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Cabeza Howe

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  • The Long-Term Bull Case For First Internet Bancorp [View article]
    I understand your concern. But to make money in the market, psychology (contrarian thinking, patience, and perseverance) is a key component often overlooked. It might take a few years for this stock to get to $500M. But $500M is almost 5x from here. Stocks go in cycles and the current one is not the most favorable to INBK. But the favorable cycle will come in a couple more quarters. When the tide turns the action could be violent, given how illiquid this stock is. Liquidity (or illiquidity) works both ways.
    Apr 10 11:49 AM | Likes Like |Link to Comment
  • China Xiniya Fashion Limited: Can We Look Into This Made In China Stock Without Prejudice? [View article]
    They would need to initiate an aggressive-enough buyback or dividend program to convince the jittery investing public. The concerns are actually understandable given all the accounting issues exposed on the smaller Chinese stocks.

    I talked to residents in the Jinjiang area (XNY's manufacturing base) before, and their general perception is that "cheating" or "fraud" is a prevalent business culture or practice in that area. You can be fluent in Mandarin/Chinese and tour the HQs and facilities and still be deceived easily.

    They didn't know enough about XNY to comment on it specifically. So, XNY could still be one of the most honest companies in China. But if they can't deliver a convincing proof that they actually have that much cash on balance sheet, it really would not matter to investors who are familiar with Chinese business culture. As such, I'm comfortable owning CYD or FENG, but certainly not XNY or ZA.
    Apr 8 11:20 AM | Likes Like |Link to Comment
  • The Long-Term Bull Case For First Internet Bancorp [View article]
    And now, after an amazing 287% growth in C&I loans in 2013, $INBK is expanding commercial lending to southwest U.S. with a new team operating from Phoenix:

    http://bit.ly/1fzybr8

    This stock will be discovered by the market later this year.
    Apr 3 09:26 AM | Likes Like |Link to Comment
  • Solazyme's Hidden Value For A World Made Blind By Associations [View article]
    Kevin,

    Thanks for your prompt and detailed response.

    On (1), the original 500 KT capacity projection might have included some contribution from the Lestrem France facility which has since been lost due to the SRN JV dissolution. Is that right? But then again, the company was saying the dissolution should actually accelerate the nutritional segment. So, theoretically the capacity and revenue should not be really lost.

    On (2) you have already answered my question in your first paragraph. No, I had no intention to ask about SZYM's potential market outside of triglycenkride oil, which is already an amazingly huge market. (Looking back at how I asked it, I now realize I didn't put my question clearly.)

    Best regards,
    Cabeza
    Mar 23 11:13 PM | Likes Like |Link to Comment
  • Solazyme's Hidden Value For A World Made Blind By Associations [View article]
    Hi Kevin,

    I'm a recent investor in SZYM. I really appreciate your library of articles on SZYM that I can delve into now. I have two questions for you here:

    (1) "By 2015 the company expects to bring online nearly 500,000 metric tons of capacity and over $1 billion in revenues." Is this still a realistic goal at this point? Or how much deviation will there be by the end of 2015 in terms of these two numbers? What has been responsible for the deviation if any?

    (2) The unparalleled tailored oil products sound a marvel. But why is it that we are able to design the fatty acids according to our needs via biosynthesis, while apparently we can't do the same with other chemical processes (like those being used or developed in chemical industry)?

    Your answers are greatly appreciated.
    Mar 23 08:37 PM | Likes Like |Link to Comment
  • The Long-Term Bull Case For First Internet Bancorp [View article]
    You were right about this stock being illiquid. However, if you can see the momentum this bank is building and have a desire to get in before the crowd any manipulated weakness can be a great buying opportunity. Hedge funds manipulate for reasons and when they bring it down, most likely than not it means they are trying to place a sizable bid soon.

    http://read.bi/1jgLN9Z

    And these guys do go both ways, thus creating volatility you can trade on in the near term and also weaknesses you can capitalize on for a long-term position.

