PlanMaestro

Have been waiting for a new European scare. Only 16% of their assets in Spain/Portugal and most Latin American operations in the top 3 by country with ROEs in the 25% range. Currently priced at 1x BV.

Glad you won this one zippy. I was on the sidelines, is it already a done deal?

I like Gramercy Capital GKK very much. The concerns are about the Goldman/Citi/KBS refi next month but as I have been posting in the Yahoo message board (where I am sharing very detailed CDO information) there are more angles to the situation. Some high level numbers: 100m in cash flow from operations pre-working capital adjustment ($2 per share) 200m in unrestricted cash at corporate 100m in restricted cash in CDOs in reinvestment period CDO 2005 will probably heal this year CDO debt is non recourse, Goldman/Citi/KBS mezzanine is recourse only to Realty At one moment it was a Graham stock and in December 31st I offered Above Average Odds Investing blog a write-up on the situation that he accepted. The next day it jumped 30% and I filed it because it was no longer completely a pure Graham stock. That was stupid... but it still looks very cheap.

Fairholme takes pictures of JOE on a sunny day http://www.scribd.com/doc/48356839/St-Joe

I was just reading Santander reports and it looks very hard to kill with only 16% of their assets in Spain/Portugal. Just their Latin American banks (like 40% of the assets and all with 20%+ ROE) are worth more than the $100B market cap. 1x BV and 4x PTPP earnings with good capital ratios and declining NPLs looks tempting.

I think that is what they are projecting, but part of the capex is growth capex.

Third Avenue/Whitman has them and made a very persuasive argument for it in one of his latest letters

Nothing, most of the people that I contacted were pessimistic on the possibilities of a successful persuasion or fight. A protracted merger arbitrage is not what I was looking for while sitting on other 5x and 10x chances. I had a little conversation with myself (do I want to be rich or instead to soothe my ego?) and decided to follow Philip Fisher's advice: avoid activist investing, either agree completely with management or move on.

Basically, MMPIQ gets to keep its prime property Southpark that is 3 blocks from Staples Center and right up front the AT&T Center (former Transamerica). It has all the permits to start construction, The deal also releases $68 million of secured debt. http://en.wikipedia.org/wiki/AT%26T_Center_(Los_Angeles) In turn, MMPI looses the Southern California School of Architecture and a large adjacent lot both worth $35 million book value and 5 other secondary properties. http://en.wikipedia.org/wiki/Southern_California_Institute_of_Architecture An OK deal that will probably have an impact between $10 and $20 million in book value but clears the largest secured debtor. Legendary was one of the few remaining unsettled secured creditors, having Berkadia also settled, and had the only competing plan of the three that diluted common equity. $2 per share of book value priced at the bottom of the market with a conservative balance sheet selling for just ... $0.28 per share. Ready for Thursday, blue skies in Los Angeles

From the Wall Street Journal today. Legendary is the largest secured creditor and one of the few that has not settled. It was also the proponent of one of the two opposing plans. Look like things are going fine: Downtown Los Angeles landowner Meruelo Maddux Properties Inc. is slated to square off with a group of shareholders Thursday in Woodland Hills, Calif., over their separate plans to bring the developer out of bankruptcy protection. But first the company will ask Judge Kathleen Thompson, who is overseeing Meruelo Maddux's Chapter 11 case, to sign off on a settlement with lender Legendary Investors Group that turns over seven properties to Legendary in return for the lender forgiving $67.8 million in debt. Legendary had floated its own proposal to bring Meruelo Maddux out of bankruptcy that called for it to pump $5 million in cash and convert $65 million in debt into an 80% equity stake in the reorganized company. They also had wanted to oust the company's existing management, including founders Richard Meruelo and John Maddux. Under the company's own bankruptcy-exit plan, shareholders (including Meruelo, the company's largest holder) would retain their ownership, and creditors (such as Bank of America) would be repaid either through the sale of the properties or a refinancing of their debts. A rival plan proposed by minority shareholders would pump $30 million into the company, including $23 million for the purchase of 55% of the existing shares. The plan also sought to remove management, including Meruelo .

