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Christopher Wallace  

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  • Leucadia And FXCM: Is This Knight Capital Re-Visited? [View article]
    Full disclosure: I am now long LUK.
    Jan 20, 2015. 09:54 AM | Likes Like |Link to Comment
  • FXCM Provides Further Details on Financing With Leucadia National Corporation [View article]
    Wow! That means LUK gets the lions share of any sale proceeds. This will be a disaster for the FXCM equity holders, and a significant potential upside for LUK, at least as an ROI. It is less significant to LUK overall as the loan amount is only about 3% of capital. Still, nice piece of business for LUK, pretty expensive for FXCM.
    Jan 20, 2015. 12:53 AM | 1 Like Like |Link to Comment
  • Don't Rush To Dive Back Into FXCM [View article]
    You have confused market with book value in your analysis. Simply, book value was $265 mil at 9/30/14. The company estimates the loss on the Swiss Franc at $225 mil. That estimate should be net of recoveries. That takes book down to $40 mil. Divide by 47 mil shares and book value today is $0.85. P/BV before the meltdown was 2.5. So the highest number you get is $2 on a P/BV basis. And that is before LUK gets whatever (not yet announced) percent of the equity. This is likely to trade between 1 and 2 on a book value basis. That does not consider additional losses in the coming quarters due to AUM run off, sales people and other employees leaving, legal and collections cost. This was a major hit to FXCM. Your analysis is more akin to missing earnings estimates by a few pennies.
    Jan 19, 2015. 07:16 PM | 5 Likes Like |Link to Comment
  • Don't Rush To Dive Back Into FXCM [View article]
    A correction for your first paragraph. FXCM did not generate negative equity of $225 million, they lost $225 million. That would leave them with small positive equity, ~ $40 million or so as at Sep 30.
    Jan 19, 2015. 11:57 AM | Likes Like |Link to Comment
  • Don't Rush To Dive Back Into FXCM [View article]
    I think it would be pure speculation to buy shares in FXCM at this point. The LUK loan gives LUK a percentage of proceeds if FXCM is sold. That FXCM will be sold is pretty much a given, as a loan is not permanent capital. The big question then becomes "how much of the sale proceeds does LUK get?". Without knowing that answer, how can you possibly put a value on FXCM? If LUK gets 10%, that is one thing, if they get 90% that is quite another. The strange thing is that neither company has disclosed the amount. I don't think FXCM will re-open until such disclosure has been made, but if for some reason it does, I would stay away until you know that very important detail. LUK you could speculate on before knowing how much equity they get. Given they had all the face cards in the negotiations, it is not likely they got anything less than their pound of flesh.
    Jan 19, 2015. 11:47 AM | 5 Likes Like |Link to Comment
  • Leucadia And FXCM: Is This Knight Capital Re-Visited? [View article]
    @Robin, I think there is a reasonable debate on the JEF value but I cannot see any reason for reducing the value of the LNG facility. Last seen, LNG was over $15 and the decline in dry gas prices serve to enhance the facilities profits.
    Jan 19, 2015. 11:37 AM | Likes Like |Link to Comment
  • Leucadia And FXCM: Is This Knight Capital Re-Visited? [View article]
    The one very perplexing aspect of the FXCM loan is the failure to disclose exactly how much of the equity LUK gets upon a sale. Handler is a master negotiator and he held all of the good cards during those negotiations. I have to believe he got significant compensation for providing the emergency funding. I just don't know why they have not disclosed it. I cannot see FXCM opening until that very material fact gets disclosed.
    Jan 19, 2015. 11:28 AM | 1 Like Like |Link to Comment
  • Leucadia And FXCM: Is This Knight Capital Re-Visited? [View article]
    I am afraid not silvmich. SNB has taken a loss equivalent to 6% of GDP. Too expensive to keep going and that is why they stopped. They hit their stop loss. Forbes describes it well here: http://onforb.es/1AC2q76
    Jan 19, 2015. 11:24 AM | 1 Like Like |Link to Comment
  • The Main Bearish Thesis On Crude [View article]
    An interesting a well reasoned article. One additional point to consider on rig productivity is that as exploration declines there are less new sweet spots discovered. Hitting a sweet spot is dramatically more productive and since those areas tend to get drilled first, as time goes by productivity should decline unless new sweet spots are found.

