constructive
-
Posts
975 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by constructive
-
-
Short positions need to be hedged or theoretically they can completely wipe out your portfolio.
When I say short positions I also mean options as well as stock.
Obviously large single name short stock positions (a la Ackman) are not an effective hedge against large single name long stock positions. That wasn't my point at all.
I'm sure you know as well as anyone what hedges are. If someone is long AMZN, holding cash or holding WMT are not hedges in my opinion. Some people seem to think they are.
-
Yes definitely. You always hear managers saying how they use "this stock as a proxy for cash", and often it's been Berkshire. I think it's an absurd idea using any stock as cash, but I would say if you were going to do that, then Fairfax is probably a better proxy than Berkshire.
I agree.
But I find it even more puzzling when people say cash or another defensive asset is "the ultimate hedge" or something like that. Nope, short positions are the ultimate hedge.
-
Warlords in Manchuria?
-
If you found an insurer that would sell you schmuck insurance, I wonder how large premiums would be for Sardar versus Carl.
-
Is CRM not a good example? They are making reckless acquisitions, so eventually they will go really bad.
But assume they can issue shares at such extreme multiples and have our champ ERICOPOLY on the board to manage all the acquisitions, won't you agree that over the past few years, their IV would be growing?
My point is, when these kinds of ridiculous companies trade at 100x IV, and they issue shares to acquire companies trading at 0.5x IV, doesn't this increase their own IV significantly?
Realistically I think CRM is more like 5x IV, and their acquisitions are more like 2-3x IV. Not as much value creation, and the differential could dry up quickly.
-
My favorite part was their discovery that they owned Barbados Power & Light.
-
Macro tourist? Bass has run a large, successful macro hedge fund for the last 7 years.
-
It's reasonable to assume that there were bids on the table then. Shareholders got details on none of those bids. So, the material fact assumption on every bid does not seem to hold.
I think it's reasonable to assume the opposite. If PRXI had multiple bids in hand, they probably would have disclosed them and wouldn't have extended bidding.
Referring to additional potential bidders doesn't imply that any actual bidders exist. They might have had 3 potential bidders, and then added 2 more potential bidders.
-
I'd buy company A. But at around $15 per B share I'd buy both and $10 per B share I'd only buy B.
A will primary generate internal gains, while B will primarily generate external gains, followed by your own reinvestment. It seems more unpredictable, therefore a discount is required.
-
You can screen for high yield bonds and preferreds.
I don't think the high yield asset class is attractively priced right now, but there are always some opportunities here and there.
-
Mohegan Tribal Gaming Authority. Looks like there are several bond issues outstanding.
http://www.fructivore.com/2010/08/place-your-bets-on-the-mohegan-tribal-gaming-authority/
-
I haven't ever felt the need to hedge currency exposure.
But on the other hand, I might look for more Australian stocks if I wasn't concerned about the AUD declining. Under the right circumstance I would look at hedging.
-
Apple
Genworth
Symetra
DirecTV
Teva Pharmaceutical
Apollo Global
Intel
Corning
EMC
Baidu
And smaller long and short positions.
-
Corker saying that the bill would "ensure that taxpayers get all of the upside that comes with the risks they were asked to assume in 2008" seems unexpectedly strong, even compared to recent articles on the same legislation. Bad news for common and preferred in my opinion.
-
Philosophically I'm not convinced that allowing patents to be divorced from commercialization is the best way for society to encourage productive inventions. I wonder if there are any countries that take a different approach.
-
Are there any material cost savings associated with keeping Freddie and Fannie alive versus transferring thier functions to new entities which can raise equity capital to act as a buffer for gov't support?
Packer
Yes, I think Fannie and Freddie's scale, established business, financial structures, relationships etc. give them a large cost advantage over any current or new entrant.
But no matter how much financial sense it makes to recapitalize the GSEs and return them to business as usual (instead of winding them down), it doesn't matter if Treasury, FHFA and Congress have opposing political priorities.
-
Maximizing ROI is probably not Treasury's primary goal here. They aren't capital or time constrained so there is no rush to do anything. Judging by the preferred share agreement, their primary goal is to radically reduce the size of the GSEs. Recapitalizing and turning the companies back to the public markets doesn't support that.
-
Argentine banks look good on paper but there are many problems. ROE is much less impressive once you realize they have 10 to 15% (underreported) inflation over the last few years. The government has tight currency controls and radically increased capital requirements, to stop the banks from paying dividends. Worst of all Argentina has a long history of sovereign default and confiscatory nationalizations.
http://seekingalpha.com/article/477871-argentina-on-the-brink-what-is-the-real-investment-risk
-
Symetra Financial Holdings (SYA)
- it's an American insurance company
- 0.46x P/B , 9x P/E
- 1.65B is the price (market cap) , Equity is 3.6 billion
- steady earnings with no deficits as far back as 2005
- huge book value growth representing something like 1200% growth in 5 years
- good Returns on Equity (definitely enticing at half of book)
- dividend yield of 2.1% (interesting)
- minimal debt (close to half a billion in long term debt)
- I think the investment portfolio is/was run by value investors I don't know yet
- what pulled me in ? White Mountain insurance & General RE each own 14% (20% consolidated for WTM), what made me look a bit closer is that WTM has warrants in Symetra that are exercisable at $11.49 (the stock is currently at $14 as of Friday). And they expire August 2014. WTM currently owns 17 million shares and has warrants to buy another 9 million shares and there are 138 million shares outstanding - I think WTM is going to acquire Symetra (and no I'm not betting on this idea but rather the fundamentals and pricing of the company)
I own shares of SYA. Here is a good thread on them: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sya-symetra-financial/ The corporate presentations also provide good background: http://investors.symetra.com/phoenix.zhtml?c=213723&p=irol-presentations
Recheck your source, because they haven't grown book value 1200% in the last 5 years.
