s effort. The Saudis were showering Afghan warlords who agreed to abide by Wahhibi strictures, which we now know became the Taliban.

I know I haven’t made the full link between the Grand Mosque seizure and 9-11, that’s why there 255 pages to read. If you like to understand things you won’t be disappointed. This is an excellent book and I would say it’s a must read if you want to understand ISIS.

NTelos Holdings – Where There is Smoke There is Fire

It wasn’t even a month ago when I published my research article on NTelos Holdings (NTLS), I Found NTELOS In The Liquidation Bin: A Misplaced Stock With 30%+ Upside. Yesterday August 10th, it was announced that NTELOS was being acquired by Shenandoah Telecommunications (SHEN), for $9.25 a share. My “30%” uspside instantly turned into a “95%” home run. I wish I could tell you I have a crystal ball or a voodoo doll telling me what to do and I assure you that I have none of that. I did an analysis and luck was on my side.

Shentel acquiring NTELOS shouldn’t come as a surprise. Back in May there were rumors that Shentel had an agreement to buy NTLS. After nothing happened NTLS’s stock collapsed to a depressing level that didn’t reflect the true value of NTELOS. That’s when it got really interesting to invest in NTELOS, it was an opportunity too good too pass, even if the takeover rumor was nothing.

Announcement link
Conference call transcript

The transaction is expected to close in early 2016.  The $586 million implies a 5.6x multiple of NTELOS management estimate 2015 EBITDA guidance.  I think they could have got more, a minimum of 6x times EBITDA at least. Here’s the offer:

Net Transactions Consideration
$ in Millions
nTelos Equity $208
Net Debt (as of June 30, 2015) $378
Total nTelos Enterprise Value $586
Less:
Reduction in future fees, discounted $225
Accounts Receivable (nTelos) $57
Tax Expense ($26)
Net Payments $256
Net Consideration $330

Below is the takeover segment taken from my article on NTELOS. Full Article Link


Takeover Rumors

NTLS plays in a big boy league that has much greater financial resources, marketing resources, brand awareness, and customer bases. The competition is intense as carriers focus on taking market share and spectrum from competitors. The trend is ongoing with AT&T acquiring Leap, T-Mobile acquiring MetroPCS, and Softbank’s acquisition of a controlling stake in Sprint. The big four nationwide operators manage more than 95% of the mobile connections in the country, while regional players are left with crumbs. The big four operators would set the technology and the device agendas, and the smaller carriers would follow their lead. The regional and rural operators would build the same networks in the country’s surrounding areas, which the big operators would use to extend their footprints through roaming agreements. The small operators could then get access to the same devices used by their larger counterparts. That’s Sprint’s strategy. Or to save the hassle a big operator just buys the little guys off like AT&T did. What are you buying? Subscribers, the wholesale business, the spectrum, and the cell towers. Spectrum is pretty much the oxygen of the wireless industry.

NTLS is occasionally subject to takeover rumors with various names thrown around such as Dish (NASDAQ:DISH), Sprint and others. I want to reiterate that the buzz is pure speculation and none of this has ever been confirmed by the parties involved. With that out of the way, here’s the latest takeover rumor:

The latest rumor was printed on May 13, 2015, by The Financial Times’ Alphaville and revealed that Shenandoah Telecommunications has been putting together a $200m offer for NTLS, which is $9.25 per share (if it’s true the actual offer is worth $205,316,904 = $9.25*22,196,422 shares). Compared to today’s NTLS price, that represents an 85% premium but near 50% premium at the time of the rumor. Seeking Alpha also republished it. The FT Alphaville has labeled the rumor “raw,” which is information that has not been tested through traditional journalistic channels (PRs etc.) So the story might be complete rubbish. All the parties involved declined to comment. However, NTELOS’s CEO Rodney Dir said that the company’s board is focused on improving shareholder value and potential strategic opportunities. Does it sound like double speak for “yes, we are open to proposals”? Below is a calculation of SHEN’s speculative offer.

Whether it’s true or not, SHEN is a “natural buyer” and a takeover makes sense. The two companies have quite a bit of overlap in Virginia, West Virginia, and Maryland. SHEN is bigger with a market cap of ~$824m and with 438,861 wireless subscribers vs. 290,100 for NTELOS, both Q1-2015 numbers. SHEN is slightly bigger, commands a richer valuation because it’s more profitable, less levered, and pays a dividend. SHEN has the financial muscle to afford NTLS. SHEN buying NTLS would eliminate a close competitor, almost double the size of SHEN, and it adds scale benefits and synergies. NTELOS would also make an interesting target because it’s adding customers and is steadily growing in the Western Markets. It’s much harder to command a higher price when your subscriber base is declining. NTELOS has a good base in the Western Markets unlike what it had in the Eastern Markets, which suffered from the lack of scale and intense competition. I discovered an interesting non-material observation: NTELOS’s headquarters is on Shenandoah Village Drive.

Already mentioned in one of the segments above, another major piece of influence is private equity firm Quadrangle Capital Partners LP (QCP) who owns approximately 4,180,837 shares or 18.84% of NTELOS, or 6.90% of their stock’s portfolio (more detail in the valuation segment below). This is a paragraph of importance on page 22 of the 2014 10-K:

Quadrangle continues to have significant influence over our business and could delay, deter or prevent a change of control, change in management or business combination that may not be beneficial to our stockholders and as a result, may depress the market price of our stock.

As of December 31, 2014, Quadrangle beneficially owned approximately 4.2 million shares of our common stock, or approximately 20% of our outstanding common stock. In addition, three of the eight directors that serve on our board of directors are representatives or designees of Quadrangle. By virtue of such stock ownership and representation on the board of directors, including a representative of Quadrangle being Chairman of the Board of Directors, Quadrangle continues to have the ability to influence corporate and management policies and all matters submitted to our stockholders, including the election of the directors, and to exercise significant control over our business, policies and affairs. Quadrangle’s interests as a stockholder may not always coincide with the interests of other stockholders. Additionally, such concentration of voting power could have the effect of delaying, deterring or preventing a change of control, change in management or business combination that might otherwise be beneficial to our stockholders and, as a result, may depress the market price of our stock.

To summarize the important pieces, QCP owns a chunk of NTLS and they control the board. NTLS’s Chairman is QCP’s President and Managing Principal (see bio link).

This is a table of the top 8 U.S. wireless carriers during Q1-2015. The table hasn’t adjusted for NTELOS exiting the Eastern Markets. If you look at the ranking, you have the top 4 and it just falls off. There’s no middle. U.S. Cellular, with its 4.7m subscribers, is a fraction of 4th place Sprint with its 56.7m subscribers. NTELOS has almost 300,000 customers in the Western Market, that’s nothing compared to the 500,000 plus that Verizon (NYSE:VZ) added last quarter. Even Shentel or anybody above on that list could swallow NTELOS without blinking.