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Edwin Berrios

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  • The Best Reason Not To Short Twitter [View article]
    This is exactly how I feel. I'm always amazed at the value that the market assigns to these profitless tech stocks. I always like to do a little exercise in these cases: If I had 23 billion (Twitter's market cap), I could buy the company and get $600 million in yearly revenues and $100 million in net losses.

    For that kind of money, I can buy all publicly traded water utilities in the US ($16 billion combined market cap) and still have nearly $7 billion left. For this, I would get over $5 billion in revenues and nearly $800 million in yearly net earnings. On top of that, I suspect there is a far greater chance of people finding a substitute for Twitter than finding a substitute for water.

    Just my two cents.
    Nov 12 03:09 PM | Likes Like |Link to Comment
  • Puerto Rico: Severe Economic Trends Cloud Fiscal Solution [View article]
    While bullish may be somewhat of a stretch, I believe you are right. With the PR "Constitution" clearly stating that government resources must be used to pay bondholders first and foremost, the citizens that remain in the island will be the ones to get screwed in this whole mess either by paying a ridiculous amount of taxes or by having their hard-earned benefits being reduced (both which are occurring right now). With all the panic selling by islanders, the new bondholders (Americans and the ultra rich Puerto Ricans) will be the ones to benefit from this massive wealth transfer while the rest of the people will be left even poorer than they are right now. Really sad to the point that makes me mad.
    Oct 17 03:24 PM | 1 Like Like |Link to Comment
  • Puerto Rico: Severe Economic Trends Cloud Fiscal Solution [View article]
    Although it seems like the criminals are aiming for it, 100 murders over a weekend is incorrect. I think you meant 10. Anyway, 10 or 100 murders in a weekend is nothing to be proud about.
    Oct 17 01:17 PM | 2 Likes Like |Link to Comment
  • Unpopular Economy Offering An Opportunity In Popular [View article]
    Nice article! Although I would not recommend investing in any Puerto Rican bank right now because the economy here is bound to get much worse than it is now, if you MUST do it, then just stick with OFG. They seem to be the only ones pushing the right buttons on a bad economic environment. The rest are a mix of horrible places to bank, TARP money still owed, bad assets still in the books and shady management (i.e. DRL top executives and murder accusations).

    Disclosure: Puerto Rico resident for 34 years. New OFG banking client tired of years of client disservice from BPOP. No positions in any Puerto Rican bank.
    Sep 25 02:15 AM | 1 Like Like |Link to Comment
  • Triple-S Management: Poised For Short And Long-Term Stock Gains [View article]
    I'm sorry, but the information on the link is nearly a year and a half old. A lot has happened here since then. Here's how things are looking right now:

    As I told you before, for my island's sake, I surely hope things get better. We would certainly welcome a break from years of bad news. However, it doesn't look like its going to happen.
    Aug 28 05:09 PM | 2 Likes Like |Link to Comment
  • Triple-S Management: Poised For Short And Long-Term Stock Gains [View article]
    By the way, I have no positions in GTS and this is one of those situations where I just hope I am TOTALLY wrong!! :)
    Aug 27 12:57 AM | Likes Like |Link to Comment
  • Triple-S Management: Poised For Short And Long-Term Stock Gains [View article]
    Nice analysis. However, I would like to know where do you get the information that an economic recovery is forecast for 2014? I live in Puerto Rico and I can assure you that things are bound to get much worse before they get better. Government has imposed a barrage of new taxes on businesses (including an additional 1% tax on some premiums earned by insurers) which will most likely have a negative effect on profitability and, ultimately, on consumers. People are being squeezed out of every single dollar on all fronts to try and keep the ratings agencies from degrading PR's debt to junk status.

    Unemployment may be on a downward trend since 2010 but we are losing jobs across the board. Since our economy went into a nosedive around 2006-07, our labor force has shrunk by more than 15% and jobs have been reduced by more than 12%. People are simply abandoning the labor force or leaving the country to search for better opportunities (mostly in the US). With these and many other issues to confront, I just don't see the economy recovering in the near future; much less growing.

    The last time I heard some news from the Obamacare issue here in PR was that the penalties to individuals who do not have insurance do not apply to PR residents. I don't know if this is true. Also, I read that the amount uninsured people that would benefit from it was approximately 350k. This would be roughly 10% of the population only. I am not really sure what would be the effect if any on GTS's bottom line.

