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Harry Beck

 
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  • Is This The End Of Life Partners Holdings? [View article]
    LPHI reported yesterday and the financials are terrible. They decided (again) not to impair the trust investment. Revenue per transaction has dropped by close to 60% since many of these transactions seem to be resales (I'll check with investor relations about that). The management discussion indicates that nothing is expected to change for a while. I am not sure how this can trade above book value, but it is and continues to do so!

    "Despite the progress we have made in our efforts to rebuild confidence in our company, the large drops in revenues, the significant legal and professional fees, and operating losses we have experienced over the First Nine Months of this year have eroded the strength of our financial condition. The SEC suit and other litigation have been highly damaging to our business, and we do not anticipate a substantial recovery in our revenues and net income while the SEC suit and the other private litigation continues. To mitigate these developments, we continue to invest significantly in programs to develop and strengthen our relationships with new and inactive licensees. We are conserving our cash in anticipation that the suit will not be quickly resolved. We have decreased our cash dividends and may make further cuts and could eliminate the dividends. We have sold the majority of our portfolio of investments in policies and are reducing our investments, including investments in policies."
    Jan 10 01:50 PM | Likes Like |Link to Comment
  • Analyzing Ackman's Herbalife Pyramid Claim [View article]
    All of MLM is a pyramid scheme...but so what? Most people in these "legal" pyramid schemes will lose money, but not too much money so the courts don't care. The question for me is perception. How will Acman's presentation change the perception of investors and the distributors? I find people in these schemes have already drank the Kool-Aid, and will ignore facts forever. Investors see China as the unending supply of suckers, and don't see a loss of revenue ahead.
    Dec 28 09:35 AM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    The State of Texas motion to reopen the temporary injunction hearing is denied. Life Partners continues to live on.
    Nov 2 03:19 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    dankahan,

    I believe the information you seek is reported to the TDI. I think reporters have gotten those statistics in the past using the FOIA.

    LPHI's auditors are not required to calculate A to E ratios and they typically do not "follow the money." They do write qualified or unqualified opinions.
    Oct 22 03:20 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    $91 million in payout represents 4.8% of $1.9 billion. If that is all that has matured in 18 months I would have to think the SEC's contention about the likely return many investors would receive is correct! The amount of the maturities should be MUCH higher based upon the when the policies were purchased assuming the Dr. Cassidy LE. The bulk of the policies were sold between 2007 and 2010 and assuming a 4-7 year LE spread, a lot more policies should be maturinga! I imagine the payouts are closer to a Fasano or EMSI LE and not the LE Dr. Cassidy produced. Unfortunately, the LEs on the policies sold to LPI are not disclosed.
    FY 2007 $151mm
    FY 2008 $415mm
    FY 2009 $694mm
    FY 2010 $590mm

    It doesn't seem the overall returns will come anywhere close to meeting the double digit expectations set by LPHI's CEO. These expectations can still be found in interviews and speeches currently found on the LPHI website (http://bit.ly/ROTIx7). There will always be early maturities, but if the late maturities are really, really late (like the SEC suggests, the overall return to a fractional investor with several policies may not meet expectations (the SEC complaint suggests returns will be closer to 0.40% if industry accepted LEs were used). It seems the lack of returns when expected explains the resale market and all the premium forwarding.

    I am glad a few policies returned 20%. Statistically it is probable some policies will return much greater. The problem with not using an accepted performance presentation standard is that the policies that have NOT matured are not included with the universe of policies sold to fractional investors.

    The State of Texas did not see thier case dismissed, but did lose the battle to call the fractional investent a "security." Some think they may come back with a deceptive trade practices suit. I have no idea, but suspect we'll all eventually know more about the intentions of the AG sooner than later.
    Oct 22 03:30 AM | Likes Like |Link to Comment
  • Understanding Carl Icahn's Oshkosh Strategy [View article]
    OSK was run in a similar way for decades (since it was known as Oskosh Truck). It remains a company that is relevant since specialty trucks with component parts never go out of style. It is also a company that will do well after any war. But will economic value be added by selling off parts of the company that may rebound in a few years time? I dunno. Can being more proactive really add top line growth? Again, I dunno about that.
    Oct 12 09:29 AM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    OK, the 10-K did come out on time and everything is as expected for me. LPHI lost another $1,849,325 and paid another dividend with 50%+ going to the CEO. $2,628,930 was lost from operations. The CEO and his offshore trust earned more from dividends and his salary than the company produced in revenue for the quarter. Someday I'll have to get a ride in his jet and sail on his yacht to experience the good life.

