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Amit Chokshi, CFA

 
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  • General Growth Properties: Rebutting the Bears [View article]
    Does Whitney ever pick his own stocks? I can't understand investors investing with Whitney when they can simply look at the 13Fs of Ackman and Einhorn and get the same, if not better, results. It's hard to find any large successes of failures in T2 that were not all based on the picks of Ackman and Einhorn.

    Whitney owned MCD, WEN, both Ackman picks, BKS, BGP, both Ackman picks which bombed out. And of course Tilson owned TGT calls just like Ackman which were killed. Then he's had the same Einhorn picks like SATS, TDC, DPS, etc. and the same same shorts like LEH, MCO, MBI, etc.

    Is there any reason to maintain the pretense of doing "real" research? GGP is an Ackman pick so naturally T2 is in there. But the idea, given the consistent number of picks T2 loads up on from Ackman and Einhorn, makes the notion of any real research of these picks laughable. I think any of T2's picks can be summed up as "Ackman or Einhorn bought it" and leave it at that.
    Dec 16 11:38 PM | 5 Likes Like |Link to Comment
  • Whitney Tilson: Why We Covered Our Netflix Short [View article]
    If you review the historical 13Fs of T2 over the past 4-5 years you'll basically see that a very significant portion of T2's historical returns have been largely generated by basic copy cat/piggybacking off Ackman and Einhorn picks.

    Also a good portion of losses have been from copycatting these guys too. T2 went heavy on TGT when Ackman was in there, BKS, and BGP as well.

    However, if you look at the latest 13F of T2 www.sec.gov/Archives/e...

    you'll see big stakes in ADP (Ackman), CIT (Einhorn), a small position in Citigroup which I assume he is building up given Ackman deciding it was worth something, DISH (Einhorn), EMC (Einhorn), GGP looks like T2's biggest position (Ackman), KFT (Ackman), MSFT (Einhorn). T2 has also been short MBIA (Ackman) and now JOE (Einhorn).

    Then other big holdings include BP which was a T2 original, although what was prob a better risk/reward at the time would have been bonds. BUD appears to be a T2 original but Ackman considered going activist on it in 2007 so perhaps easy to dust off that research. BRK which is something all value investors apparently must own...and then some megacaps like INTC and JNJ.

    One curiosity is that some of T2's seeming "in-house" picks look like dogs. REXI is something he's pushed for a few years and it's been in the doldrums for quite some time. WINN is another T2 "original" for some time and appears to have been going nowhere, same with YHOO. DLIA is another multi year underperformer.

    So as a T2 investor it appears that one is paying fees to have some 13Fs copied and then the in-house, proprietary picks actually damage the performance of just a basket of those commonly held hedge fund holdings.

    The one very peculiar thing, and not sure if it's a typo but T2 looks like it has $287MM (out of $578MM) in SPDR puts? Making a massive market call or market short doesn't seem to be that consistent with a bottom up value investor nor does it seem that T2 would put 50% of the fund into puts...so I'm curious based on the 13F if that's "real" or a typo in the filing.

    In either case, Tilson is one of the best businessmen in the investment mgmt industry. T2 seems to have had about about $100MM-$200MM in AUM the past few years and based on his recent 13Fs, it appears that AUM has increased above $500MM with most of the capital coming in over the past 9 months. If this occurred during a period of significant underperformance it's very very impressive given the track record and heavy dependency on the picks of other investors.

    In addition, Tilson has also created a very successful value investor business through his value investing congresses and various newsletters. Lot of Buffett quoting and then doing things like investing in BRK, MSFT, and JNJ when you can invest in just about any part of the market with that level of capital.
    Feb 13 06:24 PM | 4 Likes Like |Link to Comment
  • Alliance Healthcare Services: Worth At Least $10.60, Probably More [View article]
    Medicare Advantage rates just went UP today, basically a 180 to expectations. Most investors in healthcare expected a reduction but prob less than what was initially proposed but once again as citizens we are getting sold out to insurance cos...that's fine if you're long stuff like AIQ which I am.