    Don't get me wrong. Triple-S is (along with Banco Popular) one of the largest companies in PR. They are one of the largest taxpayers in the island and they run part of the government sponsored health plan which means they have a lot of influence on politicians and how legislation is carried out in this field. At least you can be sure they won't get royally screwed over by the government or go out of business. However, I really doubt they will see anything close to 11% growth for the next 5 years.
    Aug 27 12:34 AM | Likes Like |Link to Comment
  • Problems Continue At Doral Financial [View article]
    Again, nice article!! Keep up the good work. Couple of things. First, if you are looking for a trade, this stock might work for you. If you are looking for an investment, all I can say to you is STAY AWAY FROM DORAL FINANCIAL!!! I live in Puerto Rico and can assure you without any doubt this is the worst of the four major Puerto Rican banks (the others are OFG, FBP and BPOP). I know many people who work there that tell me that management is awful.

    Second, the Puerto Rican economy has been in really bad shape for nearly a decade and, instead of improving, things seem to be getting worse. Instead of creating jobs, we have lost nearly 30,000 jobs in 2013 alone. Our best and most educated people are leaving the country to find better jobs elsewhere. Quite simply, these banks will find it very hard to grow unless they start to merge or one of them fails. In any case, I don't see anybody wanting to merge with DRL since it is the one that is in the worst shape of all. I would rather take the approach used by OFG for growing during this period: waiting for a bank to fail and then buying it from the FDIC (Eurobank) or buying the assets of a bank that is leaving the market (BBVA).

    Aside from all the bad loans they have to take off the books, what I would like to know is how these banks will deal with all the real estate they own. It's actually sad to see all the new residential and commercial buildings in San Juan and the surrounding municipalities that are nearly empty or completely abandoned. Houses and apartments that originally sold for $800k are now selling for $200k and still can't sell!!! As a matter of fact, as I'm writing this, I can look outside my window and see one of those buildings. Completely abandoned because the developer couldn't sell even one apartment.

    Last, with all the good investment opportunities out there, why would you want to put your money in a company whose SENIOR MANAGEMENT is being accused of being involved in the murder of a fellow executive of the company? Now I'm not accusing anybody of anything but when you read reports that this guy had uncovered fraudulent activity by management; that he had received death threats prior to being murdered; and you hear police openly saying "This looks like a carefully planned execution" (and if you live here and know how these car to car shootings are carried out by the typical criminal, it does look that way), then there is simply no reason whatsoever to stay around.
    Aug 21 03:38 AM | Likes Like |Link to Comment
  • First BanCorp: Recovering, But Not Much More Meat On The Bone [View article]
    Nice overview of FBP. I want to add a couple of things:

    1) Financial institutions can take a deduction of 0.5% of the gross receipts tax paid during the year. For AMT purposes, although NOL's can be carried forward for a longer period, the amount of NOL you can use to offset income subject to AMT in any year was reduced from 90% to 80% of taxable income. There are certain other aspects of the new tax law that, when combined with the ones you discussed in the article, will have a negative effect on future profits, if any.

    2) With the exception of OFG Bancorp, I would not consider any other Puerto Rican bank (FBP, DRL, BPOP) as an investment. Those three are just poorly managed and just bad places to bank. Believe me, I've gone through all of them.

    3) Puerto Rico's economy has been awful for nearly a decade and the trend doesn't seem to be coming to an end anytime soon. There is simply no way for these banks to grow unless they consolidate or go out of business. The way OFG has grown in this period has been by buying the assets of defunct banks (i.e. Eurobank) and of those that have simply left the market (i.e. BBVA).
    Aug 19 05:21 PM | Likes Like |Link to Comment
  • A $132 Million Company Worth Less Than $0: Short Inscor [View article]
    Today is the perfect example why you don't mess with these things. Any "lucky" soul "fortunate" enough to get their hands on some shares to short would have felt like a genius at noon only to have their heads handed to them on a platter by the end of the day.
    Aug 9 08:07 PM | Likes Like |Link to Comment
  • Rentech: An Undervalued Special Situation Investment [View article]
    I agree with you about repurchases. I was a little disappointed no stock was repurchased in the quarter. I want to see some activity in the repurchase area during Q3.