    The stock is back down to $2.17. I wonder what the buyers are thinking will turn things around now that the company is down to transacting 3 policies for the past quarter?
    Oct 11 12:27 PM | Likes Like |Link to Comment
  • Offshore Israel: Investing In Natural Gas Where The Commodity Is Still Worth Something [View article]
    I first invested in Gazprom when it first opened up for US investors, sold, and came back a few months ago when allocating more to Eastern Europe and Russia in particular. I invest mostly through funds and ETFs but "gamble" on a few stocks that I believe are mispriced. My experience isn't enough to take seriously.

    Putin, Gehard Schroeder (former chancellor of Germany), Medvedev, Zubkov,Miller, etc. all have a political and financial interest in seeing Gazprom do well. I have the belief, and it may well be mistaken, that the corruption starts getting cleaned up with the upcoming 2014 Sochi Olympic games. All eyes will be on Russia, and Russia will want to make the most of it. This is Putin's time to showcase his economic agenda to the world, during a supposedly nonpolitical event.
    Oct 8 01:11 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    " If Texas Attorney General Greg Abbott can obtain an injunction, I may only be a month or two late with my $0.25 prediction."

    Abbott did not get the injunction...yet. And he may never get it, but the SEC civil suit and all the other civil suits are still out there. They have not been dismissed and are very much alive. The SEC suit does not address the "security" issue that Abbott could not overcome. The Texas AG lost the first round in his case, but he succeeded in making the Texas public aware of what he believes is a company engaging in fraud.

    Regardless, the stock is now down approximately 63% YTD and about the same for the trailing 12 months.

    Unless LPHI delays the next quarterly, we'll find out in a few days what cash is left after payment of yet another dividend (with no corresponding CFFO to cover it) and payment of any legal fees not covered under insurance. Some people think that any stock that continues to pay dividends without having the earnings or some other form of cash to cover the distribution is in liquidation. But hey, that is splitting hairs. You believe an increase in sales is right or a large windfall to the company around the corner (not including the resales) and I don't.

    The number of resales isn't disclosed to the public, but perhaps you can enlighten us Tomy. The number was printed in a memo as 17,000 two years ago. If I have this right, resales allow investors to get out of a fractional policy so that they can use the money to fund the premium payments for one or more policies that have extended maturities. If the licensee sales organizations can't resell the fractional investments in the previously sold life policies, those policies might lapse unless someone (e.g.., LPI) forwards premiums. LPI forwarding premiums is a post transaction effort and may create a Third Prong or Howey issue, so the resales are preferred. But what happens if the resales stop?

    Tomy, it seems you sell the fractional product. Can you tell me what the correct current number is for the number of resales? Can you tell me what would happen if the resales program ceased?
    Oct 4 12:52 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    1) I bellive the SEC argument is for the protection of the LPHI shareholders only, not for the protection of the fractional investors who purchased their contracts through LPI. The state is attempting to protect the fractional investors. The state case has not been dismissed...it is on appeal. I imagine the SEC feels going after the 1996 case is not in their best interests right now, given the rulings in favor of LPI.
    2) Texas is highly unusual because of a single court case and the 1996 case, so life settlements are not considered a security there. Most other states do not and will not IMO have this issue.
    3) The SEC desires life settlement regulation, and this means the full disclosure and licensure that comes with selling a security.
    4) Texas has not decided to regulate life settlements, at least not yet. If and when there is legislation it will be at least two years before coming a law (as I understand the legislative process).
    5) Brian Pardo is quoted by Bloomberg as saying, " We do not defraud or deceive anyone. Life Partners is licensed as a viatical and life settlement company by the Texas Department of Insurance, with whom we file our transaction documents, make certain disclosures to insureds and sellers, file annual reports, and abstain from unfair business practices. The Attorney General’s mischaracterization of our business was a disservice to the purchasers of our life settlements and to our shareholders who were damaged by this abuse of power.”