    I would also argue that AIQ is easily worth $40. The space AIQ played in at one time was valued at 0.5x-1.0x P/S from 2004-07. Now it's at about 0.16x P/S. On an EV/EBITDA basis they were worth teens+. Now AIQ is at 3.6x LTM EBITDA. The multiple compression was due to the economic crisis, competition, legislation/ACA fears, and AIQ just being a garbage operator. Most of that has been fixed for AIQ's benefit. Economy is better so more people have insurance and thus can go to the doc and get x-rays. Competition is tough but a number of less efficient ones are gone, RDNT is in worse shape btw than AIQ. ACA fears were overblown for AIQ, and more importantly ACA brings in more insured into the pool so AIQ only cares about getting these people into radiology. Lastly, AIQ's mgmt team now is much better, they stopped the idiotic M&A route, refinanced debt, and are continuing to focus on deleveraging. I am somewhat ticked off that they are increasing capex this year vs even more debt paydown but nonetheless in 2013 they still intend to bring debt down further.

    So you have a $150MM i think lowball EBITDA est for 2013...its trading at 3.2x that when considering the stated amount of deleveraging. If they can show that EBITDA can move past that, to say $160MM and more data shows that the overall industry and co-specific dynamics are improving, u can make a lot here due to valuation multiple expansion. I think in a year, if you can get to $160MM say, even at 5.0x EV/EBITDA which is still dirt cheap, you are at $30+/share given AIQ will have <$500MM in net debt at year end...
    Apr 2 11:11 AM | 2 Likes Like |Link to Comment
  • What Needs To Happen For U.S. Coal Stocks To Be A Buy? [View article]
    Forward estimates are somewhat useless given current coal prices are at an inflection point. The sellside is probably freaked, I bet they were bullish during the summer and got slammed. Analysts always are too slow to react and do so very gradually which really doesn't work for cyclical names. If you go back to other inflection points, coal stocks very likely looked dirt cheap when coal prices were on fire, even on a forward basis because analysts impound those high costs into perpetuity. And in contrast, if you look at coal companies around say 2003, they prob looked expensive on a forward basis cause of weak pricing. It's the same with all cyclicals - airlines, refiners, paper, etc.

    There is a lot that is expected to go wrong for coal in things you have mentioned such as China slowdown, India slowdown, Europe in depression, US power going to nat gas but a lot of that is in my mind getting close to being priced in. I think pricing assumes a Chinese hardlanding to match the Euro depression. Anyone can see ARA is loaded with inbounds, China appears to have stopped coming to market for the moment for imports, etc. I don't think that is surprise but it's easy to dump and move on, that's fine. I think we get a wash out soon and then lock and load.

    What I like is that the sellside is probably pricing $100/ton coal into 2012-2013 estimates but just look at the overall price vol of coal. We're at historical lows for coal, can it go lower? Sure, but a lot of commodities trade within a nice historical - multi decade range.

    The reality is if you get a slight tick up in nat gas to alter clean dark spreads, that right there could let coal prices move up slightly and because of the fixed extraction costs, there's a big chance in terms of what the profitability of these stocks look like. On top of that, the coal guys are doing the right thing by idling facilities so by sucking out that capacity, that second derivative in terms of the rate of price decline will stabilize. The coal producers are making the right moves, if they can get a little help in terms of price stabilization, maybe China coming back to market a bit, maybe soem stock piles winding down to allow ARA to bring on more imports, the stocks can rip as you have pointed out.
    Feb 29 02:18 PM | 2 Likes Like |Link to Comment
  • Investors Are Missing an Obvious Opportunity in Citigroup [View article]
    Thanks for the comments, the post was my monthly commentary and I generally don't get too into the details of a specific stock in my monthly commentary. I will be on Bloomberg Radio tomorrow at 4:30PM EST possibly covering C on that show and I will try to follow up with a detailed, more granular analysis of why I (fund and managed accounts) have been recent buyers of C that will be posted here.
    Jan 20 09:24 PM | 2 Likes Like |Link to Comment
  • Call Of Duty Can't Save Activision [View article]
    Titan has been in discussion forever, bottom line is if you look at programming discussion boards for career focused programmers, the outlook for programming at Blizzard is poor. Blizzard has been laying off workers this year including developers, also canceled BlizCon.

