Guest Bronco Posted May 3, 2011 Share Posted May 3, 2011 I would disagree and say he was dishonest. It may be in the past, but that was a shit thing he did. The corporation is not responsbile for bailing out his personal trading or investing habits. That being said, I also think CHK could be undervalued. Link to comment Share on other sites More sharing options...
T-bone1 Posted May 3, 2011 Share Posted May 3, 2011 Bronco, not to pick a fight because I think we are roughly on the same page - and especially because I'm a Flyers fan - but I don't see how its dishonest. The board gave him $100MM (over 6 years) and bought his maps for $13MM (which already decorated the corporate campus and appraised for double) . . . shareholder friendly - Absolutely not! Agrregious, even for a free-wheeling oil and gas company - You Betcha! but I don't see what is dishonest here . . . Lots of company's pay their CEO's too much. It might not seem right or fair, and I'm not in favor of it, but it isn't dishonest in my opinion. Ray Irani at Occidental was making 3X what Aubrey was/is . . . should he get a free pass because oil went up while natural gas stayed low? Link to comment Share on other sites More sharing options...
alwaysinvert Posted May 3, 2011 Share Posted May 3, 2011 I'm going out on a limb and naming a company which is not all that 'cheap' on a pure p/e basis: Avanza Bank. Financial data here: https://www.avanza.se/aza/omavanza/doc/Avanza%20Key%20Data.xls Quick outline, I'll elaborate if anyone is interested: - No credit losses - No trading department - Non-brokerage income covering all expenses (and that income will increase in tandem with coming interest rate hikes) - Savings market share of 2% while having a market share of net inflow of 6.2% - Great culture, chaired by a famous Swedish capitalist named Sven Hagströmer, who has a huge Buffett complex, and also happens to control the company via his investment company. - Basically all earnings are free cash flow, they pay out all their earnings in dividends. Growing the business is crazy cheap. - Huge operating margin of 54% despite having considerably lower prices than the 'old' banks. - They are, bluntly speaking, crushing their main internet-only competitor Nordnet - As can be seen by their figures of 2008 (the year in which I started buying shares), they make pretty good money even in an extreme downturn scenario. Despite sporting almost double the earnings multiple to when I made my first purchases, I have bought at current levels too. Even if the price doesn't quite fit you, I think this company should be on your radar :) Please do elaborate. I'm going to study this Ok, some general points on the business off the top of my head, then. The CEO of the last 10 years is stepping down sometime in the coming 12 months. The stock plummeted 10% when the news broke a couple of weeks ago. I have met the man in person and he is one of a select few that I have been in complete open awe of. He is an amazing indivudal, and it is correct that the stock took a hit from that news. While he has, of course, been instrumental in many ways in the building of the company, he had in his own words made himself obsolete. As long as they don't bring in someone who disturbs the culture (which I absolutely think they won't do) I think they are going to do just fine without him too. Their greatest selling point to more 'hardcore' customers has been an index fund completely devoid of fees, called Avanza Zero. As far as I know it is one of a kind globally. As of the 31st of December they had 236 000 customers of which 71 000 had Avanza Zero holdings in their account. The marketing of this fund has almost been completely viral and you can see the buzz about it throughout the internet. The internet brokers have also in many ways pioneered an account ('kapitalförsäkring') which has a flat tax of about 1% on the total sum in the account every year, instead of the usual stock accounts (with winnings taxed at 30%, no matter the holding period). The old banks have had these accounts for a number of years before, although with fees and a number of constraints on withdrawals. They have been highly benificial for investors but will be 'realigned' (that is, translated from politician speak, the tax rate will rise to about 1.75% a year) from 2012 on. It is possible that this will affect the inflow to internet brokers negatively. In addition to index fund, they have another peculiar product, which was aimed at putting their hoards of cash at more work. It's called the 'super loan' and is a loan at a very low rate which can be taken against holdings in certain highly liquid Swedish large caps, if you hold at least three such stocks with somewhat equal weighting and the amount of the loan is not greater than 35% of the total value of these holdings. This has not gotten that many customers, but is something that is very favourable to savers at very low risk. If the holdings decrease in value, so that the loan exceeds 35%, the regular rates kick in. They also have cooperations with other banks to be able to offer higher interest rates on savings and moreover allowing people to make use of the €100k government guarantee per loan institute several times without moving the money away from their interface. In short, they are a very innovative company and even have their own version of Google Labs where everyone with an account can go in and make their own suggestions on what to improve with the site. I think that there are considerable barriers to entry in the business, though. No competitors have entered for many years and Storåkers, the CEO of Avanza, has expressly said that with all the new regulations that has come through since Avanza started some 11 years ago they would have found it hard to even start the same business anew today (!). While their main competitor makes money too, they are way behind Avanza and has actually been contracting in the Swedish market for a while now (Avanza is focused solely in Sweden, while Nordnet has operations in other Nordic countries). Phew. That was a long rant :) Link to comment Share on other sites More sharing options...