    I think the most dangerous factor is the potential to use horizontal drilling and hydraulic fracking techniques outside of North America. I don't know to what extent the geology across the globe accommodates tight or shale formations, but if they exist elsewhere there could be an awful lot more supply worldwide if the technology is adopted across the globe.
    Jan 19, 2015. 11:06 AM | 5 Likes Like |Link to Comment
  • The Swiss National Bank Claims A Victim: Volatility Fails FXCM Inc. [View article]
    I think it is very speculative to trade in FXCM just now. The volatility will be huge as there remain so many unknowns at this point. But LUK strikes me as a very good bet at this point.
    Jan 18, 2015. 06:24 PM | Likes Like |Link to Comment
  • Don't Let Oil Pressure Affect Your Blood Pressure [View article]
    I have certainly followed this author for a while and found his articles to be well reasoned and thoughtful analyses. Depending on timing, you could have done well or not buying his names, the same for most authors here. Short AAPL has been a rather obvious exception, but every author here has one or two major embarrassments. It is a part of making calls on the stock market. But the analysis of the oil market here in this article strikes me as an accurate and tidy summary. Speaking of "form", commenting on the article as opposed to the author would probably be better form.

    As a former director of an oil service company I know just how damaging a commodity price drop can be for business. I rather think his version of events, not yours, is the more likely to unfold over the next few months and I would think shorting in the service cos to be a profitable enterprise.
    Jan 12, 2015. 05:03 PM | 7 Likes Like |Link to Comment
  • Why Hasn't The Market Reacted To Energy Fuels' Buyout Announcement Of Uranerz? [View article]
    Long term I think the merger may benefit all the shareholders as scale increases. URZ has lower costs due to ISR method but requires a specific mineralogy and hence a much smaller resource. (Perhaps there are deposits URZ has that are amenable to conventional mining?) UUUU has a higher cost but greater resource. The question from here becomes will the combined entity be better able to take advantage of higher prices (should they eventually come) than the separate companies could on their own. I think that shareholders would be served by the companies supplying more detailed info as to what the potential benefits might be.
    Jan 11, 2015. 07:12 PM | 2 Likes Like |Link to Comment
  • A Long Term Growth Strategy In West Africa: Endeavour Mining [View article]
    A good, well-researched article. I have followed this company for years and traded in and out of it. Time to now get back in.
    Jan 6, 2015. 11:25 AM | Likes Like |Link to Comment
  • Still No Reason To Buy The Dip In Natural Gas [View article]
    The cure for low prices has always been low prices and I suspect that capex should fall off markedly with prices at these levels. I think that Paulo has it right in that the evidence of production curtailment is not in....yet. My view is slightly different than his in that at the low $3s this commodity is so uneconomic that I don't see prices going below that level or at least not staying there for any amount of time. Speculators could reasonably anticipate a bottom sometime soon; investors will want to see more of the evidence on production declines first. I am not long but anticipate getting long nattie soon.
    Dec 23, 2014. 03:02 PM | 1 Like Like |Link to Comment
  • BlackBerry Ekes Out A Profit Despite Sales Tanking [View article]
    A good, sober, rational analysis, Michael. I sold my BBRY near the open for a small loss on the trade. I appreciate the effort and results that Chen has created. But ultimately device sales are needed to justify the investment case for BBRY in my mind. The revenue miss here is enough to send me to the sidelines until I see more evidence of traction gained for that segment. I would return to this name if BBRY puts out numbers showing greater take-up of their phones or perhaps if the stock gets dragged down by a general downdraft in the market. Upside from $10 strikes me as limited in the present circumstances and so I will look for other places to invest that capital, particularly when I contemplate the risk in this name.
    Dec 20, 2014. 12:37 PM | 8 Likes Like |Link to Comment
COMMENTS STATS
1,150 Comments
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