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  • Why Is Baltic Dry Index Falling if World Is Recovering? [View article]
    Very nice breakdown. I've been looking the the shippers. Based on this, it makes sense to focus on those that have little to no Capesize vessels in their fleet. Rates for the smaller vessels look relatively strong and appear to reflect a recovery.
    Apr 14 02:49 PM | 6 Likes Like |Link to Comment
  • 8 Core Portfolio Stocks [View article]
    Thanks for your feedback.

    In writing the article, I also thought it was interesting to see how the stocks compare on a relative basis. I think that one could argue that the required P/E could be higher (or cash flow yield lower) on ADP and Intel as they are both more cyclical. ADP could see benefits from improving employment, should that eventually occur, and Intel could be facing some nice upside from a delayed upgrade cycle. I have to admit that I added Pepsi above my target (around $60), but a purchase at these levels looks expensive on a relative basis.
    Mar 30 04:19 PM | 2 Likes Like |Link to Comment
  • Hey Apple, How About a Dividend? [View article]
    It's not that I'm demanding a dividend. I just have doubts that they can invest all that cash flow at acceptable returns.
    Mar 15 10:28 PM | 4 Likes Like |Link to Comment
  • Winthrop Realty Trust: Well-Positioned in Commercial RE Downturn [View article]
    Thanks for the link.

    For a small REIT, Winthrop is fairly complicated. In valuing their real estate, I'd start with real estate revenue of $40,605M. Back out about 5% for management fees ($2,030M), then back out other real estate operating expenses of $9,585M to get a net operating income of $28,990M. At a 8.5% cap rate, their real estate would be worth about $340 million. This compares to the $218MM in net real estate held on their balance sheet. Make the adjustment and you get total equity of about $350 million, or around $20 per share.

    There is a lot of noise after that with their adjustments to investments. Still, FFO per share for 2009 was $2.62. That's quite a number for a stock now priced below 13 (5x FFO). With low leverage, an 8x FFO multiple gets you to $21.

    It will be interesting to see how they deploy their cash. I wouldn't want to attribute any value to investments they might make. I worry that with REITs, and decline in risk premium (cap rates) will be offset by a rise in interest rates. This will keep values from quickly rebounding. This one is certainly worth watching. With a 40% discount to estimated value, it's worth collecting a 5% dividend while the story clears up a bit. Thanks for your article.
    Mar 15 12:53 PM | 2 Likes Like |Link to Comment
  • Are Investors Paying Too Much for Oyo Geospace's Potential? [View article]
    I have an article coming out tomorrow on Dawson. I agree with your assessment.
    Jan 20 09:18 AM | Likes Like |Link to Comment
  • Why There Is Still Value in Lexington Realty Shares [View article]
    That's not what I did. I used an 8.5% cap rate applied to annualized EBITDA, less outstanding debt. The 8x FFO is more of a valuation check. It has nothing to do with the net asset value of the company.
    Jan 15 10:56 AM | 1 Like Like |Link to Comment
  • How I'm Repositioning My Portfolio for 2010 [View article]
    I agree with most of what you say. I did outline the goals of the portfolio at its introduction a couple of years ago here: www.poeticportfolios.c...

    Blogging about stocks is my way of being disciplined about my buys, sells, portfolio, and goals. It's an investing journal of sorts.

    I also agree that a portfolio should be more focused. That's why I hold 20 stocks and two funds here. Not sure where you got 40.
    Jan 15 08:33 AM | Likes Like |Link to Comment
  • How I'm Repositioning My Portfolio for 2010 [View article]
    Steve,

    FTR has been a tough one. Keep in mind, too, that their dividend will be going down once their purchase of SpinCo (currently owned by Verizon) is completed. However, it looks like the combined company will have a stronger balance sheet and better economies of scale. There is a good presentation on their website:

    phx.corporate-ir.net/E...
    Jan 14 09:34 AM | 1 Like Like |Link to Comment
  • For Dawson Shareholders, Now Is When to Hold On [View article]
    Don,

    I think that's right. Also keep in mind that if you are a long-term holder of Dawson, you've built an understanding of the company and its management. I like their management, and their balance sheet looks great. It doesn't hurt to hold some shares, but I'm no loading up on them either.

