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Gasebu Private Investor

 
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  • Investment Rationale For Banco Santander [View article]
    Dear all. I replied many of you, if not all. No reply from my side appears published so I don't know if I'm doing something wrong. Just a quick note on what has been the main issue of your replies. SAN is still a Spanish bank with, I estimate, 40% of its assets in Spain + Portugal.

    To be more accurate they have 32% of their gross credit portfolio (not total assets) in Spain + Portugal, 28% in UK, 12% in Brazil and the rest spread in rest of Europe, Mexico, USA and other countries.

    The 15% reference you have refers to the contribution of Spain to their recurring income and not its credit.

    Gasebu.
    Feb 10, 2013. 10:16 AM | 2 Likes Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    Thanks for the input. You're right but to some extent. In fact 32% of their gross, before write-offs, credit portfolio is in Spain (28%) + Portugal (4%). I would say that is a more correct measure of their exposure and probably if you count with other Spain based assets their true exposure is more at the 40% level.

    The 15% relates to the contribution of Spain to their recurring net profit, that is also before real estate loans write-offs, which shows the current under performance in Spain + Portugal, since they only get 15% for 32% of their credit portfolio.
    Feb 10, 2013. 08:42 AM | 2 Likes Like |Link to Comment
  • RadioShack: Investment Or Speculation? [View article]
    Hi Aventador,

    Understood, but you would have had to mention on your previous comment that the 11% is for $100 million, not the whole of the company's debt.

    The 11% refers to a fraction of the debt they had to arrange in November 2012 to get to their 50% refinancing target of the $375million maturing next August 2013.

    I agree it is a high price and I appreciate you raised the issue. The company can pay that rate for part of the debt but if all of the debt's cost goes to that level, as maturities come, it's a problem to be analyzed and I will review on that.

    They want or need to refinance $187,5 million and they already closed $ 100 million paying, I agree, a high price. But it is also a good sign that tough problems are solved ahead.

    My goal is to look objectively at facts and I have the feeling you are not telling the story as it is and presenting facts in an incomplete fashion.

    I have already commented on facts that invalidate several arguments you mentioned and you don't seem to respond to that evidence, and instead you come with new arguments.

    You can be 100% right on those new arguments, I am not saying you cannot be right, but what counts for me are facts first and their interpretation after. You seem to put the interpretation ahead of the facts.
    It is not a critic, it is an observation.

    Gasebu
    Mar 5, 2013. 02:31 PM | 1 Like Like |Link to Comment
  • RadioShack: Investment Or Speculation? [View article]
    Thanks for your input. I write here precisely to get feedback on my investment ideas, and the more different they are than mine, the better.

    I agree the "leading" adjective might be a bit too optimistic.

    There are some things you mention that I don't agree with, simply because they aren't true. RSH does not have a negative balance sheet. In fact I assume you want to say negative equity because there is no such thing as a negative balance sheet. I did a simulation on the article that is one example of what that value could be but as I mention, hypothesis on this adjustment factor are hypothesis and you can make take many different ones, more positive or more negative.

    The equity of the company could be indeed negative if we assume pessimistic hypothesis on the "monetization" adjustment of their assets and we assume that debt holders won't accept any adjustment. That happens for RSH and many other companies as long as there is some debt in the balance sheet.

    Equity of the company as of December 2012 is $599 Mn (therefore not negative) coming down from $753 Mn in 2011. At this rhythm of value destruction the company has got 4 more years of life before being in negative equity. The market has already discounted the same volume of losses for 2 more years, since the company is trading at 50% of 2012 book value.

    I am sure there is a lot of people that know how to read balance sheets and I think I am among them.

    I am not defending RSH, I am thinking the Market may have gone a bit too far on the pessimistic side. I hope and trust everybody takes this as an opinion and is grown up enough to take its own proper decisions.

    I can only guarantee that I back my words with actions. I have bought RSH shares at 3.1 after the issuance of this article. As said on the article I have only dedicated a marginal fraction of my portfolio to this security.

    Gasebu.
    Mar 4, 2013. 08:22 AM | 1 Like Like |Link to Comment
  • RadioShack: Investment Or Speculation? [View article]
    Thanks for the observation.

    The evolution of the company - and even more the evolution of the stock- allows for very negative views like I think is yours.

