tag:blogger.com,1999:blog-2080506270244832638.post6140271744553986007..comments2024-03-28T07:17:13.573-05:00Comments on Clark Street Value: Wyndham Worldwide: Hotel Spin from Timeshare BusinessMDChttp://www.blogger.com/profile/10679835609782815537noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-2080506270244832638.post-64141807067116295212018-05-31T08:39:02.315-05:002018-05-31T08:39:02.315-05:00Right. Kind of like excluding Ford's financia...Right. Kind of like excluding Ford's financial debt used to securitize auto loans.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-61442519965021090722018-05-30T16:22:12.574-05:002018-05-30T16:22:12.574-05:00MDC - thanks for your great work. On the VIE debt,...MDC - thanks for your great work. On the VIE debt, are you excluding as its debt that has been securitized and so is essentially off WYND's books? Just want to make sure I understand.Anonymoushttps://www.blogger.com/profile/10156485870940059954noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-33106842860801386892018-05-15T10:30:35.672-05:002018-05-15T10:30:35.672-05:00It wasn’t my idea, my co-host suggested it, but th...It wasn’t my idea, my co-host suggested it, but the overall thesis relies on Dan Lee as the CEO. He’s an industry veteran that writes shareholder friendly sounding letters and has experience developing casinos, seems like a boom and bust kind of guy. I’m neutral on it, doesn’t seem particularly cheap to me unless you’re bullish on their CO development opportunity.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-28190313835570499252018-05-10T13:34:51.056-05:002018-05-10T13:34:51.056-05:00whats the investment thesis for FLL? I saw you arr...whats the investment thesis for FLL? I saw you arranged a meeting for itAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-22628098456550378262018-03-22T08:19:30.211-05:002018-03-22T08:19:30.211-05:00Thanks -- I did catch a mistake in my math around ...Thanks -- I did catch a mistake in my math around the net debt, come closer to your numbers and updated my valuation on the follow up post, getting something closer to $140 using 11.5x for the parent and 15x for the spinoff.<br /><br />The timeshare companies did get crushed in the recession and likely would again, but maybe not *quite* as bad given they've fundamentally changed their model (moving asset lite on the VOI sales and having more of their revenue come from cost plus management contracts).<br /><br />Sizing - It's a midsized position for me, pretty much right in the middle, as I mentioned above, sort of hoping there's more to do after the spinoff and one side trades cheaper than it should.<br /><br />Thanks again.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-69170080981862085942018-03-21T16:30:30.550-05:002018-03-21T16:30:30.550-05:00MDC, thanks for your response. I looked a little c...MDC, thanks for your response. I looked a little closer at the IR materials. It seems the net debt on Destinations will be $3bn. Still, in my view, it doesn't change the upside too much because it seems you've used conservative multiples for Hotels. If I use 16x (I know this is a VALUE blog... but that's where these things are trading), I get $150 total, $75 apiece (using 11x on Destinations). I'm still just only casually looking at this, so I haven't done a deep dive into the operating fundamentals, but does it bother you that Hotels RevPAR has not budged in 5 years, appears to be kind of flat? This would mean the "growth" is dependent on new construction and conversions. Also, it seems their margins will never be like those of MAR or HLT because they are pulling royalties off fundamentally lower revenue hotels, whereas the Hotel segment cost structure is not variable with revenue. Yet, there might be some room for improvement seeing as Choice is higher. The other item is having to hold Destinations until it re-rates, which could be some time. Hopefully, no recession in that time, because in 2009, these consumer-credit-based, non-discretionary, big-ticket item sellers were all down 70-90%! But we'll never know when a recession comes and the discount seems reasonable to give it a shot. With that in mind, how do you think about sizing this?Adjusted Earningshttps://www.blogger.com/profile/05941312147939872649noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-63113108250415510772018-03-20T17:17:04.338-05:002018-03-20T17:17:04.338-05:00Yes, I’m