    As for "housing recession," that's already history. If you look at the household formation data and new homes available (constrained by labors/materials/land), people in the know are talking about housing shortage. Throwing in the economic recovery (being bolstered by innovation, shale energy revolution, manufacturing renaissance, etc.), and people should be looking at a new housing bubble down the road. In fact just look at the house price recovery in key metro areas in the past couple of years!

    What we are seeing is a refi recession, certainly not a housing recession, which was in the past. Remember INBK has grown residential real estate mortgage loans by 48% in 2013, as pointed out in my article above.
    Mar 21 10:35 AM | 1 Like Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    Do you agree with Robert Stone's assessment today?

    "We believe the Luverne plant is producing small amounts of isobutanol from standard corn mash feedstock, and that it is being successfully converted into jet fuel for military test programs, albeit at high cost. However, commercial success depends on consistent, repeatable, high volume production at expected fermentation metrics, which may still be several quarters away. We believe achieving this is necessary before licensing partners will commit capital ..."

    http://bit.ly/1h1jZng

    Has his past analysis been on mark in the past?
    Mar 21 10:16 AM | 1 Like Like |Link to Comment
  • The Long-Term Bull Case For First Internet Bancorp [View article]
    Thanks, Vincent. In my article above, I have stated the "borrow short lend long" practices in the banking industry (and how the low-rate environment in the past few years have hurt the industry). But I do not quite agree with the broad brush statement, so often made in the media, that rising rate is good to banks. It's more complicated than that. So, instead of going with the popular view, I have chosen to point out the risks involved. Borrowing short and lending long has shortcomings as well, mainly through the repricing of short-term liabilities when rate rises. That's why sound ALM and interest rate sensitivity management policy should always be in place in banks. But as I pointed out above, FIB has managed rising rate environments quite well historically. Another thing to notice is that how fast short rate rises (relative to long rate) matters a lot. Economic outlook and inflation also play a role. A lot depends on Fed policy and how well banks respond to that. It's actually a very complicated topic.

    Investors can also take solace in INBK's conservative LTD ratio. Unlike BOFI, INBK has lots of room to increase this ratio to lower funding cost and increase NIM. Looking at the pieces and very attractive valuation, INBK indeed can be one of the best investing ideas for the next five years. On that, I fully agree with you.

    The renowned and widely-respected Wellington Management apparently agrees with us, by taking a whopping 9.88% interest in INBK vs. nil in BOFI.
    Mar 20 02:30 PM | 1 Like Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    Hopefully that's more because they have actually pioneered their technology than because of competent attorneys (just think about who backs Butamax and how much more financial resources Butamax might possess). But that's amazing anyway! Another question: why does a retrofit plant always seems to end up with less isobutanol capacity than ethanol? Thanks again for responding.
    Mar 19 03:42 PM | 1 Like Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    Thanks for the clarification. I feel a little wary about the litigation with Butamax though the district judge ruled in favor of Gevo last year. Should this go wrong, it could really destroy this company. How nervous are you about this?
    Mar 19 02:22 PM | 1 Like Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    Potential credibility issue aside, were we to deduce from Pat Grubber's hints given on 2Q (now I have read that script too) and 3Q CCs, it would mean 2H14 at the earliest for 1 million gallons month (MMGM) run rate. Pat said on 2Q call he was likely looking at <1 MMGM for EBITDA breakeven at plant level. On 3Q he basically said targeting mid 2014 for EBITDA breakeven. So we might not be hitting 1 MMGM if we were at just EBITDA breakeven in mid year. And 1MMGM would mean 2H14 at earliest. Would you agree?
    Mar 19 08:23 AM | 1 Like Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    I noticed that. Now I have sensed that you are saying some execution problems (or even mismanagement) might have contributed as well. I'm new; but this looks likely to me, when you compare GEVO to SZYM. Would you say that management has a credibility issue here to some extent?

    Also, do you have any idea if the "final fermenters" (other than the first two million-liter ones brought online mid last year) are online now at Luverne? Thanks for the articles which have helped me get up to speed with this company faster. And thanks for responding to my comments and answering my questions.
    Mar 18 08:38 PM | 1 Like Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    If shareholders believe in management's execution, they should continue to do so, hold on to their shares or even buy more at this price. Otherwise, they can either bail out of the stock or call for a change in management. But removing the CEO just because of perceived shareholder communication issues makes little sense, at least to me.

