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Harry Beck

 
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  • Gazprom: A Mega-Cheap Valuation [View article]
    Zzan,

    The dividend could drop. No question. My thesis is mostly dependent upon a doubling in the P/E ratio of the company, much of which will come from Russia eventually being valued more favorably than many third world countries.
    Sep 21, 2012. 02:11 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    Interested Reader,

    Life settlements are NOT becoming a bigger and bigger business every year as you claim, but the industry is past the bottoming out that occurred after the STOLI stuff ended and the 2008 VBT. Life settlements SHOULD become an asset class more people and institutions invest in because of the absolute return and diversification potential. I believe statistics show no investor will get adequate diversification unless they have AT LEAST 30 policies, and the 30 number will not protect an investor from an outlier event. 200 to 300 policies constitutes an adequately diversified portfolio for many institutions.

    Demographics still favor life settlements, as you point out. Many life insurance companies would prefer no settlements, but many don't care (AIG as an example) and have found ways to profit from them. The objection of some carriers to settlements has nothing to do with profitability, since an actuary can adjust pricing for life settlements in a few minutes. There is an issue more important to these carriers: Preserving the tax free buildup of life insurance by making sure Congress doesn't view insurance as an investment. Yes, it is contradictory that these same carriers promote variable products, but they do so with the hope that most people will keep the insurance to maturity.


    The argument that big, bad Wall Street is against poor little LPHI is pure folly. Right now the life settlement market is so small in the scheme of total investments that most institutional investors aren't exactly chomping at the bit to get back into this arena until they know with better certainly what returns are likely expected. Besides, Wall Street isn't going to promote a product to retail investors without full disclosure. This means letting investors know the total fees and commissions in their investments, and properly reporting past performance.

    The AG of Texas may run into trouble on Monday. He still has to prove the investments are "securities" to the judge, and he still has to attach the alleged $300 million shortfall to a firm (LPI) that doesn't hold the policies. That may be a stretch. Some opine that the company allegedly is deceptive with their trade practices. We'll see. Regardless, the SEC and civil suits look a lot stronger to me right now than the one from the TSSB.

    Regardless of Mondays outcome, the LEs provided by Dr. Cassidy are still way too short, with the SEC believing roughly 90% of investors have recently seen their LEs exceeded. The fact that the company never requested Cassidy monitor or change his methodology makes some people believe the company really doesn't care about the fractional investors. This is no way to get future business. If I ran a company and cared about my clients, I would offer full disclosure. I would also constantly monitor and adjust any valuation method that was meaningful to clients.
    Sep 21, 2012. 02:04 PM | 1 Like Like |Link to Comment
  • Focus Media - New Bronte Allegations Make It A Strong Short [View article]
    Shiner Young,

    This time might be different since Carlyle will lose long term being associated with this likely fraud. The Bronte blogs may provide a bit of moral suasion to avoid the deal. I still haven't shorted it, but may buy a few out of the money puts tomorrow. If it goes down, it will go down huge.
    Sep 20, 2012. 01:30 AM | Likes Like |Link to Comment
  • Beleaguered Life Partners Holdings (LPHI), appoints Scott Dubs as CFO. Mr. Dubs will succeed Dave Martin, who had served as LPHI's CFO since 2008, and brings 36 years of financial experience to the company, including 12 years as an auditor with Price Waterhouse Coopers and 24 years as CFO/VP of Finance of both public and private companies. Shares LPHI +0.5% AH. [View news story]
    Scott Dubs was fired after 10 days on the job, so LPHI still has no CFO.

    Regarding the idea of a publicly trade vehicle of LPI sourced policies: NO WAY. Doing so is a post transaction entrepreneurial effort. This smacks of Howey's Third Prong, so LPI will never do it. Instead, the company will rely upon the resale efforts of the master licensees.
    Sep 13, 2012. 09:22 PM | Likes Like |Link to Comment
  • Focus Media - New Bronte Allegations Make It A Strong Short [View article]
    John (Bronte) put forth a great argument, and you cannot deny that his facts about the accounting are correct regarding FMCN. Assuming due dilligence is done, the deal shouldn't go through if the acqusition numbers are indeed fabricated.

    HRBN surprisingly did go through, but that was the only surprise of what I saw from a bunch of "fraud" stocks last year. I still can't figure out the HRBN end game, and probably never will.
    Sep 13, 2012. 04:37 PM | Likes Like |Link to Comment
  • Gazprom's Political Factors Include Corruption Risk [View article]
    If you discount the corruption this should sell at a P/E ratio of what, 4-6x earnings? It I selling for less than Pakastani stocks.
    Sep 11, 2012. 10:40 PM | Likes Like |Link to Comment
  • Gazprom: A Mega-Cheap Valuation [View article]
    The dividend is discussed above, for an approximate 5.6% yield.

