Seeking Alpha

Alex Trias

View as an RSS Feed
View Alex Trias' Comments BY TICKER:
Latest  |  Highest rated
  • Peter Lynch On Dividend Growth Investing [View article]
    An acquaintance that I met some time ago finally got onto the subject of money. He's been retired for a number of years now and lives off his portfolio's dividends. What's interesting is that he has absolutely no background in finance or investing, and doesn't even find the subject all that interesting. His approach is that he has owns about 25 blue chip companies that are listed in the S&P500 and that all pay dividends. That's it. When he has extra cash lying around, he pulls the list, sees which company he already owns that is now paying the highest dividend, buys it, and goes back to doing whatever he was doing before. He says he only sold stock once in his, to help pay for a daughter's wedding. Every single other transaction he's ever engaged in with regard to his portfolio is a buy
    Dec 25, 2014. 05:51 PM | 3 Likes Like |Link to Comment
  • The Case For Navios Maritime Partners' Stock Buybacks [View article]
    The slide seemed to coincide with a downgrade by Morgan Stanley. At that point, many shipping firms had already had dramatic share price decreases, and NMM, belatedly, joined the party. Much of the sell off seems fueled by the concern that lower commodity prices may signal weaker demand, and hence, less need to ship products. I also read that with lower fuel prices, shippers may start to run their vessels at faster speeds - effectively increasing the number of available shipping days. The last straw was a notion that with the recent collapse in shipping rates measured by the Baltic Dry index, Navios will have a tougher time renegotiating leases that are set to expire next year and that are currently above market. This may lead to a decrease in earnings and, simultaneously, dividend cuts at some point down the road. It's impossible to look at a stock with a 17% yield and not feel that what the stock market is saying is that the dividend is far too high to last.

    Of course, much of what the market "says" is complete gibberish. I agree with you that the best time to buy into a business is when the erstwhile owners are willing to sell it to you at any price. I certainly feel better buying NMM at $10 or $11 a share than, say, $20 a share (where it was trading just a few months ago). I'll tell you what, I'd be much, much happier if the stock dropped to $5 a share, although I'm not holding my breath. The way I see it, if you can buy an expertly run business in an industry that is absolutely critical (and that's been around for a couple thousand years) at a price that's well below the actual value of the business, you're in luck. The market, in it's infinite wisdom, often offers prices for companies that are nothing short of lunacy. That's fine news for investors, as long as you're comfortable focusing on stuff like earnings and dividends, rather than share prices.
    Dec 25, 2014. 04:59 PM | Likes Like |Link to Comment
  • DryShips Is Exploding Ahead Others For Good Reason [View article]
    Worst scenario seems clear enough - they go bankrupt. They're already in violation of some loan covenants and trying to work through the issues to avoid bankruptcy. They rely on spot rate charters more than many other shipping companies, so current weakness in the Baltic Dry index couldn't come at a worse time.

    Best case scenario is maybe a buyout. I could see spinning out the ORIG shares to shareholders, and then selling the dry cargo and tanker business to a stronger player (Navios holdings, perhaps?)

    I own a tiny position in this stock, and consider it highly, highly speculative. I own it because I believe the CEO is very focused on unlocking value, and there seems to be quite a bit of untapped value to work with. The biggest risk I see is timing. Can DRYS stay solvent long enough for shareholders to realize the value locked up in the company? They're probably going to need to move far more quickly than they might want - conditions in the shipping industry are going from bad to worse, and for DRYS, the clock is ticking.

