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Asymmetrical Investing

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  • Feeling Quantitatively Uneasy In Japan [View article]
    Good article, lots of really good information. Regarding the Nikkei, I am skeptical that growth is going to continue. It may rise for a little while longer but any rational analysis of Japan shows that Japan is broke and will never pay back the money it has borrowed with anything other than more pieces of paper. Alas, timing is the great mystery, but events look like they are moving more quickly there. When the market perception changes there will be no time to exit.
    Mar 28 10:23 AM | 2 Likes Like |Link to Comment
  • Campus Crest Offers Great Yield And Good Upside [View article]
    CCG was downgraded by a couple of banks based on the company outlook for 2014. I think its mostly overblown, CCG is still generating good cash and they are strongly positioned going forward in most of their markets.

    There were a couple of things to be concerned about, namely a large increase in charge-off's and a lower booking rate at their copper beach portfolio, but I think it is likely that these problems get fixed. Management did get beat up pretty good on the earnings call yesterday but at the end of the day I think the assets are cheap, the management team is competent and that this is a good buy.
    Feb 28 09:13 AM | 2 Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    Wow Spanish bonds are cheap! never mind they can't possibly pay back what they already have borrowed, but hey, who cares about fundamentals anyway?
    Feb 12 08:57 AM | Likes Like |Link to Comment
  • Merged American Airlines Offers Significant Upside Opportunity [View article]
    Great, this is one to hold onto for the foreseeable future.
    Feb 11 12:30 PM | Likes Like |Link to Comment
  • Welcome To Phase 3 Of The Global Financial Crisis [View article]
    Techy, the Fed is tapering QE as long as rates stay in the zero bound. If rates start to rise - they will go right back to buying bonds.
    Jan 30 03:15 PM | 1 Like Like |Link to Comment
  • Welcome To Phase 3 Of The Global Financial Crisis [View article]
    Exactly right, those that haven't drunk the Keynesian kool-aid can see the train wreck coming - but what is the timeline? The central banks do have a number of tricks to prolong this madness. We've already seen the playbook - fudge the numbers as long as possible and in the meantime print or if things start heading south request a bail-out (recycle money from your friends if need be, a la ESM). Other options are to confiscate through taxes (which has the side benefit of distracting from government mismanagement and identifying scapegoats). If things are still not settled then confiscate through bail-ins (like we saw in Cyprus), nationalization (hello Argentina) and ultimately inflation. Did I mention keep printing?
    Jan 30 10:28 AM | 1 Like Like |Link to Comment
  • Campus Crest Offers Great Yield And Good Upside [View article]
    Thanks Seattle, really appreciate the on-the-ground perspective. I haven't looked into ESRT except being generally aware that the ESB was included in their portfolio but will have to look into it further.
    Jan 22 06:11 PM | Likes Like |Link to Comment
  • Campus Crest Offers Great Yield And Good Upside [View article]
    Hi Ruk, thanks for the comment. The majority of properties are at larger public universities, although there are some private universities as well - although in either case they tend to focus on larger schools.

    You mention student growth and it is obviously a big component of what we think the potential could be for the student housing developers. Based on the latest information, total enrollment is increasing again, albeit slowly. Nevertheless, as school becomes more expensive the students enrolling tend to be more affluent. From a developers perspective, students aren't all equal. Those who desire to live on or near campus and who have large disposable incomes are obviously much more desirable than students living at home with mom and dad.
    Jan 15 03:11 PM | Likes Like |Link to Comment
  • Campus Crest Offers Great Yield And Good Upside [View article]
    JP, thanks for the comment. There is some fixed and variable debt on the balance sheet. The variable makes up about 43% of the total debt outstanding (as of Oct 30, 2013) with total debt outstanding of about $488M. Their average cost of debt is pretty low at 3.35%. I took the figures from page 8 of the following document http://bit.ly/1aGYZDr
    Jan 15 02:43 PM | Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    Vincent, ummm, that is the trade I was discussing - a long dated option expiring in 2016. The entire paragraph reads thus:

    "The best trades at this point, depending on level of risk, would be to purchase long dated out of the money put options (LEAPS) with expiration up to two years off. Although there is a good deal of premium priced into longer duration options, the potential increase in volatility, as well as the decreased frequency needed to roll over the trade, makes the higher premium worthwhile, in my opinion. Currently, SAN is trading at $8.76 per share and a put option can be purchased with expiration of January 15, 2016, at strike price of $7.00 per share for $0.99 per share, or at strike price of $5.00 per share for $0.55 per share."
    Jan 9 12:33 PM | Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    vferrer, I appreciate the comment.

    One point about the banks is that the ESM does have a program that enables it to directly recapitalize banks. The latest news that I've heard is that the ESM refused to directly recapitalize the Irish or Spanish banks, but that doesn't mean that they couldn't do it with another country. As you said though, for Ireland and Spain at least, any recap just means a further increase in debt.
    Jan 9 11:10 AM | Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    Debutant(e), if you actually read the article, you would know the only trade I discussed was an option expiring in 2016, which, by my math, is still two years out. I openly acknowledge that the trade may or may not pay off in that time frame (I think it will, but that is my best guess), and is only recommended as either a speculative trade or a hedge.

    As an aside, I've found when you point out flaws in institutions that people hold dear, that they don't take too kindly, so I'm not going to get my feelings hurt if you don't like this or any other of my articles. However, it is my opinion that the reason there is so much opportunity (and danger) in the markets right now is precisely because people like you refuse to believe that 2+2 = 4, because the consequences are unfavorable.
    Jan 9 10:50 AM | Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    Tracy, appreciate the comment. Respectfully, I'd say the same thing when you cite the Huffington Post - consider the source!

    A couple of things. First, my call on the Euro debt crisis is the main focus of my article. I don't have a vendetta against SAN, in many ways they are a well run company. However, they are inseparably linked to EU sovereign debt - especially Spanish debt - and are thus highly vulnerable to significant moves in the value of that debt. That is the sole point of my article and I don't touch any of the traditional valuation methodology's for determining what a fair price would be for SAN, BBVA or anyone else, since that isn't my focus.

    The biggest problem with my call (that I readily acknowledge) is that nobody knows the timing of when the market perception changes. My point in the article is that much of Europe is beyond the point of no return, and that the debt will ultimately be addressed either through write-offs or inflation. That is something that can be argued with facts, like the ones I presented in the article. What I can't hope to predict with any precise degree of accuracy is when the market realizes that is the case and acts accordingly. I think it could be in less than two years, but that is just a guess on my part - it could very well be another 20 years. My goal for anyone reading is to use that information in their portfolio planning - not as the primary investment - but as a hedge to protect the rest of their portfolio which remains long in the market.
    Jan 8 01:59 PM | Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    Gotta love the internet... Thanks for the page views at least
    Jan 8 08:06 AM | Likes Like |Link to Comment
  • Europe's Problems Still Not Anywhere Near Solved, Investors Should Prepare For Next Shoe To Drop [View article]
    Thanks Debutante, I'll check it out
    Jan 8 07:56 AM | Likes Like |Link to Comment
COMMENTS STATS
85 Comments
145 Likes