    Whether or not it is a seasonal business has not been established by management so I really don't know the answer. I just can't call it a dud after two months and at least tuning a profit in the period. As I said earlier, it sure beats the guaranteed $10 million-plus quarterly losses of the alternative energy business.

    Remember, I'm not saying this is the best company out there and that it should be a core holding for your retirement portfolio. My argument is that the shares are mis-priced and that there are some catalysts that could get the shares to my calculated target price. Once they get there, I just don't see at this moment a good enough reason to stay around. Thanks for the comment!
    Aug 9 12:02 PM | Likes Like |Link to Comment
  • A $132 Million Company Worth Less Than $0: Short Inscor [View article]
    @awgreig I think there is value in at least alerting people not to buy the shares although I really don't need anyone telling me not to buy Pink Sheet penny stocks. I once played with them and accumulated some nice tax losses for my efforts. I've seen a lot of articles lately on penny stocks which is clearly an attempt from many authors to get that Alpha-Rich or Small Cap Insight guaranteed money. Some of these articles are very good and some are not so you have to be able to separate the wheat from the chaff. That being said...

    @Ashraf Very nice article. I believe you are one of the best authors in SA. I always enjoy how you analyze a business and how you communicate your ideas. Great job with this article. However, since I consider you one of the best, I will hold you to a higher standard than the rest and your call to action in the title (Short Inscor) shows you failed to ask the most basic question: Can my audience take action with my recommendation? As others have noted earlier, this stock is practically impossible to short so the answer seems to be no. Hey, the moon may be undervalued but it doesn't mean I can buy it. Not trying to be picky, just trying to give you my opinion in the most respectful way I can. Keep up the good work!!
    Aug 9 01:03 AM | 7 Likes Like |Link to Comment
  • Rentech: An Undervalued Special Situation Investment [View article]
    Results are just for two months Q2. Don't know if it's seasonal but certainly there must be some acquisition related expenses in there. But hey, at least it generates a profit from operations and it's not losing $10 million-plus per quarter as the alternative energy business once did. All in all, I think it's a step in the right direction. Thanks for the comment!!
    Aug 8 11:16 PM | Likes Like |Link to Comment
  • Southern Copper Is Currently Undervalued, But With Short-Term Risks Still Present [View article]
    Thanks Bob!! I really enjoy your articles. I discussed the risks of labor issues in the article. Thanks for pointing out the government intervention and environmental issues which I believe are also important. I think one has to monitor the government intervention issue very closely (specially in South America) because a change in power could change the investment climate (specially towards the mining industry) very quickly. The next elections in Peru are in 2016 and a new President will be elected; this is definitely a risk to monitor. Tia Maria has been a problem for the company but I believe they have done a good job in relocating and putting to use much of the equipment they purchased for this site.

    As you say, it remains to be seen if expanding at this moment is a wise move. However, I believe copper demand will remain strong and that supply may falter because lower prices will make many existing, development and expansion projects uneconomical, especially for the higher cost producers. If that happens, SCCO will be there to benefit ahead of those that decided to wait to expand.

    Please look at my response to khatcher's comment for my thought on the shareholder's rights issue.

    I just want to see what the company has to say when it reports Q2 earnings. It should give us a better idea of how this will turn out.

    Again, thanks for your comments!!
    Jul 22 12:53 PM | 1 Like Like |Link to Comment
  • Southern Copper Is Currently Undervalued, But With Short-Term Risks Still Present [View article]
    Thank you!! One of the main concerns I've heard from many people is the shareholders' protection issue because of the controlling position of Grupo Mexico. I think it is a legitimate concern. First because of the fact that the possibility of abuse from the controlling shareholder if it decides to purchase all remaining shares is clearly possible and second, because the company has been involved in a similar lawsuit in the past (which it lost).

    The company is based in Delaware and, although I'm not a law expert, I believe that recent court decisions in this state regarding related-party mergers have provided for stricter standards that controlling shareholders must meet (special committee of independent directors and approval of the majority of the minority shareholders) in order to shift the burden of proving that a transaction is unfair to shareholders. I believe these decisions should make it tougher for Grupo Mexico to take advantage of minority shareholders in SCCO in case a buyout offer is made because it would make it easier to challenge the transaction.

    If you want, you can read more about this in these two articles:
    Jul 22 11:58 AM | 1 Like Like |Link to Comment