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  • Alaska Air Group: A Valuable Investment, Either As A Standalone Airline Or A Takeover Target [View article]
    We would venture that part of the reason has to do with competitive concerns. Alaska's west coast niche is a profitable one, and competitors have made no secret of a desire to gain more share in that market. Although Alaska has a long track record of fending off such competition, the concern does exist, even if we think it is unfounded.
    Nov 12 04:04 PM | Likes Like |Link to Comment
  • Commerzbank: Substantial Value In Germany's 2nd Bank [View article]
    As we noted below, the shipping portfolio is of course something to watch, but so far Commerzbank has shown that it is able to manage the wind down of these assets. Q3 earnings are due on November 7, but we don't think there will be talk of a dividend, that's something that will likely be left for 2014. But Commerzbank is making progress in boosting capital and winding down its non-core assets, and as those two goals move closer to being completed, there will be more and more room for the dividend to be reinstated.
    Nov 2 06:10 PM | Likes Like |Link to Comment
  • Commerzbank: Substantial Value In Germany's 2nd Bank [View article]
    Our upside scenario already takes into account a reduction to book value of Commerzbank's expected losses over the lifetime of its portfolio, as well as a sizable reduction to account for its non-core segment. In total, these two reductions trim Commerzbank's book value by over 28% relative to its stated book value, but even that leave room for meaningful upside. A degree of conservatism is certainly important, but there comes a point where conservatism no longer becomes prudent. We went through Commerzbank's interim report for H1 2013 to quantify an appropriate discount to book value, but we don't believe that simply discarding book value by virtue of the fact that it is provided by management. Furthermore, not all book values are the same. National Bank of Greece, for example, may trade at a P/B ratio of around 0.2x, but would we recommend buying shares? Probably not, given that their book value is based on a myriad of Greek assets. Commerzbank's book value, however, is based on primarily German assets, and even its central & eastern Europe portfolio is performing relatively well. Our point is that Commerzbank's P/B multiple is valuing it at levels assigned to PIIGS banks, despite our view that its assets are, on the whole, of far higher quality.

    Though the shipping loan portfolio is something to watch, Commerzbank is making progress. The portfolio was trimmed by 7.1% in Q2 2013 (http://bloom.bg/1cwCIuF), and with Q3 results due November 7, we expect further reductions in the portfolio, as well as the rest of their non-core assets. While there is certainly more work to be done in winding down these non-core assets, we believe so far, the bank has shwon good progress in doing so, with around €10 billion in further assets to be shed during the last 2 quarters of the year.
    Nov 2 06:07 PM | 3 Likes Like |Link to Comment
  • Christian Dior: A Better Way To Invest In Louis Vuitton [View article]
    To our knowledge, the dividend does indeed get passed through from LVMH to Dior, and Dior itself pays a dividend (€2.90 in fiscal 2013) as well. There's about €6.2 billion in net debt at Dior, though much of that is attributed to LVMH itself, including its 2012 $850 million debt offering. THe maturities are spread fairly evenly through 2018, and Dior's debt-to-equity ratio has been coming down (down to 22% in fiscal 2013 fro 24% in 2011). Many European holding companies do trade at discounts, but in this case we believe that the discount is unwarranted, given that the assets in question are functionally equivalent to one another, and the value of Dior's stake in LVMH is easily valued, whereas the assets of many other European holding companies can be more difficult to value.
    Oct 22 05:01 PM | 1 Like Like |Link to Comment
  • Lionsgate: Satiating Shareholders As The Hunger Games Approach [View article]
    We are looking into DreamWorks, but the thesis there is made more difficult (but not necessarily invalid) by the fact that DreamWorks relies far more heavily on a few movies each year; if they fail, the company's EPS would likely face material pressure, whereas Lionsgate's more diverse content portfolio helps shield it from the failure of any one project.
    Oct 1 01:33 PM | 1 Like Like |Link to Comment
  • The Royal Bank Of Scotland: Undervalued As Restructuring Moves Forward [View article]
    With the uncertainty in Washington, we would buy a small portion of a position now, and then look to add to it on a DC-induced (or Rome-induced) sell-off.
    Oct 1 01:29 PM | Likes Like |Link to Comment
  • The Royal Bank Of Scotland: Undervalued As Restructuring Moves Forward [View article]
    Deutsche Bank certainly has its own qualities, but it also comes with large exposure to investment banking and capital markets, something that RBS is moving further away from. Our thesis on RBS rests in part on the fact that going forward, RBS will be a simpler, more "vanilla" bank, albeit at a large size. Already, over 80% of its profits come from retail & commercial banking, which is far more predictable than investment banking & capital markets, even if it produces less profit in the good times.
    Oct 1 01:28 PM | Likes Like |Link to Comment
  • The Royal Bank Of Scotland: Undervalued As Restructuring Moves Forward [View article]
    The other point to note is that Lloyd's trades at a premium to its projected book value for 2013 (per Reuters), its P/B ratio is at around 1.18x (http://bit.ly/1bkAFpp) versus around 0.63x for RBS (http://bit.ly/1bkAFpp)
    Sep 30 03:27 AM | Likes Like |Link to Comment
  • The Royal Bank Of Scotland: Undervalued As Restructuring Moves Forward [View article]
    Valuation is the primary driver, Lloyd's is up over 93% over the past 12 months, while RBS is up around 42%
    Sep 29 04:28 PM | Likes Like |Link to Comment
  • The Royal Bank Of Scotland: Undervalued As Restructuring Moves Forward [View article]
    We think RBS' preferred stock also has decent upside potential. As one of the comments above states, RBS has several preferred issues trading at large discounts to par, with good yields. Assuming the bank continues to recover, RBS' preferred shares should rise alongside their common stock, albeit to a lesser degree, but that will be made up for in part by dividend payments; it remains to be seen when RBS can restore its common stock dividend.
    Sep 29 01:01 PM | 1 Like Like |Link to Comment
  • SeaChange: Q2 Results Highlight Return To Growth And Continued Upside Potential [View article]
    Per SeaChange's Form 4 filings that we examined on the SEC's website, there were no transactions conducted by Starboard in July.
    Sep 16 07:40 PM | Likes Like |Link to Comment
  • Cascade Microtech: Undervalued Amidst A Global Semiconductor Recovery [View article]
    It's possible that offers have been made, but the board didn't approve of the price. Given Cascade's size, M&A rumor leaks are unlikely to be given much, if any prominent news coverage. A takeover is certainly possible, but our thesis was based on Cascade remaining a standalone company.
    Sep 16 07:38 PM | Likes Like |Link to Comment
  • Aware, Inc.: Gains To Come As The Market Becomes Aware Of True Profitability [View article]
    Aware's 2013 proxy statement does list her ownership, as well as that of James Stafford, but we decided to focus on purely direct equity stakes of the company's board of directors and executives, not those of the extended Stafford family. But if those are included, insider ownership does rise by meaningful levels.
    Sep 15 02:20 PM | Likes Like |Link to Comment
  • Aware, Inc.: Gains To Come As The Market Becomes Aware Of True Profitability [View article]
    No, we have not heard of IWSY, but will look into it
    Sep 15 02:18 PM | Likes Like |Link to Comment
  • SeaChange: Q2 Results Highlight Return To Growth And Continued Upside Potential [View article]
    The answer is both; the bulk of SeaChange's revenue comes from initial sales, but the company does generate revenue from maintenance and technical support agreements that it signs with its customers when it completes a sale.
    Sep 12 12:36 AM | Likes Like |Link to Comment
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