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Chris DeMuth Jr.

 
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  • Best Long Idea For 2015: BNCCORP [View article]
    Sadly one of many many instances of bad timing and losses that I've suffered along the way. Happily, it has netted out as it has. More thoughts here so as not to repeat them: http://bit.ly/1J3QMcA.
    Dec 17, 2014. 02:40 PM | 2 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Well, I hope the price goes as close to $0 as possible before year end so I can pick up a few more shares and so it will make my 2015 performance easier. New rating: SELL (to me).
    Dec 17, 2014. 11:26 AM | 6 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Luke Edson,

    Good question. Thanks for asking. Oil prices will have an impact because the economy in North Dakota is highly impacted by oil. BNCC has not been a big lender to the oil industry given they are too small to make that type of loans. In fact, opportunity in the oil industry is one of the reasons why they should sell. That being said, their loan portfolio would be negatively impacted if oil collapsed from here. They have loans out on multi-family projects built to house oil workers. If oil goes to $25 per barrel, many of these workers will leave and the buildings will become approximately worthless. If oil is at $25, you would not have as many buyers for BNCC. If oil stays where it is now or declines modestly, they will be fine. There would not be as much new exploration in the short-term but the current economic activity would continue. That is what BNCC needs to avoid credit issues. The Bakken region is sustainable and that there are banks that would acquire BNCC. While it is difficult (impossible for me) to estimate where oil prices are headed in the short-term, longer term it will be fine for BNCC.

    BNCC’s loan to deposit ratio is less than 50%, meaning that they are not as much a lender as a deposit gathering machine. They have a trust and asset management division that benefits from the wealth creation in the Bakken. Such wealth is not still in oil and it would not disappear if oil continues to decline. Only 59% of their loans are in North Dakota. They have significant other exposures in Minnesota and Arizona. Their mortgage operation is multi-state. Allegorically, the oil weakness is a problem that drove down BNCC’s share price. Statistically, the facts do not bare out the oil price as something that justifies a price of BNCC under $20 by itself or under $25 in a deal (we would oppose selling for under $25 and would hope for a price closer to $35).
    Dec 17, 2014. 11:26 AM | 5 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Jason, that is a legitimate concern that cannot be minimized. In the case of BNCC, we are talking about 10% of their loans. Some could go bad. I will probably look at making offers for any in distress, so there will be a market for such loans.
    Dec 17, 2014. 10:51 AM | 2 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Yes, they are my model for what one can do. But I would want to push it even further beyond traditional banking activity.
    Dec 17, 2014. 10:15 AM | 1 Like Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    That is a legitimate concern. It is something that I plan to monitor closely for two reasons -- to better understand BNCC's risk profile and because I love making offers to banks to purchase loans to own such firms.
    Dec 17, 2014. 08:29 AM | 3 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Indeed! My only complaint (well I have many complaints, but my only complaint at this very second regarding the limitations of being a bank holding company) is that the use of their assets is so restricted. I wish that one had more flexibility to use float to put together a portfolio of value investments such as has been done with insurance companies.
    Dec 17, 2014. 08:03 AM | 4 Likes Like |Link to Comment
  • BNCCORP Looks To Continue Its Chart-Topping Performance [View article]
    Profit Fan: Rangeley Capital has owned BNCC for a long time and I have benefited hugely from your articles on the topic. I didn't want to mention it because we had not finished sizing our position when you started writing about it. Now, it is our top investment idea for next year and one that is likely to be monetized at a substantial premium. If you are interested, here (http://bit.ly/139D8nk) are my chicken scratches on the topic. If you don't mind thinking about this one further, what do you think it is worth to a buyer if they were to be able to take the income from BNCC and slash away at non-interest expense? I get an answer that sounds too high to be believed relative to the cost of buying shares in the market today. But, why can't a buyer take out several million dollars of expense? I use a 25% reduction but would be tempted to try for closer to 100% were I the buyer.
    Dec 17, 2014. 07:45 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Oil Prices Slide Ahead Of Fed Meeting [View article]
    So far, three out of my four bank ideas (previous to this week's) have been successfully acquired. One of those required a 13D filing and some encouragement. If this week's idea, BNCC (http://bit.ly/1zrO7VM), works out, it will be acquired before the end of 2015 for at least $25 per share. It could be worth as much as $35/share to the buyer. This is quite a bargain anywhere beneath $20. Please check it out and share your thoughts.
    Dec 17, 2014. 07:33 AM | 2 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Ruerd, it is a historical anomaly based upon our regulatory history. Agricultural interests did not want all of the bankers to be from the big cities such as New York because they viewed big city bankers as less sympathetic to their plight when they had a bad season. They did not want banks foreclosing on their farms. So, they placed burdensome regulations that prevented branch banking, forcing separate and later publicly-traded banks to stay at the state level. The farmers thought that bankers who were their neighbors would be more understanding. This never really made much sense and the regulations were subsequently changed, but left behind thousands upon thousands of tiny, publicly-traded banks ripe for consolidation. One could roll them up, but again regulation enters the picture. It is hard to get approval to be a bank holding company and without such approval, it is hard to own more than 9.9% of a bank's equity.
    Dec 17, 2014. 07:17 AM | 9 Likes Like |Link to Comment
  • Best Long Idea For 2015: BNCCORP [View article]
    Thanks. I downplayed what I think it is worth to a buyer. $1.5 mil of income while reducing non-interest expenses by at least $2 mil would make it worth over $30/share in a deal. $25-28 is the compromise.
    Dec 17, 2014. 06:51 AM | 6 Likes Like |Link to Comment
  • GoPro's CEO Is Stoked... But Selling [View article]
    In the third quarter of 2014, GPRO entered the quarter with $80.4M of net inventory. They were able to generate $279 million of revenue during the quarter with product cost of $155.9 million. Using the same ratio of product cost to starting inventory for the fourth quarter, $117 million of inventory would support product cost of $227 million at a gross margin of 44%. This would yield fourth quarter revenue of about $405 million. This is somewhat short of the $540 million forecast. They say that they have ramped up their production so this may not be a problem. However, in checking on Amazon and in Best Buy, there are few available in the low and medium price range. Maybe they already produced them and they are sold out. Maybe they will get here this week. The risk at Christmas is if they are one week late, then they will need a price cut to move them in January and the dealers will look to GoPro to foot the bill.
    Dec 17, 2014. 01:37 AM | Likes Like |Link to Comment
  • GoPro's CEO Is Stoked... But Selling [View article]
    Great question. It is something that we are very interested in but not something that we are ready to discuss. -C
    Dec 16, 2014. 03:51 PM | Likes Like |Link to Comment
  • GCVRZ Forum [View instapost]
    MS drug has the potential to change lives: http://bit.ly/1wDdxPa
    Dec 16, 2014. 03:02 PM | 2 Likes Like |Link to Comment
  • Peer To Peer Investing Forum [View instapost]
    Mike, I am very interested in this question, but don't know enough to answer intelligently. Could you explain what Overstock is doing? Thanks/sorry. -C
    Dec 16, 2014. 11:05 AM | Likes Like |Link to Comment
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