    It is not entirely clear to me if the share price performance disaster in the past few years is an industry phenomenon, execution problem, or just shareholder communication problem. I just do not believe shareholder communication should deserve that much credit.

    If the company is really this close to royalty and product revenues, maybe a little more dilution is a necessary evil. Sorry to say that; but if he can deliver some encouraging news a new share offering might actually kick off a leg up for the stock price! So he certainly needs to communicate any major achievement down the road. On that I fully agree with you.
    Mar 18 05:18 PM | Likes Like |Link to Comment
  • GEVO: Patrick Gruber's Last Chance To Deliver On His Promises [View article]
    I'm not a shareholder just yet, is studying the story, and might soon become one. The story does really appear enticing. I have read a few of you guys' articles, visited company website and read PRs for the past year or so. I have also read the 3Q13 CC script. I'm sympathetic with all current shareholders who are in the red now. Nothing is more frustrating and hurting than watching one's capital erode away due to whatever reason, but in particular if it's a stock that you have put so much faith in.

    However, could it be that this is just the way an early stage investment works? Market is relentless and just cares about the progress made toward profitability. But the labs, science and commercialization processes are always inherently difficult and full of surprises.

    How could Mr. Gruber have done differently? If he has simply said something like "in the near term we are experiencing all sorts of setbacks and the road is going to be rough, therefore you guys just do not count on Luverne to be fully commercial until 2Q15." That's very clear communication; but will the share price rally because of it?

    On 3Q13 CC, Gruber said he's targeting Luverne plant to be EBITDA positive by mid 2014. He also said he's not in a position to guide on volume as of last cc; but he hoped he would be able to do so early this year. Isn't that as clear as a CEO can be in terms of communication, in particular in this line of business?

    Should he repeat similar message in the coming 4Q CC and postpone volume guidance for one or two more quarters, should he be released of his CEO duty? Is that really to the best interest of shareholders? Will a new CEO actually help? I do not think so.

    If the company is already at a stage that royalty and product revenues are ready to roll in rapidly and quarter after quarter, the stock will just rocket higher regardless of how vague Mr. Gruber is on guidance. He could just refuse to give guidance and the stock will still fly. On the contrary, no matter how clear and how much he communicates to shareholders the stock will just continue to suffer if the company can't deliver.

    So Mr. Gruber should simply focus on execution and delivering result. Shareholders, I recommend you do NOT put the cart before the horse. Remove Gruber only because he can't execute and deliver. Do not remove him just because he can't communicate. Otherwise, you are going to hurt more.
    Mar 18 03:36 PM | Likes Like |Link to Comment
  • The Long-Term Bull Case For First Internet Bancorp [View article]
    Thanks for the comment, eduso. I have to disagree with you here. BOFI is indeed outstanding. The high P/B might indeed be justified if it can keep on spinning out the amazing performance investors have got used to.

    However, INBK is not risky at all, if you look at the graphs throughout my article. INBK has been a steady outstanding performer in its 15 years of history so far. Even assuming no acceleration of growth going forward (then it would perform like it did in the past 15 years), INBK should gradually be valued by the market at P/B of 1.5 or higher. It just takes time for the refi. bust to get cleared out of way.

    The only thing that makes one feel risky has been the refi. boom and bust it managed to participate fully in the past couple of years. And that's an indication of just how hard it is to manage interest rate sensitivity regarding noninterest income. Any bank that had a great percentage of revenue in mortgage banking has been punished hard in the past couple of quarters. But good news is that this is behind them now. Outstanding banks can now move forward, away from the refi shadow.

    And INBK's growth is now taking off, which will enable the bank to benefit immensely (more than in the past) from the great secular tailwind of internet banking. If the loan growth pace we have seen in the past year or so continues (which I think it will), INBK stands to outperform BOFI because it is trading at such a low P/B. Multiple expansion plus the unprecedented growth similar to BOFI might just drive this stock to frenzy proportion one day.
    Mar 13 11:01 AM | Likes Like |Link to Comment
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