A friend just told me that Berkadia withdrew objection to the debtors plan (MMPIQ). Confirmation hearing now set for 1/27/11.

I have been trying to follow it but it gets expensive pretty fast so I may missing something. The most relevant news is that Richard Meruelo keeps fighting dirty and the consequence is that probably the confirmation hearing could be delayed. Also the unsecured creditors are complaining that all plans lack supporting evidence of funding, but even in that complain most of their darts were directed to Dirty Richie.

This is not a criticism but an observation. It surprises me is that Einhorn does not realize that he does not know banks -despite all the publicity of the Lehman short- and keeps trying his fortune in this arena. The one bank long (diluted up to the point of no recovery) and one short (recovered to pre-crisis levels in less than a year ... do not mess with banks in Texas) that I saw in his portfolio both went horribly wrong, and it was not difficult to see why. And when asked recently about banks in Charlie Rose the only thing he could say was some cheap innuendo: "there is much to worry about banks". And let's not talk about New Century.

Parsad, could you share your views on KFS? With a substantial part of the equity in cash (after the sell of the Canadian business), an aggressive expense reduction program and buying their debt at a discount it seemed like there was an opportunity. Also Stilwell was buying at prices higher than $4 in Nov 2009 and it looked like they only needed to solve the Lincoln issues for a fine turnaround. However, they have been unable to fix the loss ratio of a short tail American business after more than two years. Do you understand why they have not stopped u/w at these rates? Also regarding the spinoffs of some of their divisions, I am still in the dark for the reasons. Do you know what they are trying to achieve?

Thanks for the suggestions Myth. The situation has a lot of similarities with BCIS and I discussed those with Geoff during the weekend. Very smart guy.

Hey guys, my question is a real one. Today's price is above the offer so it looks like I am not the only one thinking that the it is inadequate. Does anyone has experience on how to oppose going private transactions or at least pressing for a better offer?

I think the punch line - not much of a fan of moralizing with investments - is that investing is always risky and a large margin of safety has to be demanded. For example, you can also get hit by management doing stupid transactions when control is diluted (ie: Kraft is a small mistake, but sure you guys know some more destructive like BAC/ Countrywide). I actually have a small 15% profit since Sept 2009 but was expecting something much better than that. 5% premium, close to the a 52w lows and well below the 52w high they will probably have to improve their offer ... merger arbitrage anyone?

After a complete settlement of the FDA quality issues? Probably something closer to $20. 2x sales for a high operating margin, low capex, 20%+ growth per year seems ... fair. SunPharma is really lowballing this, they recently announced that some of the issues are close to be resolved and shipment of some products resumed. This was supposed to be my Oil Salad scandal, it is getting more complicated than that.

You guessed right

Given the low interest rates, reasonable valuations in several sectors and renewed access to debt it is starting to feel like the 1980s. One of the stocks I own just received a lowball going private offer, 5% premium to the most recent price and 25% of all time highs, from its largest shareholder (70%). Does anyone has experience on how to oppose self-dealing transactions?

More detail on his plans including the "island" strategy. Impressive guy, disruptive model.

Seems like the smart way of doing it...

And the Japanese real estate bubble was bigger and their banks in much worse shape

Pretty good summary, there is also a nice table in the Charlestown's plan support letter (http://www.kccllc.net/mmpi) I would only clarify that the debtor's plan suffers no dilution. It is using the Watermarke loan convertible at $0.4 to buyout willing sellers at $0.25 so it is actually accretive. The only reason I am voting for the Charlestown plan is to give them leverage in the subsequent negotiations. It is very probable that all 3 plans will get rejected and Richard Meruelo must be kept in check. The OEC support letter provides details of Meruelo's machinations. (http://www.kccllc.net/documents/0913356/0913356101021000000000012.pdf) I have not received the paperwork either.

Well if the valuation supports it, debtors might have to throw another bone or a better bone.