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Brett Samaha
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Brett is an independent trader who specializes in closed-end fund investing, an area he believes is the most inefficient part of the securities markets. He also takes long/short positions in companies he believes to be extremely under/over valued. Brett is fascinated with the way investors... More
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  • Sometimes the Best trade is doing Nothing
    Yesterday, When Barnes and Noble was trading at $14, I saw that it had risen from the high-single-digit prices on no apparent good news, so I was thinking very hard about shorting it.  Aside from the nook, the future of bookselling doesn't look so bright, and why would I buy a money losing company like BKS when a profitable bookseller, Books-A-Million (NASDAQ:BAMM) is trading at .6x's Book Value and 7x's Earnings.  My trade would have been long BAMM, short BKS.
    I saw that the short interest in this name was 70% of the float, so I thought that I could get short this name at higher levels when the final leg of the short-squeeze played itself out. It did not occur to me that any takeover offers were coming because BKS had previously put themselves up for sale, but no bidders came. Luckily for me, I did nothing yesterday, and when I woke up this morning to BKS up $4, it reminded me that being cautious, patient, and objective is a good strategy for all investing, but especially for short selling.
    Tags: BKS, BAMM
    May 20 2:34 PM | Link | Comment!
  • TGS: Levered to price of Liquified Natural Gas, LNG
    The recent earthquake off the coast of Japan and ensuing tsunami has raised questions about the future of nuclear power in the world.  Many experts think that the short-term solution to replace nuclear power is liquefied natural gas or LNG.  Considering that the LNG market is relatively small, a small increase in demand leads to large increases in price, so investors may want to look at companies with exposure to LNG prices. 

    One company that has not had much coverage because it is illiquid and located in Argentina is Transportadora del Gas del Sur S.A. (NYSE:TGS).  This company is an Argentinean gas utility, but about 50% of their revenue is from the production of LNG to which they have spot price exposure.  They sell their LNG to a subsidiary of Petrobras at a discount to the global spot LNG price. This makes TGS a good vehicle in which to play a rise in the price of LNG. 

    Today TGS is up 6%, so one should wait for a pullback in shares before buying.  Also investors should consider the risks associated with investing in a company in Argentina (currency, political, liquidity risks etc.)

    Disclosure:  No position in TGS
    Tags: TGS
    Mar 31 10:16 AM | Link | Comment!
  • Why is Books A Million so Cheap?
    Books A Million (NASDAQ:BAMM) recently reported Q4 results that apparently dissappointed investors (demonstrated by the stocks 19% fall since the earning release).  Revenues were down 2.6% y/y while EPS dropped 42% from the year before from $0.76 to $0.44.  Full year EPS dropped 35% from last year from $0.88 to $0.57.  While these trends are certainly not encouraging, when investors consider that BAMM is trading at 7.4x's last years depressed earnings, it pays shareholders a 3.9% dividend and has a very strong balance sheet, it warrants a second look from investors looking for a cheap stock. 

    BAMM pros: 7.4 P/E (ttm), 3.9% dividend, 52 EBITDA/ Interest Expense, 0.6 Price/Book Value, minimal impact from competitor's store closings (discussed below), strong focus on maintaining margins.

    BAMM cons: shrinking revenues, same-store sales decrease of 6.7%, questionable business model going forward,and a family management team with a private jet and >51% control. 

    Much attention has been placed on the fact that one of BAMM's competitors has filed chapter 11 and is closing approx. 200 stores; however, a closer look at the geographic intensity of that competitor's store closings with the geographic intensity of BAMM's locations yields only a 25% correlation. The competitor's store closings' impact should be de minimus on the historically slow Q1 results.   

    Prescription: BAMM should: 1) Initiate a $10 Million share buyback program which aggressively buys shares below $5 2) Sell management's jet while normalizing SG&A expenses. 3)Raise the dividend to $.06 next quarter

    Disclosure: I am long BAMM
    Mar 30 1:44 PM | Link | Comment!
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