SYA's ROE has been unsatisfactory the last few years (although still adequate to support the valuation in my opinion). ROEs are generally depressed in the current low interest rate environment (especially life/health insurers). They have put up decent results compared to other insurers, but their valuation is much lower.
You may be right that WTM wants to buy more. SYA also has a 10M share repurchase plan. In my opinion they should be prioritizing buybacks above growth and dividends, but that's not the case.
-
Correct, this is different from AIG/BAC.
Treasury changed from getting dividend to getting anything above "A-L-buffer" to prevent the circular flow of funds (ie borrowing from treasury to pay them).
Once the loan is paid out in full, what legal/moral argument would they have to continue to get (usurp) all income of a private enterprise?
In 10-K, the covenant says
Covenants
The senior preferred stock purchase agreement, as amended, provides that, until the senior preferred stock is repaid or
redeemed in full, we may not, without the prior written consent of Treasury:
---
--Terminate the conservatorship
- Enter into a corporate reorganization, recapitalization, merger, acquisition or similar event; or
Also
Termination Provisions
The senior preferred stock purchase agreement provides that Treasury’s funding commitment will terminate under any the
following circumstances: (1) the completion of our liquidation and fulfillment of Treasury’s obligations under its funding
commitment at that time, (2) the payment in full of, or reasonable provision for, all of our liabilities (whether or not
contingent, including mortgage guaranty obligations),
The treasury's stranglehold may loosen once they are paid in full
Morality is not an investable thesis.
"Payment in full of all of our liabilities" means liquidation of the company and paying off $3.2 trillion in liabilities. It doesn't mean that anything happens once they pay dividends equal to the face value of the preferred stake.
Their is currently no mechanism for Fannie and Freddie to repay the preferred.
-
Berkowitz is betting that dividend on Common preferred will be restored and Preferred will trade at Par.
The questions if that will Treasury after getting their money back still punish common preferred?
We know Fannie will be earning lot of money even in run off mode.
Will govt's exit in Fannie take AIG route or some other form.
Even if the Govt. does not get out of Fannie, govt. will face pressure to restore dividend to common preferred after they have got their money back.
No, obviously the situation is nothing like AIG or BAC. Fannie and Freddie are in conservatorship and are winding down. The government owns senior preferred shares in Fannie and Freddie, which currently hold 100% of economic value.
It's possible that they will decide to recapitalize, and Treasury will give up the senior preferred for cash. But how would that happen? Treasury and FHFA agreed on the current approach which gives all profits to Treasury, and no value left for public shareholders. Do you think Treasury will change their mind and give money away to hedge funds, just because they asked for it? If not, do you think both houses of Congress can agree on that?
-
And of course, I feel sorry for the thousands of retail investors who will surely lose money on these, no matter what the outcome.
-
I don't mind honest speculation on these, but Berkowitz irritates me. The Federal Government doesn't need any of his "help" to recapitalize, or capitalize new companies. He's really just asking for a handout.
-
Most of you are missing the entire thrust of Buy and Hold:
If you buy an equity today, that consistently pays a growing dividend over time, three things will happen. (1) The cash yield (Dividend/Purchase Price) will grow over time (2) Inflation will maintain your purchasing power by increasing the share price, & your dividend (3) The longer you keep the equity, the more reliable (1) and (2). Essentially, no think risk management.
If you buy a dividend paying XYZ at age 20. It is highly likely that by age 60 (40 year holding period) your cash yield on XYZ will be so high that it repays the investment every 1-2 years, you will have a cash flow that you can live off, and an investment worth many times what you paid for it - if you ever need to sell. Zero need for a financial adviser, & you would essentially eliminate most of today's services provided by the wealth management industry.
Moat, management, etc is just the DD necessary to assure yourself that XYZ is probably still going to be around, and paying a growing dividend, over the planned holding period.
SD
What percent of stocks beat the market over 40 years?
You have to be in the top 10% of investors to apply a strategy that selects the top 10% of stocks. People are not born knowing how to select good dividend growth companies, they have to learn.
Shoppers Drug Mart
in General Discussion
Posted
What do you guys think of Jean Coutu? Hitting new highs, but still seems cheap at ~6.3 EV/EBITDA. They've been reducing their stake in Rite Aid.
http://markets.ft.com/research/Markets/Tearsheets/Summary?s=PJC.A:TOR
http://www.benzinga.com/news/13/06/3709724/the-jean-coutu-group-announces-sale-of-40-5m-rite-aid-shares-remaining-stake-equa