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James DeMasi

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  • American International Group: Buy The Pullback, Fair Value $90 Per Share [View article]
    I own AIG for the same reasons as described in the article. At the very least I'm confident that the answer to the question "will AIG be worth more in two years than it is now," is yes. That's good enough for me in the current market, which, to me, feels a bit frothy. The fact that there's significantly more potential to the upside is gravy.
    May 7 01:06 PM | Likes Like |Link to Comment
  • The TBTFs join to fight proposed bank tax [View news story]
    Here's the government approach to problem solving. Women make 77 cents on the dollar compared to men. Why not tax men 23% more of their income? Problem solved. That's a bit extreme but the point is that the thought process in Washington seems to be to tax everything down to the lowest common denominator. Instead of granting each of us the individual freedom to strive for our best, the government prefers that we all embrace mediocrity and let them call the shots via our tax dollars. They're doing a good job of it too.
    Mar 18 02:37 PM | 3 Likes Like |Link to Comment
  • The TBTFs join to fight proposed bank tax [View news story]
    A public perception tax? What is wrong with this country? The government is relentless in trying to find new ways to waste everyone's money under the guise of fairness and goodness. How is it that everything the government does that's supposed to be good for us involves new taxes? Taxes aren't good. Taxes on sugary drinks, new taxes for the healthcare laws, more taxes for education. We spend more on healthcare and education than anywhere in the world and we're not the best in either. Fixing the problems at this point has nothing to do with the amount of money spent, and everything to do with how that money is used. Our government is out of control.
    Mar 18 02:12 PM | 5 Likes Like |Link to Comment
  • The Way To Play Sallie Mae [View article]
    Does SLM Bankco's provision for loan losses seem low? On the 10-K it looks like there's a 1% provision, meanwhile 4.1% of the consolidated private loan portfolio is non-performing. The credit quality of SLM Bankco's loan book looks strong, but 2/3 of those loans are unproven. They either haven't begun repayment yet or are still in their first year. The consolidated traditional private loan portfolio has strong credit metrics too and is still 3.5% non-performing. On the surface the preferred B shares looked interesting. Now I'm not so sure. Is there something I'm missing or not considering while looking at these numbers? Thanks.
    Mar 10 01:10 AM | Likes Like |Link to Comment
  • Special Situations Investing With HART [View article]
    That is one option. Collaborations, grants, and selling some of their product to other researchers are other possibilities. To issue debt they simply need to show that they have a viable, functioning business, which they cannot do until there is regulatory approval. If they get approval and start generating revenue then debt becomes an option. I tried to model that in my spreadsheet as well. There will likely be negative cash flows still because of growth capex. That would likely be funded with debt to the extent that it can be. There could be more equity issued as well, but at that point the company will be growing quickly. Dilution there isn't necessarily destructive unless it's excessive, because it will be fueling, presumably, a greater amount of value creation. It will be years before they get there. The most important thing to watch right now is getting enough patients to fill the trial, the actual results, and whether or not they remain on track for approval. Delays would necessitate earlier funding sources. Equity being a real possibility, but rather than dilution occurring to fuel growth it would be used to simply get started. What does that mean? It isn't good, but more important would be the reasoning behind it. If there were a significant delay then it would almost assuredly be because of a negative finding in the trial. Approval and the timeline to it is everything right now. They have a unique track record that demonstrates early viability on a survival basis in an otherwise greatly underserved market. I believe the potential is real, but, from an investment perspective, so is regulatory risk.
    Dec 24 06:58 PM | Likes Like |Link to Comment
  • Special Situations Investing With HART [View article]
    It's extremely difficult to imagine them offering debt before a regulatory approval. The company's CEO mentioned the possibility of collaborative partnerships to mitigate dilution, though I definitely expect dilution. However, I believe that it is captured in the valuation through the heavy operating losses. Projecting losses for 9 of the next 11 years under an optimistic forecast helps to illustrate that there is real risk involved. Particularly dangerous is the possibility of lengthy delays in the regulatory process. I'm not trying to kid anywhere here. This must be sized appropriately if added to a portfolio. In my portfolio it makes up roughly 1%.
    Dec 13 02:49 PM | Likes Like |Link to Comment
  • Special Situations Investing With HART [View article]
    HART's 10-12B/A discloses the details of two patients who received third party scaffolds that needed improvement. Those two patients were re-transplanted with HART-made scaffolds earlier in 2013. HART believes that their scaffolds are superior to those of third party manufacturers, and began making their own for quality control purposes. However, the move has draw some legal attention from NFS, the previous manufacturer, which is also in the 10-12B.

    I asked Mr. Green if this occurrence, or the possible re-occurrence, could potentially be a source of regulatory delay. His response was:

    "To address [the] point about clinical trials, no therapeutic is ever perfect. I do not expect that our trachea replacement will be approved by the FDA because it is perfect, but I would expect it to be approved if it offers significant benefits over standard of care. Standard of care for trachea cancer patients is awful. Median survival from diagnosis is only 10 months. We will not know the true benefit vs. standard of care until we have completed clinical trials, but the data so far is encouraging.