    Valuewalk has a nice recent article on how cheap Russia is right now: http://bit.ly/TZlI1j

    The idea is to payout 25% of net profits (consolidated). That is the good news. The bad news is that Putin will IMO make good on campaign promises and, therefore, must raise tax. In the case of Gazprom I estimate another $20 billion per year. Russia is I think running at a slight surplus. I don't care since the whole country is selling cheaper than Pakistan...insane.
    Sep 6, 2012. 05:20 PM | Likes Like |Link to Comment
  • Gazprom: A Mega-Cheap Valuation [View article]
    Me neither, but Putin did start out in the KGB. When this company cuts a deal with a foreign country, I not sure Regan's "Trust...but verify." comes into play because Gazprom already knows (lol).
    Sep 5, 2012. 03:53 PM | Likes Like |Link to Comment
  • Gazprom: A Mega-Cheap Valuation [View article]
    Gas is indeed in a decline, and the stock was punished as a result and has settled for now at the current valuation. At least one analyst recently changed his rating from an overweight to a hold. I don't care. I simply see investor perception changing about Russia, and a rising tide lifting all the ships.

    What I didn't put in the article is the chance of a global recession, which is now "100%" according to Marc Faber. Is it possible a recession and a lower gas price is already reflected in the market price of gas and Gazprom? I don't know, but I do know a stock with a 2.7 multiple that has steady revenue will likely drop less than a similar stock with a 15x multiple should we enter a global recession. Meanwhile, an investor can collect a dividend (which may lessen) while they wait for the global economy to improve.
    Sep 5, 2012. 03:48 PM | 2 Likes Like |Link to Comment
  • Gazprom: A Mega-Cheap Valuation [View article]
    Europe seemingly hates Gazprom's influence, and for good reason. Will cheaper imported gas pose a problem? I don't see it, although that is an important assumption in my thesis. A gas field is still worthless unless you can pipe it out.
    Sep 5, 2012. 03:39 PM | Likes Like |Link to Comment
  • Will Soros Stake In Manchester United Send Shares Above IPO Prices? [View article]
    David,

    No, management enrich themselves all over the world, not just in the USA. My question is this: What do the European fans think of management (Glazer)? Teams can take in $ despite fans hating current management. But hating mgmt. can also signal the beginning of a trend.
    Sep 1, 2012. 07:58 AM | Likes Like |Link to Comment
  • Focus Media: China's First Big LBO Deal Is A Head-Scratcher [View article]
    Bronte Capital just published a nice piece on Focus Media, giving four explanations of how the company can be massively profitable in between years of huge losses. He doesn't favor any of the four explanations (likely doesn't want a lawsuit), but his fourth and last scenario confirms with Muddy Water's Carson Block that the numbers could be fabricated. In order to hide the fake earnings the company simply keeps buying fake companies and hiding the fake cash into fake goodwill! Then those companies lose money and eventually get written off and proof, the fake cash is gone. If so, Focus Media is worth under $5 per share.

    Auditors of Chinese firms have missed a lot more than this before.
    Sep 1, 2012. 07:05 AM | Likes Like |Link to Comment
  • Not All Dividends Are Worth It [View article]
    Life Partners is subject to a Temporary Restraining Order that prevents the company from paying a dividend, at least until after a September 24 hearing. Until then the judge will not them dissipate assets in a way that might enrich management.
    Aug 30, 2012. 09:44 AM | 3 Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    The Life Partners business model is based upon having reps who are not registered--the licensees--sell the fractional product. So a barber or plumber with no financial or investment expertise can sell the product. If a receiver is appointed or if LPI goes back to investors to help them (assuming a premium shortfall) or if LPI keeps up premium forwarding or if the whole deal is dependent upon resales a new problem for LPI comes into play: The Third Prong of Howey. This give substantial ammo to the regulators who want to call fractional investments securities. Once regulation comes in fractional investors would get disclosure of the true cost (to LPI) of each policy and all the fees and commissions involved PLUS the past performance of the investments using an acceptable performance presentation standard. That is enough to bury LPI/LPHI.

    Life Partners doesn't need an investor to help work things out, because an investor will be needed to help the fractionals (post transaction entrepreneurial effort) and that brings Howey into play. Life Partners need to get rid of the regulators with the current business model in tact. IMHO that is not going to happen.

    Catch-22!
    Aug 29, 2012. 02:25 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    Correction. I have indeed seen numbers regarding the entire portfolio, and those numbers came from the TSSB: 3,879 policies were sold to 29,000 investors across the USA. 3,152 of those policies have exceeded what the TSSB believes is contrived LE estimates promised to investors (according to the TSSB complaint). There is a link to a Bloomberg article above reporting this if you do not have access to the complaint. So, interested reader, are we to believe the Texas State Securities Board or you?
    Aug 29, 2012. 09:53 AM | Likes Like |Link to Comment
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