netting the European sale proceeds agains...Yes, I’m netting the European sale proceeds against the LQ debt. I should have discounted it for taxes, their press release says they expect to pay less than 15% of the proceeds. Might change things a dollar or two, but then you’d expect some cash build since 12/31 too. Directionally I hope I’m still close enough?MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-91138591006561266162018-03-20T16:48:34.181-05:002018-03-20T16:48:34.181-05:00Anonymous, yes, but the total (across both compani...Anonymous, yes, but the total (across both companies) net debt number in that post appears to be the same $3,789. My guess is that he's offsetting LQ debt with the proceeds to be received for EUR, etc. But I'm not sure of the tax basis there and, hence, the proceeds. Maybe management has talked about this somewhere, but since I just started looking, I have not seen it yet.Adjusted Earningshttps://www.blogger.com/profile/05941312147939872649noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-86572297333135476132018-03-20T16:41:48.173-05:002018-03-20T16:41:48.173-05:00http://clarkstreetvalue.blogspot.com/2018/03/wyndh...http://clarkstreetvalue.blogspot.com/2018/03/wyndham-hotels-resorts-form-10-notes.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-4001570856130322292018-03-20T16:29:06.604-05:002018-03-20T16:29:06.604-05:00Perhaps you are offsetting that with the European ...Perhaps you are offsetting that with the European Vacations Rental proceeds and the net position in the securitizations?Adjusted Earningshttps://www.blogger.com/profile/05941312147939872649noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-66918287606521218842018-03-20T16:25:13.190-05:002018-03-20T16:25:13.190-05:00MDC, I might be missing something here, but have y...MDC, I might be missing something here, but have you included the $2 bn of additional net debt (for LQ) in your SOTP? The way I'm doing it is approx. $4 bn of net debt as of 12/31 according to the 10-K (excl. VIE) plus the additional $2 bn for LQ for a total of $6 bn pro forma. I just started looking at this, so maybe I'm missing something. Please let me know what you think.Adjusted Earningshttps://www.blogger.com/profile/05941312147939872649noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-57928968674445170212018-03-19T12:20:53.670-05:002018-03-19T12:20:53.670-05:00I did actually buy calls last week as well, here I...I did actually buy calls last week as well, here I just bought the Aug $115 for now, but you might be right that LEAPs could be better. I do like the setup that both companies should trade at or above the current valuation, might be a smoother path to valuation realization that way? Not sure, but I think calls could work here too.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-11468942656822096772018-03-19T06:22:52.748-05:002018-03-19T06:22:52.748-05:00Just curious: are you considering establishing a L...Just curious: are you considering establishing a LEAPS call option on WYN, like you did<br />successfully with HLT?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-31387066550854838792018-03-15T13:13:40.011-05:002018-03-15T13:13:40.011-05:00Yes, I'm excluding the VIE debt.Yes, I'm excluding the VIE debt.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-86527435581400287532018-03-15T12:48:03.366-05:002018-03-15T12:48:03.366-05:00Actually, no, recent borrowings wouldn't be ma...Actually, no, recent borrowings wouldn't be material enough to lift those multiples thus. I imagine for net debt figures, you've excluded securitized financing via VIEs? Ben's Jaminhttps://www.blogger.com/profile/01036316291484037538noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-20449283760235427892018-03-15T12:37:46.173-05:002018-03-15T12:37:46.173-05:00Fwiw timeshare comps are trading even higher now o...Fwiw timeshare comps are trading even higher now on an EV/EBITDA basis (I think some of the net debt numbers are a few quarters old) given recent increased leverage. ILG's at 14.3x; Marriott Vacations 14x; Hilton Grand Vacations 11.7x (using $471M FY18E); Bluegreen Vacations 11.7x. Nonetheless, using the lagged multiples may be quite appropriate given the late-cycle risks you mention. Ben's Jaminhttps://www.blogger.com/profile/01036316291484037538noreply@blogger.com