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Hmmm running out of ideas


hyten1
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man its been getting frustrating, good ideas are getting harder and harder to come by, unlike 5 to 6 months ago.

 

what is everything looking at?

 

here are some stock that i have been looking at

 

anh, kvhi, mcd, bpo

 

i cant seem to figure out why mohnish bought bpo. i understand its commercial reit with many of its property tied up with long term leases, but my question is how much is their property worth in the current environment relative to their purchase price?

 

 

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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.

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HTH--A cash rich company with successful veteran bankers at the helm, led by Gerry Ford, who has many years of experience, and several successful bank deals under his belt. They have a bank charter from the OCC, which means they are ready to acquire wounded bank assets. I have owned the preferred in a big way, and got common back in the 9's. I started buying the common again with this latest selloff(which happened because they did not win bid for GFG). I think it is extremely low risk(you are buying mostly cash) with huge upside. Mr. Ford owns 30% of the common, and has even been a big buyer of the preferred(which is callable.......now.......hint hint).

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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.

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There are still some large cap "value"  ::) stocks still going for half their price from 2008:  GE, BAC, BA.  I like MCD too.  MCD, for some reason, hasn't participated in this rally. Makes me like it even more.

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Fairfax and Markel are still sufficiently cheap to me. Some megacaps high quality businesses are still cheap also. It depends on the margin of safety that you ask and the kind of business that you search for.

 

If I can find a business that can grow by 12% per annum (more is the bonus) over the next 5 years and that is trading at 70% (less is the bonus) of my estimated reasonable fair value, the potential CAGR over 5 years is interesting.  Classical Shelby C. Davis criteria.

 

Can Fairfax and Markel grow their book value per share at 12% or more per annum over the next 5 years? Are they trading at 70% or lower of their intrinsic value? To me, both answers are yes.

 

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Have seen a tremendous run in the two main American securities I own (IR & CBS).  I continue to hold all of the IR and only sold off a small piece of CBS – not nearly as deeply discounted as they were in March but both still seem reasonably undervalued.  I will likely hold all my Ingersoll Rand for a very long time.

 

Still finding deeply discounted bargain status in a few Canadian issues – below are a couple examples:

 

RNK:  Over the last year or so they have struggled with external production problems on their first theatrical production + the general financing mood has created some difficulties.  The market as it will gave it a good beating (at one point a market cap of <$10 mil).  The price has improved somewhat – but still I think it is worth significantly more than the current $15 mil market cap appraisal.  Things would appear to be heading back to normal and the major transformation of this company back on track.  A very underfollowed story.

   

EFH:  The non-standard insurance segment is appearing to be in an initial hardening phase.  They continue to grow their niche segment which has yet to hit critical mass.  Meanwhile, a (very timely?) expansion into the States.  The company is very underleveraged and in excellent shape to take on the growth initiatives as well as the non-standard business that they previously passed on but is starting to come back at improved pricing.  The company and management have a history of attaining well above average returns – meanwhile it trades at about .82x BV.

 

UCP / DD

 

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NFJ a "clean" closed-end fund (no debt, relatively low fees) trading at 20% discount to NAV.  Holds 70% equities and 30% convertible preferred and debt.  Also sells out of the money calls - this may be the reason for the discount, but not a bad strategy right now if you think the market will settle down here.  The NAV has tracked the SP500 pretty closely over time.  20% discount is too high and likely will close to less than 10%, when? who knows.

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PDS. Not directly comparable but keep in mind their market position in horizontal drilling - & that to get the most flow from a tight shale field you really need to drill across the pay zone. GW has given them US as well as Cdn contacts, they have the right kind of rigs in place, & idle capacity. When it starts those first to sign up will get rights of first refusal on those rigs - & the most bang for their buck.

 

SD

 

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i hear what everyone is saying.

 

i guess for me the margin of safety has gotten smaller now, makes everything harder :)

 

For me the type of ideas i am looking at now are mostly "hmm if there is a recovery then this is cheap, if end up like japan then oops" as oppose to before "this is trading at almost liquidation or trading at 2 to 3 times earnings, WOW!!!"

 

what dose everyone think of anh,nly agency mbs companies, i guess the key is what do you think the interest rate will be in the future. this is not the type of investment i like to make (this is more short term)

 

ideally i am looking for companies:

1. I have to understand etc (all the typical value stuff)

2. trading at almost net tangible asset value or close to it or at net asset with a potential for growth

2. very high quality biz trading at less than 8 pe with either no growth or potential for some growth.

 

 

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The recovery is here, and it will continue to gain ground all the way into the 1st qtr of next year.  Mark my words.  We will be GDP positive by the end of the year.  For how long?  Until liquidity is drawn down, and I think that will happen sometime the middle till end of next year.  Already, some of the extended credit facilities that the Fed created are being wound down.  Long term after that?  Who knows.  More than likely we will head for stagflationary times aka the 70's.  Majority of the M2 money supply is not being circulated, and is sitting as reserves on bank balance sheets and not being lent out.  So, there are arguments made that inflation shouldn't be that big of a problem. 

