Arohan

Can Leucadia Profit from Capmark's Bankruptcy?

Point well taken.

I did not mean to imply that they intended to flip the business right away. Leucadia and Berkshire are not known for short term trades.

This was meant to be whenever the eventual sale occurs, which knowing Leucadia and Berkshire as patient investors, can be a long time away when the debt may be substantially or completely paid off.

I posited earlier in the article that Berkshire's debt position is not in danger of impairment.

Thanks for pointing this out.


On Oct 26 03:35 PM DHM wrote:

> Ummmm, if the business is worth 1/2 of $1 billion, then the equity
> will be wiped out and the Berkshire debt will be impaired. The equity
> will not a 25% ROI. Duh.

National Presto: Why It's Still a Value Investment

Senan, true that they compete in the retail market for kitchen products and it was a surprise to me that they are able to generate such high gross margins in this segment. This is despite them having Walmart as a significant channel for their products. Their Defence segment has been picking up quite a few wins lately and they have been improving their margins (due to economies of scale) in the absorbent products. It is best to look at the company as a portfolio that they have been managing quite adroitly

Friedman Industries: Strong in a Weak Market

CarthageCapital, you are correct about the temporary loss of USS. However, I am looking at FRD from the perspective of its current balance sheet to see if it has enough juice to last through the weak market conditions, and I think it does. If and when the economy improves and the steel demand comes back, the company is well positioned to start growing. The current forecasts say that the steel demand will be up in 2010.

If the economic conditions worsen rapidly to the extent that the company needs to be liquidated, there is enough tangible value on the BS that I am confident that the shareholder at current prices will be able to recover a good chunk of his investment.

The question is whether the company will muddle through and leak some of the value in the process. Maybe. I would invest if I trust the management to be competent. Otherwise, just give it a pass.

Travel Centers of America: Rare Value Investing Opportunity

plan.maestro, Thanks for the voice of caution. I have spent considerable time researching this company and the business as well as the agency issues with HPT and personally feel that the margin of safety (when I purchased) was sufficient to overcome these concerns. Of course, the margin of safety has since eroded a bit but I do stand by my findings.

Travel Centers of America: Rare Value Investing Opportunity

I agree with the LUK comment and to be frank, that is what brought TA to my attention. Regarding the comment about why I did not buy at $3; I do not think that is relevant. What is relevant is I purchase when the stock offers value and in my opinion I did that. I will let the market figure it out.

Why Would Treasury Cut AIG's Interest Payment?

Ah Felix, you are assuming that the government is interested in holding on to AIG for long! This doesn't make sense. I think they want to make it possible so the government is able to get out of this investment as quickly as possible, with profits, and with a stronger AIG in the wake

Understanding Brookfield's Malaise

Nice writeup on Brookfield. This is one of those core holdings that you buy once and hold on to as long as possible (as long as the corporate model/philosophy stays consistent).

American Express Calls Investment Banks' Bluff

Your article is confusing

It is not impossible to have the following two things occuring at the same time:

1. Individual consumers are stretched and are having issues with their credit, including the super credit worthy ones. This is what is affecting Amex and,

2. Asset valuations at the banks for the mortgage assets (created in the past) have been marked down significantly and there is not much markdown left to take. Additionally, the investment banking activitiy may have picked up in pockets. The banks are also restructuring and disposing off assets, etc. Additionally, some consumers may be pulling their deposits out of Indymacs of the world and putting them at Bank of Americas of the world. Therefore it is quite plausible that some of the banks had a better quarter than what the street thought and the things may indeed be improving for some of the banks. In fact, as liquidity continues to come back in the market, you may find a lot of previously marked down assets written up as the market begins to be able to price them

You are comparing apples and oranges and jumping to conclusions

As Merrill Reports, Short Squeeze in Financials Continues

Regarding your last observation on the panic buying failing spectacularly, you may be right. I would also like to add to this: Financials today offer spectacular values to long term investors.

It always boils down to whether you are a short term oriented trader or a long term oriented investor

Why I'm Committed to the UltraShort Financials ETF

Hmmm Mr Lathrop, you talk about fundamentals of the sector but you do not care to discuss valuations. You may be right but only because you have short term outlook. Long term investors might wish to consider this as an excellent opportunity to buy

Predicting the Financial Sector Rebound

Well written. I would be wary of shorting any financials right now. Some sense is coming back to the credit markets and it will not be long before some of the companies start writing up their assets that were written down too far

In any case, all this is relevant only if you are looking for the short term. Longer term, financials are terrific values right now. I can't see a world where financial sector is not relevant, neither can I see some of the premier names today disappearing.

How To Buy a Bank (and Other Beaten-Down Stocks)

Loved the analysis. I have been aggressively buying financials over the last few months including C, BAC, CFC and WM and have written quite a bit on this on my blog. IBN and RBS look intriguing so thanks for the tip

WaMu: WSJ Backs Up My Sell Recommendation

I don't understand your sell rating. A stock that is trading at such a discount to its intrinsic value cannot be a sell, unless you have a reason to believe that the company will go bankrupt. As DSX Lover states, if management is an issue for a company like this, it will be replaced

Even worst companies can be a good stock buy if priced at a sufficient discount to its value. It is heartening to see institutional investors getting caught up in the sentiment of the day and not take a long term view. That means it is still possible to get market beating returns for a savvy investor

Will BofA Really Buy Countrywide?

The deal looks bad if you cannot think beyond the present time. It would be a stretch to imagine that the mortgage market will remain in dumps forever. People will start buying houses. Do you think BAC should wait until the market comes back up, Countrywide gains marketshare and profitability, and then buy Countrywide for $50 a share? Why would Mr Lewis make such a boneheaded decision?

Yes, there are risks in this acquisition, but nothing that Bank of American can't fix by supporting this in the short run with additional capital. Once the market stabilizes, this should be a huge score for BAC. One forgets that Countrywide was (or maybe still is) simply the best mortgage company in the country. You also forget that BAC has been a growth oriented company and is now hitting a limiting factor in its growth (deposit accounts cap) and buying Countrywide is probably the best way for them to continue growth. Sure they can acquire internationally and they will probably do that but as a shareholder I sure as hell hope that they do not let this golden opportunity to get Countrywide for a pittance go by

You did the right thing by buying BAC stock, but for the wrong reasons

BofA/Countrywide Merger Arbitrage Opportunity

As if you read my mind! This trade has been discussed quite a few times in several blogs (links below) and I have to say that this offers a very interesting case study

www.arohanvalue.com/20.../
www.arohanvalue.com/20.../

And also,
tradinggoddess.blogspo...
www.princeofwallstreet.../