Myth465 Posted May 3, 2011 Share Posted May 3, 2011 Bronco and you are fine with what Sokol did? Interesting stuff (and I am no fan of Hokey). Link to comment Share on other sites More sharing options...
alwaysinvert Posted May 3, 2011 Share Posted May 3, 2011 I'm going out on a limb and naming a company which is not all that 'cheap' on a pure p/e basis: Avanza Bank. Financial data here: https://www.avanza.se/aza/omavanza/doc/Avanza%20Key%20Data.xls Quick outline, I'll elaborate if anyone is interested: - No credit losses - No trading department - Non-brokerage income covering all expenses (and that income will increase in tandem with coming interest rate hikes) - Savings market share of 2% while having a market share of net inflow of 6.2% - Great culture, chaired by a famous Swedish capitalist named Sven Hagströmer, who has a huge Buffett complex, and also happens to control the company via his investment company. - Basically all earnings are free cash flow, they pay out all their earnings in dividends. Growing the business is crazy cheap. - Huge operating margin of 54% despite having considerably lower prices than the 'old' banks. - They are, bluntly speaking, crushing their main internet-only competitor Nordnet - As can be seen by their figures of 2008 (the year in which I started buying shares), they make pretty good money even in an extreme downturn scenario. Despite sporting almost double the earnings multiple to when I made my first purchases, I have bought at current levels too. Even if the price doesn't quite fit you, I think this company should be on your radar :) 7x book and 22x free cash flow? Seems awfully pricey to me. Yes, like I said it's not classic 'cheap' value case. But the question was not of the overall best opportunity around, but a company that I would be the most comfortable in owning for 5 years. With that said, it is my second largest holding. With the huge gap between net inflow (which is trending upwards too...) and current market share, incoming higher interest rates which will positively affect their earnings (Sweden is doing extremely well in an international perspective and rates are expected to rise sharply), their market position and their past record, I think I can motivate the valuation pretty easily. Of course, it's harder for someone who's not from here to value the intangibles and I'm not sure that I can paint a fair or even slightly useful picture of that here. The Swedish stock market overall seems quite a bit pricier than in the US, though, so it seems likely that there are opportunities which are way more attractive to you guys that I really can't get a grip on from way over here... Time will tell if I am right or not, I guess. Link to comment Share on other sites More sharing options...
rjstc Posted May 4, 2011 Author Share Posted May 4, 2011 Myth; Concerning Corelogic. Curious what your thoughts are. Making money now in the default business which somewhat protects if things get worse but when things get better will go away so now it's providing a bit of a hedge until re-fi's slow. Data and Analytics are about 44% of revenues and mortgage processing about 56%. One question is apparently whether management will try to try expanding by using more debt. I guess the CEO has good experience. What do you see? Being sprung off allowing them to grow faster? Thanks, Ron Link to comment Share on other sites More sharing options...
Myth465 Posted May 4, 2011 Share Posted May 4, 2011 Myth; Concerning Corelogic. Curious what your thoughts are. Making money now in the default business which somewhat protects if things get worse but when things get better will go away so now it's providing a bit of a hedge until re-fi's slow. Data and Analytics are about 44% of revenues and mortgage processing about 56%. One question is apparently whether management will try to try expanding by using more debt. I guess the CEO has good experience. What do you see? Being sprung off allowing them to grow faster? Thanks, Ron I primarily see a dominate player in a market that will always be around. 5 years is a long time, and anything could happen. if I had to own a stock without trading I would want something with few competitors. I kicked the tires on it and read the VIC writeup, I also really liked another company which was similar though much smaller. I passed on both due to housing weakness, and low current but depressed FCF yields. I never did a deep dive or reviewed calls, but I liked the suite of products and comp dynamics. Mastercard is probably a better example. I prefer deep value. But there is great risk with deep value. I couldnt imagine owning FBK for 5 years as my only stock. Link to comment Share on other sites More sharing options...
ourkid8 Posted May 5, 2011 Share Posted May 5, 2011 Without a doublt if I had only one stock to buy it would be Philip Morris International (PM). PM is my largest position in my portfolio at around 17% and I have a purchase price of $45.19 which gives me a dividend yield of 5.7% and growing. Right now it is a bit pricey but management is absolutely comitted to creating shareholder value by paying outover 100% of their earnings in Dividend (65% payout ratio), acquisitions and share repurchases. This is a position you buy and hold for life... Benefits- -addictive! -100% of earnings comes from outside the USA but translated back into US$'s which is currently giving us a nice lift with the devaluation of the US$ -PM has signed an exclusive agreement with China national tobacco corporateion (CNTC) to exclusively sell their Marlboro cigarettes in China (This will payoff long term) -PM is actually growing volumes in Asia at a very nice clip which is offsetting the volume declines in EU -Since this is an 80/20 stock where over 80% (it is 100%) of their earnings comes from outside the US the withholding tax paid on dividends is 1% instead of 15% for all canadian investors -owns 7 of the top 15 international brands in the world -Marlboro is the #1 brand in the world and is outselling it's next 2 closest global competitor brands combined!!! -Can raise prices above inflation -consistently looks for efficiencies and over the last 4 years have cut over $1B in costs (Another $250M will be cut this year) -Completed a 2 year $13B share repurchase program and is working on completing a 3 year $12B share repurchase program Risks- -Lawsuits (significantly reduced by splitting away from Philip Morris USA) -plaine packaging -trade down -health concerns -gov legislation restricting smoking I can keep on going with the benefits but this is definitely a stock I would hold for the next 5 years and beyond! Thanks, S Link to comment Share on other sites More sharing options...
rjstc Posted May 5, 2011 Author Share Posted May 5, 2011 ourkid8; I agree. This is one I own also. Thanks, Ron Link to comment Share on other sites More sharing options...
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