    The AG spokesperson was quoted as saying, “Life Partners is charged with defrauding thousands of investors in violation of the Texas Securities Act,” Bean said. “The defendants are attempting to evade state oversight by arguing that its products are not securities -- a claim that is inconsistent with prior U.S. Supreme Court precedent.”

    There is an appeal so the story in Texas isn't over yet. Regardless, there is the SEC civil suit!
    Oct 1 09:55 AM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    The stock is crashing again, but now has a bunch of new shareholders based upon it trading 10 million plus shares two days ago. The AG is appealing, and I guess he is working deceptive trade practices into the argument. No matter, because the SEC suit has nothing to do with the fractional investment being or not being a security.

    It is not common that the state wants to put someone out of business so badly.
    Sep 28 10:18 AM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    One problem is that LPI and LPHI offer no statistics using any known performance presentation standard (like mutual funds, separate accounts, etc.). So no one really knows what these people are making or not making. We do know the promised double digit returns are impossible to meet based upon the SEC lawsuit. The SEC claims the returns will be closer to 0.40 percent. Guys like you will advertise "12%" returns on a policy, without also mentioning all the policies that have exceeded maturities!

    Another problem is the premium forwarding and the resales. People who are doing poorly are offered the chance to sell out of a good policy (as I understand it) so they will have money to place into a poorly performing on that is in premium call. So how does LPI measure that into a performance presentation standard? They do not as far as I can tell.
    Sep 28 10:14 AM | Likes Like |Link to Comment
  • Focus Media LBO Offer: Betting On The Timing Rather Than The Outcome Of The Proposed Deal [View article]
    If this tanks it will tank big, probably down to single digits. If it goes up, it goes to $27. I like the idea of a strangle but you aren't you better off buying more of the farther out of the poney puts? I see this as a single digit play on the downside if that scenario pays off.
    Sep 26 01:52 PM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    Can you actually answer the question of how many resales have transacted? I saw a newsletter from a while ago that claimed 17,000, but can you verify what the number is today?

    There is no doubt LPI's home state of Texas wants to out them out if business...and cannot do it. For now the company operates with less than full disclosure to clients, still advertised double digit returns off the LPHI website (links to Pardo at the NASDAQ Opening Bell & during a Pimm Fox interview) and without interference from the TDI and TSSB. LPI does have to worry about a pesky civil suit from the SEC that does not have anything to do with the issue of the fractional investment being or not being a "security."
    Sep 26 02:32 AM | Likes Like |Link to Comment
  • Is This The End Of Life Partners Holdings? [View article]
    You can find some of those people who are plaintiffs in the civil suits that have already been filed. It is not unusual to find people and institutions that have lost money in the past. If you don't believe me, look at the Regent portfolios that LPI advised, and those portfolios did not use a Cassidy LE!

    Actually, your question is poorly worded since in theory LPI flips the policy soon after purchasing it, so nobody can lose money "with them." What is being done is resales to keep people from "losing" on their individual policies (paying more in premiums if they don't have the money).

    This is not a Ponzi scam...the polcies are real. I question if the investors are getting what they expect given that the LPHI website still has links to broadcasts that show Mr. Pardo clearly giving the expectation of double digit returns.

    Texas cannot regulate on behalf of the fractional investors, as was clearly decided today (the judge followed case law). But the SEC is not suing on behalf of the fractional investors. Instead, they filed suit against the company for fraud, stock fraud and insider trading all of which effect the shareholders of LPHI stock. The arguments are pretty much the same, with the SEC complaint pointing out that fractional investors would likely receive only a 0.40 percent return if proper LEs were used and LPHI would have earned substantially less money. The suit also details the whole LE issue. What is different is that this is a suit protecting shareholders, not fractional investors. The "Is this a security?" question doesn't come into play because the Commission is not playing the Howey card, at least not yet.

    So far there is no one in Texas that seemingly can regulate LPI. In theory, any company that is not regulated and is not selling "securities" can promore any returns they want without adhering to any performance presentation standard. This may be unethical, but it also could be legal. The SEC says it is wrong to deceive shareholders. They may end up in effect regulating LPI by going after LPHI, something the TDI and TSSB cannot do since the fractional investment is neither an insurance product or an investment.
    Sep 25 09:39 PM | Likes Like |Link to Comment
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