Myth465

My analysis is pretty bare bones. I am comfortable owning FFH at below 1.3 - 1.5 BV. If its above BV then I would want decent and consistent underwriting profits and a decent basket of undervalued securities / or an overall undervalued market. A hard market also would be desirable above BV. At much more then that then I will look to sell and buy back around or under BV. Under Book seems like a no brainier especially if you can see what they are investing in and review their FI yield.

What are some of the basic Concepts if you dont mind me asking.

http://www.wsw.com/webcast/naptp2/evep/ Very interesting presentation. I recommend it for thoughts on the gas markets.

Oil is more complex but, its fundamentals are easier to see. The catalyst is there and easy to see is what I meant. I dont know what will drive gas prices up. Here is a summary of a call I am about to listen to. Its a presentation by the CEO of EVEP, this was taken from a Yahoo Board and I haven't confirmed it yet so ... The info relating to EVEP is all true, I will comment on the comments soon. Walker was candid and interesting as always: - Gas will be in the "pennies" in the next few weeks! - EVEP is 90% hedged, benefit from gas going down. - Never seen such disparity in gas price forecast going forward. - Comfortable now with debt, will not rise to levels seen earlier this year. Prior year acquisitions were "a mistake". - Currently selling at a discount to peers, doesn't keep him up at night. - Won't see any drop downs right now given markets, but EVEP should participate in EV acquisitions. EV is being very aggressive right now. - Drilling costs coming down radically, expect next wells could be under $2M, from $3.8M last year. - Chalk wells have been paying out in months, rather than years. He was critical of initial wells there by another company, said it shows he shouldn't be involved in drilling decisions. - About to announce a Marcellus deal. - Just about fully hedged in oil through 2014. - Hedges dropping off in price after 2012, but planning on making acquisitions to maintain distributions after 2012. So, good stuff going forward for EVEP, but my goodness, gas prices are about to crater into the ground if Walker is right. What will that do to MLP prices? Keep your cash warm.

Congrats guys, I decided to just sit on this one over the last few weeks or so and its up 40%. JEast one day I will realize that I need to just start following you in. At least HRP worked out well. Good Luck going forward, this one is on a tear.

With ORH getting taken over I need another Owner Manager Position so whats your best picth on Contango?

My problem with MCF is I dont like Gas in general. Also whats there reserve life? I also wonder about the decline rate on the well, so I worry about long term value. I know they are for sure a low cost producer and have best in class Management but, the gas markets have too many variables. I dont know when the cycle will turn and it has a bad economic outlook in my opinion. This or at $2 will be the bottom but, how high or long will the top go. There are still 2000 rigs out there and the pricing on them is low, so I see several small boom bust cycles in gas due to no barriers on drilling in my opinion. Canada and the US are stuffed with gas and there are no pushes to ramp up its uses (power plants, or natural gas cars / buses). Its also tied to weather and coal prices which adds to complications. Its a wild card. One good hurricane and its up but, a cold summer / hot winter does the opposite. Everyone is waiting ready to turn on the drilling once prices go up causing them to go down. Oil is much easier to understand - it is going up due to energy usage and general inflation. Its a world wide product so pricing is world wide instead of regional. Additional oil also costs more to get out of the ground. I like gas as a kicker / byproduct of oil, I like it when its hedged and the company can buy during the down side, but, I hate it when its the companies only asset during a down turn and they have to pay down debt.

I like gas but Compton is too risky. Gas prices will hit $2 per a few smart gas MLP CEOs - (EVEP). You want to own a guy acquiring assets not a guy fighting to stay alive and forced to dilute. I would buy the Bonds if pressed but, US MLPs have hedged gas for the next 3 years at $7, are cheap, and yield 14% or so. You also have companies like MCF who have no debt and are low cost producers. I think Compton will survive but, wont come out of this downturn better or stronger. They were over leveaged and mismanaged. Alberta gas I believe goes for a lower amount then HH due to Canada having an oversupply of gas and higher transmission costs.

I would have loved to get into SSW at the same price as you. Even over the last few weeks that I have been looking into it it has moved up 20%. Similar to you all other REITs have rallied and you cant really get a safe 13% (in my case) out there in the market. Thanks for the tip, it has worked out quite well and I am sure HRPT's management can generate a bit of value while we wait.

Hey J East thanks for the great idea. It has worked out wonderfully but, what do you think now on the valuation. I got in at $11.50 but, with a basis of $7 and change you must have a big smile on your face. My thoughts are below. HRP is now approaching $8 and is at $7.40 as of today. It has rallied quite a bit and I may have to part with it soon to protect my gains. It is approaching 8 times FFO but, they are still making great moves and interesting transactions which makes me want to hold. They are selling properties with cap rates of 7 and 8 and buying class A properties at cap rates of 10. They also still have the liquidity to make a game changing move and have the balance sheet is still full of undervalued assets. I would sell if I had another interesting REIT but, don’t have any other good options aside from FUR. I will be adding significantly to FUR and for now will collect my 13% dividend.