    Starcraft 2 is losing subs to League of Legends. I did not want to write even more on why to short ATVI but first off SC is not a monster franchise relative to WoW and ATVI earnings but SC is feeling a lot of pressure by LoL. LoL and other F2P games have captures casual and professional (esports) gamers.
    Dec 17 10:29 PM | 1 Like Like |Link to Comment
  • Verso Paper: A Lotto Ticket That Might Pay Off [View article]
    I have not factored any help from a housing rebound but it could be a potential positive contributor. Pulpwood is used in the production of both paper and oriented strand board (OSB). OSB is used in res/comm construction so if you can get enough demand whereby pulpwood prices go up, this in turn would lead to a move up for paper. That's why if you listen to VRS's last conf call, mgmt indicated that increasing pulp prices was a good thing. Paper Age magazine also has indicated pulp leads paper. Nonetheless, I think we'd still need a sharp and continued move upwards in housing to really drive pulpwood and thus paper prices. It would be nice to see because it would be economic news and basic economic growth (GDP) has a strong correlation with paper performance, secular decline notwithstanding.
    Nov 28 11:58 AM | 1 Like Like |Link to Comment
  • Here We Go Again - Sowood Manager Launching New Fund [View article]
    Why rip on guys that get a second chance? Didn't the great Bill Ackman blow up when he ran Gotham yet now he's idolized by all of these value investors.
    May 4 09:37 PM | 1 Like Like |Link to Comment
  • Alliance Healthcare Services: Worth At Least $10.60, Probably More [View article]
    u must have missed the news yesterday and my earlier comment - medicare advantage reimbursement rates are going UP now...
    Apr 3 12:52 PM | Likes Like |Link to Comment
  • Verso Paper: A Lotto Ticket That Might Pay Off [View article]
    I mentioned the CUSIP in the article, HY is the "safer" bet but I own the equity and it's all based within a portfolio context.
    Nov 28 05:51 PM | Likes Like |Link to Comment
  • Verso Paper: A Lotto Ticket That Might Pay Off [View article]
    The only North Am guys are Sappi, Resolute, VRS, and NewPage. VRS has two major facilities. Quinnesec is a CFS producer and is actually a competitive cost facility for VRS so if we can get CFS going the right way, I think these guys can do well with that plant...not to mention the bio-mass fuel savings should drive costs down further.
    Nov 28 12:01 PM | Likes Like |Link to Comment
  • An Open Letter To Media General's Board [View article]
    I agree 9.5x ~95 = $900MM EV. The pension can be broken up. NYT retained the pension when it sold RMG. With all of the bankers MEG has on its payroll, they could get creative, sell the NP and push out x% of the pension to the buyer, and the broadcast unit if it was sold would take another portion of the pension. NP could get a better value while BC could get a slightly lower due to how they break up the pension liability between the buyers. In either case the BC division alone, using your metrics gets this to $900MM-$1B value. Even just the BC sold alone netted against the corp + pension debt can be worth $6.50.
    Apr 5 01:07 PM | Likes Like |Link to Comment
  • What's Next For Media General? [View article]
    2) Much of the 'Bank Paper' -- which is, in fact, pari passu with the existing Public Notes -- has alrady been accumulated in the hands of some very aggressive funds....who view management with great skepticism. Thinking of the "Bank" as the 'bank' is a terrible mistake. The holders of the 'bank' debt are distressed hedge funds, the likes of which would cut the head of management off immediately. And they will, in the end, NOT provide a long-term extension of the type management is seeking.