 

ORH, if it pulls back into the 40's, is a good bet.  I'm starting to like IBKR.  I still like Citigroup, even though they are considered by many to be insolvent.  I like the brand name, and the retail operations across the world.  It's a massive banking franchise.  They are also shoring up capital, marking down losses quickly (more so than most banks), and selling assets.  I started buying around 2.90 up to 3.5.  I've got 10% of my portfolio in Citigroup. 

 

 

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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.

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

 

The investment portfolio is managed by outside investment managers.  Although, I think they have hired some competent investment people -- I don't expect the portfolio to be the main theme here (but it is run quite conservatively).  This isn't an FFH --- more like a Progressive in the first inning having yet to use it's leverage.   One might argue though that they are more intelligently run than Progressive --- at a time when they shouldn't be -- Progressive is very highly leveraged.

 

Management of EGI consider themselves insurance people and that is where their focus is.  They are intelligent people and operate this space in a very disciplined manner.   ROE's have run anywhere from 5% (last year) up to 30%.  One goal is to over time achieve more consistent results .... which they think the Niche segment will help out with.  With some hardening of the market, maturing of their niche segment and some increased leverage ability -- I find it conservative to view about 15% ROE as about normal.  So based on such normalized earnings the company would be presently trading at about a 5.5x PE multiple(+/-?).  

 

UCP / DD

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Gold.

 

Right now it is still summer time, volatility is low and the market is slowly going higher. Few care about these huge forecasted U.S. deficits (shall we say done deals) and these mysterious treasury issues that are always well received. Why worry, be happy!

 

At some point, this will become front and center. There is just no way around it with the sheer magnitude of this problem. I don't think that we have repelled yet the law of supply and demand. By the way, I have never seen Warren Buffett discussing publicly about a potential issue that has not become a "real" one at some point down the road.

 

It will matter big time some day. When exactly? I don't know for sure, but I have a feeling that following Labour Day that this feel good perception may start to change.

 

If you don't like gold or can't understand its fundamentals, short the dollar some way or treasuries.

 

Cardboard

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The investment portfolio is managed by outside investment managers.  Although, I think they have hired some competent investment people -- I don't expect the portfolio to be the main theme here (but it is run quite conservatively).  This isn't an FFH --- more like a Progressive in the first inning having yet to use it's leverage.   One might argue though that they are more intelligently run than Progressive --- at a time when they shouldn't be -- Progressive is very highly leveraged.

 

Management of EGI consider themselves insurance people and that is where their focus is.  They are intelligent people and operate this space in a very disciplined manner.   ROE's have run anywhere from 5% (last year) up to 30%.  One goal is to over time achieve more consistent results .... which they think the Niche segment will help out with.  With some hardening of the market, maturing of their niche segment and some increased leverage ability -- I find it conservative to view about 15% ROE as about normal.  So based on such normalized earnings the company would be presently trading at about a 5.5x PE multiple(+/-?).  

 

UCP / DD

 

I guess you can view EGI as the exact opposite of a Kingsway Financial. They are actually doing their job at EGI.

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Gold.

 

Right now it is still summer time, volatility is low and the market is slowly going higher. Few care about these huge forecasted U.S. deficits (shall we say done deals) and these mysterious treasury issues that are always well received. Why worry, be happy!

 

At some point, this will become front and center. There is just no way around it with the sheer magnitude of this problem. I don't think that we have repelled yet the law of supply and demand. By the way, I have never seen Warren Buffett discussing publicly about a potential issue that has not become a "real" one at some point down the road.

 

It will matter big time some day. When exactly? I don't know for sure, but I have a feeling that following Labour Day that this feel good perception may start to change.

 

If you don't like gold or can't understand its fundamentals, short the dollar some way or treasuries.

 

Cardboard

 

Cardboard, I couldn't agree more. I think commodities in general will be an excellent hedge against the dollar. They only thing I don't like about gold is it has very little practical application. Other commodities should do well (oil, copper, etc) and have practical uses. That is also another reason I am glad to see WEB & Prem invest more outside the US. Longer term energy should do well as the economy recovers...

 

cheers

Zorro

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Gold.

 

Right now it is still summer time, volatility is low and the market is slowly going higher. Few care about these huge forecasted U.S. deficits (shall we say done deals) and these mysterious treasury issues that are always well received. Why worry, be happy!

 

At some point, this will become front and center. There is just no way around it with the sheer magnitude of this problem. I don't think that we have repelled yet the law of supply and demand. By the way, I have never seen Warren Buffett discussing publicly about a potential issue that has not become a "real" one at some point down the road.

 

It will matter big time some day. When exactly? I don't know for sure, but I have a feeling that following Labour Day that this feel good perception may start to change.

 

If you don't like gold or can't understand its fundamentals, short the dollar some way or treasuries.

 

Cardboard

 

Buffett may have that opinion publicly, however his biggest disclosed portfolio move last quarter was to sell COP and buy JNJ.

 

I'm only saying that because it doesn't look like he is backing up the truck on metals or commodities.  The only move I've seen him make is to lighten up on commodities (oil) via that COP sale.

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