    Shipping must be one of the least attractive places to invest at the moment, which means you're going to see plenty of values, but also plenty of value traps. I don't know which one DRYS will turn out to be, but I suspect that if you own a few different names in this particular space, some are sure to drop 90%, but if a few soar in value, you'll come out ahead. It may take quite a bit of patience, though, if you're investing that way.
    Dec 24, 2014. 09:18 PM | Likes Like |Link to Comment
  • The Case For Navios Maritime Partners' Stock Buybacks [View article]
    I'm not too focused on quarter to quarter performance - I generally look at the average for five years worth of earnings, so even a year's worth of sour earnings doesn't always have that huge an impact on my determination of a company's basic value. Navios typically comes through challenging market conditions very well, and can often use these types of situations to the company's advantage. With that in mind, I have been pretty happy with the recent sell off in the stock - I'd rather buy the company when conditions are terrible and the stock is cheap than the other way around. My only question is that the dividend yield is so high now, the market must be pricing in a significant dividend cut. I have no unique insight on whether the market will prove correct, or whether Navios will be able to maintain the dividend beyond 2015.
    Dec 24, 2014. 08:56 PM | Likes Like |Link to Comment
  • Dry Shipping: Don't Worry About Slow Steaming, But That's Where The Good News Ends [View article]
    Thanks for the article, Specialist. Just curious, but do you see the current situation in the drybulk market as similar to, say, the early part of 2012 when the baltic dry crashed? One difference, no doubt, is the lower cost of fuel, which as your article points out, can increase the supply of shipping services. By the same token, the Chinese stock market has been rising for a while now, which arguably might suggest stronger economic underpinnings in China. 2012 was tough on shipping companies' stock prices, but the ensuing recovery in 2013 was spectacular in some cases. Alas, the 2013 recovery was only fleeting, and for many shipping companies, their stock prices are effectively flat since 2012 - and in some cases even worse. That said, as an investor, you'd clearly be happier right now having invested in the darkest days of 2012 than the heady days of late 2013. Any thoughts you might care to share on whether 2015 is the new 2012 would be of great interest.

    Thanks again, and I hope you have an enjoyable holiday season.
    Dec 24, 2014. 01:48 PM | Likes Like |Link to Comment
  • DryShips Is Exploding Ahead Others For Good Reason [View article]
    Omninoob - yes, absolutely this should impact the value of DRYS if you are trying to figure out what it might be worth on a going concern basis - in that case, you'd probably want to take a multiple of the average cash flows from operations minus an impairment charge for wear and tear. The poor conditions in the market today will take down this average. I figure DRYS is probably worth more broken up that it is worth operating in it's current form.
    Dec 23, 2014. 01:29 PM | Likes Like |Link to Comment
  • DryShips Is Exploding Ahead Others For Good Reason [View article]
    My bad - Google finance lists the total number of shares for DRYS as 650,000,000 but the latest quarterly lists the total number of shares at only 412m.
    Dec 23, 2014. 12:55 PM | Likes Like |Link to Comment
  • DryShips Is Exploding Ahead Others For Good Reason [View article]
    Last question - on page 4 of the most recent financials, DRYS puts the net asset value of DRYS' assets (other than the ORIG shares) at $670,000,000m. Assuming for the moment that ORIG stock is fairly priced, would you say that puts the liquidation value for DRYS at $2.00?

    Dec 23, 2014. 11:43 AM | Likes Like |Link to Comment
  • DryShips Is Exploding Ahead Others For Good Reason [View article]
    At $9.41 per share, DRYS' stake in ORIG should be worth about $737,600,000. At the current trading price of $1.31 per share, the total market cap for DRYS is about $897,350,000 - which means that the market is ascribing a valuation of $159,750,000 to DRYS' shipping business. I realize the share prices are very volatile at this point, but I don't see where you are getting a negative valuation of half a billion for DRYS - is it just that the stock prices have shifted drastically, or am I messing up the math somehow? Thanks
    Dec 23, 2014. 11:12 AM | Likes Like |Link to Comment
  • Update: Bad To Worse At ARCP [View article]
    Good point. Life being what it is, nothing is blemish free. The point is, Berkshire is fairly obsessive about avoiding questionable behaviors - I don't see that ARCP is. Also, David Sokol wasn't the Chairman and CEO - contrary to the situation unfolding at ARCP.

    Look, everything could blow over, and ARCP's stock could sail higher. Investing in companies with a very high "yuck" factor can be a wildly lucrative way to make money, particularly since the market reacts to a company's case of the sniffles as if the company had an airborne strain of ebola. The only point I am making in all my various comments is that ARCP makes investment sense if you're an expert in early stage turnaround situations, or other ultra high risk/ high reward styles of investing. If, on the other hand, you're like me and you are more focused on sitting in your rocking chair collecting rock solid dividends from at least mostly unimpeachable businesses, wholly smokes is ARCP not the place to be.