    I get the sense that if I sold, I wouldn't make it back in before they start adding crews and generating strong earnings again.
    Sep 18 09:50 PM | Likes Like |Link to Comment
  • Middleby's Bad News Is Behind It [View article]
    Not quite sure I agree with the title of the article, as there are likely to still be some challenges ahead. Despite these challenges, however, Middleby may still prove to be a bargain in the long term.
    Sep 9 10:32 AM | 1 Like Like |Link to Comment
  • Waiting for a Better Entry Point for Netflix [View article]
    Last week YouTube said they may try to stream movies online. All of a sudden there was a sell-off of Netflix shares. This always happens with Netflix, and Netflix has continually crushed their competition or prevented them from even entering their market.

    I hold my $35 buy-in price and think that I may get it soon.


    On Aug 19 10:58 AM Dmoon wrote:

    > I like NFLX but note in your numbers looking at Q4 revenue per subscriber
    > the numbers are going down 43.96 $40.27 38.19 37.28 so that tells
    > me people are moving to lower subscription rices. I know I reduced
    > my own when money got tight. I now also do streaming movies on the
    > XBox so that must provide some revenue from MSFT to NFLX. Also your
    > comments about Q4 and Q1 being highest growth is because its wintertime,
    > people stay home and might even cancel their subs in spring summer.
    >
    >
    > If they can convince the film companies to put new releases on instant
    > viewing costs will come down and revenue will go up.
    >
    > Not sure you'll see your $35 price anytime soon. Its unrealistic
    > to think they are going back to March lows (S&P 666)
    Sep 6 09:02 PM | Likes Like |Link to Comment
  • CapitalSource: Tremendous Opportunity or Value Trap? [View article]
    I honestly haven't gotten that far yet. I hope to take another look at them soon and post my findings.

    In general, I hate to see the dilution, but it seems it was likely required to meet debt requirements. It's difficult to tell about the losses. Loan loss reserves may be swinging the other direction. It's possible that loan losses at banks in general are now more backward looking than forward looking if you know what I mean.


    On Aug 19 02:27 PM chchchch33 wrote:

    > Thanks for the excellent work Dan. What do you make of CSE after
    > their recent equity and debt offerings and the large loss they posted
    > in their most recent quarter? I thought they were reasonably clear
    > in their last conference call--you felt they were still shady?
    Aug 19 06:47 PM | Likes Like |Link to Comment
  • CapitalSource: Tremendous Opportunity or Value Trap? [View article]
    Writing about Capital Source is very much like assembling a puzzle. Management gives you the pieces but it seems like they make their best efforts to scatter them around really good to obscure what's going on. Maybe it's intentional, maybe not. It makes me a bit nervous, though.

    In 2-3 years there may be clarity, but investors will pay a higher price for that potentially cheery consensus.


    On Aug 18 06:16 PM H.J. Huneycutt wrote:

    > Great analysis, Dan.
    >
    > I've looked at CapitalSource a few times, but have never felt I understood
    > the banking aspect well enough to give it much of a write-up. I've
    > been kinda loosely following it in order to try to understand the
    > industry a bit better.
    Aug 18 10:14 PM | 1 Like Like |Link to Comment
  • CapitalSource: Tremendous Opportunity or Value Trap? [View article]
    It's good to be skeptical of bank assets. They could be much worse or much better than reported. When I wrote this analysis, Capital Source was about $2 per share. I ended up not investing more for the same reasons you stated, even though it may have made sense to put some money into it because at that price, you may just earn 5x your money in the next three years.


    On Aug 18 05:27 PM stink726 wrote:

    > After being burned by so many different types of financial stocks
    > in the past 2 years, I don't see how anyone can believe any financial
    > company's financials. Who knows what the next thing to blow up will
    > be?
    Aug 18 10:11 PM | 1 Like Like |Link to Comment
  • CapitalSource: Tremendous Opportunity or Value Trap? [View article]
    As part of their bank requirements, they have to retain their earnings for 2.5 years. Even if they could distribute their earnings to the parent, they would be much better served to pay down debt as quickly as possible.


    On Mar 31 10:31 PM dreamer67 wrote:

    > Also key question, if they have (the potential) of 80,000,000.00
    > a year in income in only one of 4 legs of the company with a value
    > of 4 billion, why is the dividend so skimpy. It would seem that
    > a modest dividend would change the game for this stock in a huge
    > way
    Mar 31 11:36 PM | Likes Like |Link to Comment
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