    I don't want to be enthusiastic nor pessimistic when dealing with investments. I agree that the company needs a new mindset and that the company is dazed and confused as I also suggested in my article but at the same time we cannot forget objective facts.

    The company is trading well bellow its Book Value and Cash per share reference. In 2012 it has been the first year since I have record (1991) that its EBIT margin has turned negative. This event can repeat itself in the coming year and quarters and put the company under the water but we cannot take that for granted and consider the company is already doomed.

    We cannot forget that at these values there is margin for positive value breakup or other M&A alternatives and it is with this in mind that I risked a bit of my investment capacity with RSH.

    It is not a great company, but it is not a disaster of a company and the value is compelling. I don't look for a turnaround but I think the market as discounted all negative events and maybe has forgotten than positive ones might also show up. Since the price is good enough I think it is worth the ride, not forgetting that we did not buy, at least I didn't, because I love the company.

    I won't feel attached to RSH and I don't have the intention to stay invested for a long time and even less dream with turnarounds but I think pessimism might have taken control of the stock which is a good think when trying to find opportunities.

    Gasebu
    Mar 4, 2013. 05:28 AM | 1 Like Like |Link to Comment
  • RadioShack: Investment Or Speculation? [View article]
    Hi Danthrax,

    I agree and as I say in the article my most probable scenario is any kind of M&A that brings higher value to the shareholders than current share price.

    We cannot discard a turnaround but it shouldn't be our investment case scenario.
    Gasebu.
    Mar 3, 2013. 06:35 PM | 1 Like Like |Link to Comment
  • RadioShack: Investment Or Speculation? [View article]
    Hi Jeffrey,

    I agree it is very difficult to turn around RSH. It is a race against the clock. The financial situation of the company as of today is good, but unsold product stock begins to grow, margin is already negative, and things could get tougher, unless the management is able to implement some energetic moves.

    That is why I think we have to be very cautious.

    Gasebu
    Mar 3, 2013. 04:06 PM | 1 Like Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    Thanks for your feedback too. Those 5 years look like a nice investment horizon. Gasebu.
    Feb 10, 2013. 02:01 PM | 1 Like Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    It's hard to see how cheap it was not long ago, but the risks in Europe and Spain in particular were also much higher so it is better to look ahead and don't miss what I think is good value investment.
    Feb 10, 2013. 01:57 PM | 1 Like Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    Mr.BotĂ­n and its team are well known for its flexible approach to adapt to the market and try to get profit of windows of opportunity. If price gets right they will change their minds quickly and react to it, despite being such a huge institution. As commented above I think there is more to Spain than just the HQ, but you're totally right is an international bank.
    Feb 10, 2013. 08:39 AM | 1 Like Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    In my opinion 60%, not 85% as people seem to understand. As commented above, one thing is the contribution to recurring income and another one is the weight in the balance sheet. In that sense Spain + Portugal are 32% of the gross credit portfolio, UK is 28% and Brazil is 12%.

    In bigger geographic groups. Europe ex-UK would be 40%, UK 28%, Latin America 21%, USA 5% and other countries is 6%.
    Feb 10, 2013. 12:05 AM | 1 Like Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    I agree past 10 years EPS may underestimate valuation, but I prefer to be on the safe side than the opposite.
    Feb 10, 2013. 12:04 AM | 1 Like Like |Link to Comment
  • Rotork Has All The Quality You Could Want [View article]
    Thanks for the article. I am beginning to analyze the company, based on its outstanding past performance, and it seems clear that we have to assume a very bright future in order to justify this valuation. Probably will be better to wait for tougher moments. Thanks.
    Jan 29, 2014. 02:37 PM | Likes Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    The bank is as strong as it was. Conversion of reserves into capital does not change the book value of the bank.

    JPM will remember that analysis of the bank for a long time.

    Q2 as you all point out seem very strong and confirm the basis for what might become an excellent investment.

    Thanks a lot for your through analysis. It helps me a lot.

    Gasebu
    Aug 4, 2013. 07:19 PM | Likes Like |Link to Comment
  • Investment Rationale For Banco Santander [View article]
    Many thanks for the input.

    I asked with intention and with the suspicion that the view from Europe is quite different.

    Thanks again.

    Gasebu.
    Jul 16, 2013. 10:04 AM | Likes Like |Link to Comment
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