    That said, if an activist investor like Icahn steps in to gut the place, sell off the typewriters and fire 85% of the staff, anyone sticking their neck out now to buy the stock will be very, very happy that they didn't listen to me.
    Dec 19, 2014. 07:51 PM | 1 Like Like |Link to Comment
  • Update: Bad To Worse At ARCP [View article]
    I'm not sure either - which is the whole point. I need to be able to take for granted that anyone I do business with is 100% on the up and up. In my line of work, the mere appearance of impropriety is grounds for sanction. I've found that rigidly adhering to the highest professional and business ethics makes for as good an investment philosophy as it makes for a professional philosophy. I have no idea what is really going on at ARCP, but I do know that the business and it's leaders have not lived up to the very highest standards of ethical business conduct. That's all I need to know - it's grounds for instantaneous dismissal. I can just invest in Berkshire Hathaway, never even QUESTION the accuracy of anything the CEO tells me, so why on Earth would I stoop for companies where I cannot even rely on what they've told the SEC?
    Dec 19, 2014. 06:39 PM | 1 Like Like |Link to Comment
  • Update: Bad To Worse At ARCP [View article]
    I don't agree. There is a difference between drama and common sense. If I understand Garthilk's point, when you see one cockroach, you assume there are many more out there you cannot see. When you see three, four, then five, you start to become a bit more confident in the idea that there is a nest of roaches. By the way, it takes FAR more than four or five people to sign off on and file a financial statement. It's not a question of creating drama. It's just knowing that liars very rarely lie just once.
    Dec 18, 2014. 09:09 PM | 4 Likes Like |Link to Comment
  • Update: Bad To Worse At ARCP [View article]
    Golly, there have been nothing BUT negative surprises with this company. Why expect anything different? Hope is rarely a winning investment strategy. Caution, skepticism, and conservative and prudent risk taking works far better.
    Dec 18, 2014. 09:02 PM | 2 Likes Like |Link to Comment
  • Update: Bad To Worse At ARCP [View article]
    I don't understand the "innocent until proven guilty" bias. The company has repeatedly mislead shareholders, both when it came to issuing equity earlier this year, to lying on the financials. Why wouldn't you assume the worse until proven otherwise, rather than assuming all is rosy and happy until proven otherwise.

    I gather ARCP debt has been cut to junk status. It seems plausible that they are in violation of loan covenants, which means they may have to repay loans in a jiffy - but with what I don't know because there is no way they can roll over any new debt in this current environment. I'm sure other readers will disagree with my comment, but I'd honestly be very worried that ARCP faces a risk of becoming insolvent. There's merit to being greedy when others are fearful, but if those others happen to be standing with you on the decks of the Titanic and are worried about that iceberg that just struck, then by all means, get scared and make your way onto a lifeboat!

    Many shareholders point to the NAV per share and say "hey, there is my lifeboat". The problem is, if ARCP becomes insolvent, shareholders are the ABSOLUTE LAST to get onto the lifeboat. Shareholders are like those guys down in steerage who get locked into the ships bowels. Is that where you really want to be when you're on a sinking Titanic? That's not investing, that's suicide. Why not just buy shares of a really amazing company run by first rate, honest managers instead of ARCP?
    Dec 18, 2014. 08:59 PM | 5 Likes Like |Link to Comment
  • American Realty: Schorsch Falls, AFFO Rises [View article]
    Very astute comment - reminds me Philip A. Fisher's classic book "Common Stocks For Uncommon Profits." You're not investing in a balance sheet. You're investing in a BUSINESS, run by people. Actually, your comment underscores why human beings make better investors than computer algorithms. Computers can't look anyone in the eye and judge their personal character. And at this point, nobody knows who you'd even need to sit down with or whose eye to look at. Even the board of directors of ARCP has no clue who is going to run ARCP. I guarantee I have no idea either.

    Like you, I wouldn't short ARCP with any more enthusiasm than I would buy the stock. I stink at betting on stock prices, but do far better investing in businesses. Shorting a stock is far, far beyond my area of proven competence. ARCP could jump to $30 a share, for all I know, or go straight down to zero. I have NO IDEA which, or when.

    It is tempting to look at what appears to be a low stock price and say "aha! Bargain opportunity!" Personally, I prefer evaluating the business first, decide if it's a business I want to be in, and only after doing all that work, the very last step of all is I look at the stock price and decide whether it's worth the risk. You start by looking at the stock price first, and you end up getting all these biased ideas about whether it's a good place put your hard earned money.
    Dec 16, 2014. 07:56 PM | 2 Likes Like |Link to Comment