Tag Archives: IRDM

One more time: CS on Maint. Capex (IRDM)



A reader kindly shared:


Also, to see cash flow analysis of different industries to START your analysis go to: http://scheller.gatech.edu/centers-initiatives/financial-analysis-lab/

Now on to Iridium (IRDM)

You just got hired as a junior analyst for a hedge fund. Your boss calls you in and asks for your opinion on whether he should buy IRDM.  He heard about it from a hedgie friend in New York who heard about it from another hedgie friend in New York  who heard about it from…….you get the picture–a daisy chain of independent-thinkers.

Your boss slaps this on your desk:


IRDM_VL Dec 2014   Check this first.



You remember something about Buffett saying that the tooth fairy doesn’t pay for capex?  What will you tell your boss this afternoon?

If you want more clues (after trying hard) go to the search box on this blog and type in IRDM–follow the links.

Good luck!

PS: I will resend the book folder to new students and I will send value vault folders to the folks who have been asking for the past three weeks. I try only to check email once a day and I group the various email requests over time.

I will be next focusing on ROIC for Chapter Four in Deep Value because we already covered EBITDA and its use and ABUSE.  And EV/EBITDA multiples. Remember that multiples are simply a short-hand for cost of capital.  I remember when Blockbuster (US Video Chain) looked cheap in an EV/EBITDA analysis (from a broker report) but Blockbuster was being dis-intermediated by Netflix and planned to reinvest in its stores to sell popcorn and toys along with DVDs. How do you think that turned out?   Rear-view looking at past multiples may mean being entombed in a value trap.  When I heard of Blockbuster’s plan, I thought of entering a mule in a horse race–what are my chances?

A Blockbuster Video store - File / Photo: Justin Sullivan/Getty Images








Have faith but don’t be overconfident! Have a great weekend from sub-zero New England.

Review of MCX and Past Case Study (IRDM); Arguing Clinic

Does the tooth fairy pay for capex–Warren Buffett

IRDM Maintenance Capital Expenditures Case Study

Time to check in on IRDM. Last post:http://wp.me/p2OaYY-zt

A hedge fund made a case for investing in IRDM’s growth, but we made the case that true capital expenditures were not being accounted for and thus true owner earnings were being overstated.  I repeat this case since the concept of true MCX is so important.  Look at the lost opportunity cost for this hedge fund.

A Thorough Discussion of MCX_Case Study and Capital Theory

IRDM Presentation and then Tilson on IRDM 4_11

Time to attend an argument Clinic

Case Study on Capital Expenditures (MCX)

Here’s to our wives and girlfriends… may they never meet! –Groucho Marx

MCX and Iridium Case Study

Our first discussion of Maintenance Capital Expenditures (“MCX”) occurred here: http://wp.me/p1PgpH-6t

One method of learning is to EXHAUSTIVELY analyze and read about a subject so we can master the topic and understand the principles and subtleties in applying those principles.

We are focused on Return on Invested Capital which has been defined one way as Operating Earnings (Earnings before Interest Expense and Taxes, EBIT) or better yet, (Earnings before Interest Expense, Taxes and Depreciation & Amortization, “EBITDA” – MCX) divided by tangible capital or (Net Working Capital + Net Property, Plant and Equipment). We have covered EBITDA thoroughly in a 36 page discussion here: http://www.scribd.com/doc/66843869/Placing-EBITDA-Into-Perspective.

Now we review MCX as part of the (EBITDA – MCX) calculation.

The link below has a PDF that further analyzes how to calculate one aspect of Return on Invested Capital–(EBITDA – MCX) divided by Tangible Capital.

Also, this case study will be placed in the VALUE VAULT

The Bridge of Death

If you do not master the above case study then as investors you will not be able to cross the Bridge of Death:http://www.youtube.com/watch?v=_7iXw9zZrLo&feature=related