here are my rough thoughts. yesterday's move was quite possibly...

here are my rough thoughts. yesterday's move was quite possibly the most bizarre overreaction to a fairly innocuous, even if disappointing, set of announcements, that basically didn't change any of the facts relevant here. it seems most of the consternation is because the announcement gave the impression that PCSIL would be retained, or otherwise wouldnt be allowed to be shut down. i think that is completely erroneous. in fact it seems like PCSIL will be wound down/liquidated/shut, finally, probably very soon. i agree that the announcement was not worded very clearly - but keep in mind only on Nov 28 (the day before the AGM) did EML gain approval to reconstitute the PCSIL board - up until then, they had been laboring under the legacy board (irish bureaucrats with sinecures and no intention to move fast and risk their salaries) - without any of the EML parent directors on the PCSIL board! however that has now been changed, so clearly they can do what they want with PCSIL and it seems to me the most obvious thing is simply to wind it down in an orderly fashion.

some were also freaked out by the $20mm negative FCF (higher than expected) at PCSIL and the statement that this would continue 'for the mid-term'. that to me seems like signaling to the CBI - that this business is irredeemable and thus must be shut down - rather than any claim to maintain the business. keep in mind also that signifciant shareholders are on the board, and calling the shots - Alta Fox, etc - these guys are clearly sophisticated and would not maintain such a money-losing entity in perpetuity, it just makes no sense.

meanwhile the guidance given for 2024 - $55mm EBITDA - is, when you adjust for the negative drag at PCSIL, basically in line versus where I expected (and well ahead of street consensus). I expect it proves conservative as well. and Sentennial may well be sold, prob not in the next 3mos but I would argue within 1H of 2024 we will likely have that disposed of too - given they made it clear this is viewed as non-core.

all in all - you have the thesis still on track, if slightly delayed and with a bit of muddied communication, driven largely by the need to pacify a sensitive, touchy regulator. but my view of fair value - $1.6 or so - didnt really change much after this, maybe down 10c or so on higher costs. given the equity traded as low as mid 70s on essentially the same set of facts, and, crucially, my strong conviction the steps being taken to realize SoTP value are still very much being pursued, this seems a very fat pitch indeed.

i bought over 2mm shares yesterday at prices in the 75-80 range. i expect, at a minimum, this to trade back to 1.1-1.2 range on the announcement of a formal liquidation/exit from PCSIL, in the coming months. realistically with this new board, it really could come imminently, maybe next month? I am unsure but really this could snap right back. if this announcement is not forthcoming by say early 2Q, I will admit defeat on this entire read and cave and move on.

DYODD.