    - This is not true for the existing deal. The second amendment can be found here http://1.usa.gov/Ho2Brh

    If you go to page 11 the lenders are listed primarily as BAC (yes they may hold little overall of the 363+rcf), a number of JPM entities,
    Oppenheimer, Franklin Templeton, Regions Bank, Royal Bank of Scotland, Presidential Life Insurance, Bank of Nova Scotia, SunTrust, and Wells Fargo...mostly bank banks. As I stated in previous posts, the new lending group would do what you said without a doubt, one reason I believe MEG mgmt would work to make a newspaper sale happen as well to further reduce leverage.

    3) The "accommodation" for more senior debt is illusory. The credit is currently 7.0+x Debt/Ebite. So why would existing Noteholders allow NEW debt to come in Senior to them? Never giong to happen. Never. --- I agree that the noteholders would not let the new holders come in senior to them. But pari passu is a definite possibility. I agree with you re senior sub notes if PP does not happen.

    5) The Common has no lift but has a bar-bell on its next and is going to get pushed lower UNLESS.

    a) Management shuts down loss making enterprises
    b) Cuts Corporate costs from $25 to $12....fat chance
    c) Sets a path to reducing losses in newspapers, such as the Tampa paper, which is easier said than done

    -- I have generally stated that these are things that need to happen. Also, a sale of the newspaper segment would also help. Tampa Bay Times (MEG Tampa Trib rival) stated a lot of large changes at TT have occurred and MEG mgmt indicated this on the Q4 call. Strong fundies for FL this year could help.
    Mar 28 04:43 PM | Likes Like |Link to Comment
  • Media General: What The Bridge Amendment Means [View article]
    For credit purposes, SBSA has 21 radio stations and 2 tv stations. It's valuation on an equity basis and from a credit standpoint would be based on radio comps.
    Feb 23 09:30 AM | Likes Like |Link to Comment
  • Lexmark International Gets No Respect; Could Easily Be Worth $55 Per Share [View article]
    Miles - LXK's consumer segment was 23% of sales as recently as Q1 2010. That's about $230MM and as of Q3 2011, that same segment is 11% of about $1.04B in revenue or $114MM in rev. That's been a big headwind, basically that alone accounted for a 10%+ decline in the top line over that time period but because it's become smaller, the ability to grow the topline from this point is easier because that headwind has become much smaller. The other divisions have been growing during this time but have been unable to offset the legacy consumer declines but I think we're at the point where that may change. Despite a 50% drop in the consumer segment topline, overall revs on a YoY basis are up 1%...not bad considering that.

    I don't think LXK has been considered a tech company from the perspective of a high valuation company in over 4 years. My valuation at $50-55 basically says given its operating metrics in terms of ROA, ROIC, dividend, cap structure all warrant a valuation closer to its peers. It's better managed than XRX and CAJ, has a dividend, and cleaner balance sheet...I think something along CAJ's valuation or even 75% of CAJ's valuation works.

    Re my Yale Presentation, the first slide covered "Mainstream Value Investing" as the title of the first slide should have made apparent...and said that in that case, mainstream value investing follows precepts of Buffett and the rest of the usual stuff value guys look for. I don't follow that approach. If you got to the next slide, I covered Deep Value Investing which is what I focus on. Main thing is valuation is the primary consideration as I think I've focused on w/LXK and if you got to the next slide which would have been page 5...the last point was that "if valuation incorporates these pessimistic assumptions and research suggests operations can turn, an asymmetric payout scenario can develop for the investor."

    So we know LXK is in a challenging industry but overall how bad is it relative to LXK trading at <3x EV/EBITDA, <8x EPS, <6x legit free cash flow after int exp, taxes, capex, pension contributions when even as bad as the co is it is cranking out a 24% ROE off a clean balance sheet, and a 9% ROA, and it pays a $1/share div...seems like it could be easily valued at $50-60. And FWIW Buffett bought IBM shares last Q.
    Nov 30 09:13 PM | Likes Like |Link to Comment
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