Honestly this is my biggest problem with OSG, TNK, and SSW. I think they are great buys but, wonder if it will prove to be a better deal to wait until the scrapping happens.

If the subs get cash for stock (the ones holding ORH stock) cant they dividend any surplus stock up. Also isnt ORH overcapitalized. I think the transaction itself will improve the balance sheet and increase holding company cash.

Several good points have been made. To all those who say that FFH can just walk away, consider that again ORH will likely have a $60 BV by the end of the quarter or by the end of October. So ORH shareholders wouldnt really be left out in the cold barring a takeover. Both sides have options and the best way to solve this is a fair deal with a slight premium to BV. Thats crazy every $1 is worth almost half a million to him.

That was pretty funny.

Could someone post the thesis for Seaspan, it seem interesting and I remember it being discussed on the old board but, cant find the post.

Humm never really got the story with PDS. I owned them in the past and made decent money off them but, the GW Buy didnt make much sense to me. I have looked at land drillers and I like HP and PDC, PDC at $4 a few months or so ago was dirt cheap.

MBS companies hit the too hard pile. Im not a full time investor and these would take up too much time. I prefer to outsource this and other complicated instruments to successful capital allocators such as to Prem, Buffet, and Ashner. At FUR Ashner is making some interesting moves regarding buying loans and I think the joint vendor to purchase MBS and Debt securities will turn out to be profitable.

EGI Financial Holdings looks very interesting, do you have any comments on there investment portfolio.

Im kicking myself for not getting into HTH preferreds in March and April. I even thought that they would be called but didnt have the cash to pull the trigger. I got into ORH.A and that worked out just as well. May have to look at the common a bit more.

Humm instead of symbols can we post thesis. FUR generates FFO (Funds Flow from Operations) of about $31.6 Million dollars each year and was purchased at around $160 Million Dollars. This gives it a value of 5 times FFO. There is also around $100 million dollars in the hands of a capable REIT Investor and 2 loan platforms (Concord and Mark Realty which may not be total zeros). This is another work horse position and I feel comfortable with the purchase price. FUR is below book and has capable focused Management with tons of skin in the game. FUR has less cash but has a portfolio of real estate securities. ESV - Ensco will weather this difficult period. Utilization will continue to drop and Ensco will likely cold stack some rigs. Ensco still generates between $750 million to $1 billion in cash flow, has no debt, and will have the largest fleet of deepwater rigs and all will be fully contracted. That has be worth more then $5 billion dollars, my guess is at least twice as much. CCHN is also very interesting. Here is a write up on it http://valueinvestingworld.blogspot.com/2009/05/clear-choice.html - Hard to get an order filled though.

BPO seems expensive compared to US REITS - FUR and HRP. Can someone explain why people are turning towards it. I just bought some energy stuff - PSE and ESV. Also bought some URI and ORH.

Hey I like Berkowitz. He has some good ideas but, ya I couldnt follow him into Sears, Defense, or Healthcare. URI seems like a decent bet though.

Buffet has talked about this for years and people have known about Buffet and value investing for quite a while, at least 20 years. Simple but not easy is the name of the game, and December 08 and March 09 clearly show that fear and greed still dominate the business cycle. You hold your cash and pick your spots and must be prepared to go against the grain if necessary. The lady sounds decent enough but, is simply off base. Mark Sellers - 7 Traits of Great Investors ○ Trait #1 - The ability to buy stocks while others are panicking and sell stocks while others are euphoric. ○ Trait #2 - A great investor is that he is obsessive about playing the game and wanting to win. ○ Trait #3 - The willingness to learn from past mistakes. ○ Trait #4 - An inherent sense of risk based on common sense. ○ Trait #5 - Great investors have confidence in their own convictions and stick with them, even when facing criticism. ○ Trait #6 - It's important to have both sides of your brain working, not just the left side (the side that's good at math and organization.) ○ Trait #7 - The most important, and rarest, trait of all: The ability to live through volatility without changing your investment thought process.

The ratio should be 6 to 1 based on energy and has usually been 10 to 1. It is for sure out of wack but, long term oil should and will rise (we arent making much more of it and more importantly the stuff left is harder to produce). Barring electric cars driving up power usage the fundamentals for natural gas dont look good to me in the medium to short term and should be great in the long term. Right now we are drowning in it and it can be produced quickly and cheaply.

Oh and personally I have and would take a hedged bet. Look for something which gives you little pain over the next few years regardless of natural gas prices and great upside on any number of events. Long term gas will be valuable. But short term we have far too much of it and its becoming an unprofitable product for unhedged producers, (this is great long term, the cure for low prices is low prices). I like the offshore drillers (ESV being my favorite and the best run, no debt and growing), and hedged producers who can still make a profit with $2 gas. I also like producers with oil and gas exposure. They can drill oil for now and turn on the gas when prices improve. 100% gas is a concern for me. $75 oil is very profitable for most producers. Prices will turn and revert back to $6 - $10 gas. We have hybrids, drastically reduced rig count, cold winter, hot summer, and no LNG imports and potential exports over the next few years. The trouble is when, and will your producer of choice survive (watch debt levels).