Complete Growth Investor

About Pinnacle Airlines, and Concentrated Risk

94487,

Look at the second page of his ownings in the 13-F. He still owns Wellcare in the same amount.

101010,

I agree that the small and micro cap field can indeed be filled with landmines. I don't think that's any reason to ignore it, though.

You do need to be filled with a sense of risk and be looking for risk under every rock. As I'd highlighted in the article, risk is everywhere and, in small caps with no moat especially, you really need to be atuned to all of the risk factors that could cause your investment to take a big hit.

Maybe Mohnish didn't take enough caution, I'm not sure. Maybe Pinnacle will triple from here. I can't make that judgment. But there are some obvious lessons to be taken from a company, in this case PNCL but that includes many companies, that rely on only a few companies for business. The "tail risk" grows in that proposition.

About Pinnacle Airlines, and Concentrated Risk

I hesitate to indict Mohnish here. He's got such a good head on his shoulders, but he made some mistakes, all at the same time. Besides Delta, they may not even be permanent mistakes. CRYP is down, PNCL is down, ATSG is down. I highlighted some risks here, but I'm not saying these are permenant capital impairments. Maybe, but his fund could easily double from here...

Numbers Check on Sears Holdings - It's Cheap

To those that have made intelligent criticisms and comments, I thank you. You've all brought up some terrific points. There are a ton of variabilities to the valuation of Sears, but I only want to point out that I am agnostic as to how Sears reaches its ultimate valuation. The point of the column was not to argue that Sears is a great retailer, nor even that I have faith Eddie will turn around the retail operations. The retail valuation was merely a look at what Sears might be worth if that situation were to occur.

Were I to pick one, I give much more weight to the second valuation, sum of the parts. At minimum, I don't see the assets being worth less than the market values them today. The range of values I presented above I believe present a conservative look at asset value, with other upsides that I mentioned.

Lastly, I caution all not to underrate the value of incentives in this case. Edward Lampert has an entire career nearly riding on the case of Sears, and should he choose, he has options to maximize the value of Sears' assets without a retail turnaround. This is a backup option, but one not to be taken too lightly considering the incentive for Lampert at some point. He's got intelligence, assets, and and incentives. That's worth a great deal, though not in a quantifiable sense.