Lowell - comments

The deconsolidation of Wolf IV is now visibly cascading through the financials, but on a net basis the ultimate change in cash was on par with model, despite investments running ahead of Lowell’s somewhat challenged replacement rate. We are curious about relatively high costs to collect vs a lower-than-expected expense line. In the end, however, none of it changes our thesis. The company is in the second of likely three restructurings, and the collections engine is shrinking. We see no fundamental reasons to hold the bonds.