    Readers may see the filing and disclosure themselves by following this link and reading the paragraph entitled "Russian and EU Clinical Trials."
    Nov 27 03:03 PM | 1 Like Like |Link to Comment
  • Special Situations Investing With HART [View article]
    The five year follow up on Claudia Castillo, the world’s first patient treated with a regenerated trachea, was published last month in The Lancet with no mention of stenosis at the anastomoses. Also worth pointing out is that the FDA approved the first surgery in the USA in full knowledge of all the clinical data then available.
    Nov 25 07:35 PM | Likes Like |Link to Comment
  • SodaStream: Tremendous Growth Prospects And Potential Buy Out Target [View article]
    I'm aware, and I completely understand your point and Seth's too for that matter. I think this has gotten off subject. The primary question is why do people buy SodaStream when they can buy soda for dirt cheap without any hassle or extra accessories? 1. Do people buy it for health reasons? Sure, some might, but I don't see a mass of health conscious people buying it for that reason. Do people buy it be green? Probably a sliver of people do. Do most people buy it because it's fun, different, and has some other benefits to boot? Yes, I think most do. That's what would worry me if I were looking at the long-term. I'd be worried that people buy it, are excited about it for 3 - 6 months, and then put it away. The company can still grow over that time by moving a lot of product to an ever larger customer base. It was mentioned that market penetration is still low. As a result the stock can still go up from here. The problem is that I have no confidence in knowing how long they can make money and view the business model as essentially terminal if its being bought for novelty. I can't justify paying a premium price for the stock with that much uncertainty in the business itself. This is purely a consumer behavior thesis. The only thing I'm fairly confident in is that Coke will still be completely relevant in 10 years. I have a hard time saying the same of SodaStream. That's obviously where we disagree.

    Counter-arguments might be that the same can be said of bottled water. Why pay for something that's free? Bottled water works because people don't like or trust their tap water (hence Brita filters), it can be convenient if you're on the go, and I doubt that people really consider how much they're spending over the course of a year. They feel like $2 here, $2 there... it's nothing. I see SODA's inconveniences as negating its other benefits.

    Now, I didn't respond to Seth about not paying for green, because frankly I don't need to waste time on someone that resorts to insult over thoughtful discussion. Here are thoughts on going green, and why I don't think people buy SODA to be green. People prefer green products when the price points for green versus non-green are relatively close to each other. Why aren't LED bulbs flying off the shelves? Their lifetime cost is lower than CFL bulbs, they're easier on the eyes, and they don't contain mercury. Why isn't solar on every rooftop in America? It will pay itself off in 5 years and then you save a lot of money over the next 15 years of the system's useful life. The reason is upfront cost. When one goes to the store to buy some light bulbs they don't generally feel like spending $250, especially when a pack of 8 CFL bulbs costs about $12.

    It would be stupid to say the upfront cost makes people not want to buy SodaStream since they're obviously selling many of them. The take away here is that they're not buying it to be green, and I don't think the majority are buying it to be healthy either. That leaves novelty and that isn't a sustainable long-term model. You might still be able to make money in the short-term, but SODA as an investment just isn't for me.

    Take that with a grain of salt if you like. We can still both make money in the market, but it will surely be in different ways. Neither of us are going to convince each other otherwise on this one. I appreciate your comments and that of the author's and for presenting your thoughts respectfully. Good luck!
    Sep 13 03:05 PM | 2 Likes Like |Link to Comment
  • SodaStream: Tremendous Growth Prospects And Potential Buy Out Target [View article]
    On avoiding nasty ingredients, you already made my point for me. A healthy diet would avoid soda and artificial sweeteners completely.

    Here's a description of acesulfame K:

    "Acesulfame potassium is a zero-calorie sweetener that is 200 times sweeter than sugar. It is derived from acetoacetic acid and fluorosulfonyl isocyanate. Acesulfame potassium works in the body by stimulating the secretion of insulin in a way that may lead to reactive hypoglycemia. While the FDA approved of its use and consumption by American citizens, the Center for Science in the Public Interest believes further research should be conducted to ensure that it is safe to eat. The CSPI thinks that acesulfame potassium may be carcinogenic due to experimentation of the substance on lab rats. Additionally, in lab rodents, acesulfame potassium has produced lung, breast and rare organ tumors, various forms of leukemia, and chronic respiratory diseases. Due to the fact that the substance acesulfame potassium contains methylene chloride, long-term exposure may lead to a number of issues for people consuming it, including headaches, visual disturbances, mental confusion, nausea, depression, effects on the liver and kidneys. "

    Sounds a lot like aspartame.
    Sep 13 04:06 AM | 1 Like Like |Link to Comment
  • SodaStream: Tremendous Growth Prospects And Potential Buy Out Target [View article]
    Similar in that single functionality but not necessarily similar in demanded use is what I was trying to say. For example, a microwave and an oven can both heat food but are desired for different reasons. The reasons as Seth pointed out are valid, I'm not going to say they aren't. I just don't think there's enough value in those reasons to make SodaStream a legitimate threat to the big operations. Pepsi and Coke make versions now that don't contain aspertame or corn syrup and use natural sugar, so what? If you care about your health then don't drink soda at all. Then what, buy SodaStream to save bottles? Recycle. Like I said, I just don't see it. If I'm wrong then I'm wrong. There are thousands of companies to invest in. I just don't feel comfortable long-term with this one, but if you do then I hope it works for you.
    Sep 10 11:30 PM | Likes Like |Link to Comment
  • SodaStream: Tremendous Growth Prospects And Potential Buy Out Target [View article]
    Not suspiciously omitted. If I were to buy soda then I'd buy a bottle and store it in the fridge for a week. Not a big deal. Surveys have shown that while consumers care about going green, they're not too interested in paying for it. Finally, avoiding nasty ingredients as you mentioned, is personally my biggest concern as a consumer. However, if people were to buy it for that reason then they'd have to be health conscious, in which case I'm not sure that they'd drink soda at all let alone enough to justify buying a machine for it. Maybe they would for their kids I suppose.
    Sep 10 11:21 PM | Likes Like |Link to Comment
  • SodaStream: Tremendous Growth Prospects And Potential Buy Out Target [View article]
    You forgot Coke and Pepsi's fourth and best option, which is to ignore SodaStream completely. Everyone likes to compare SODA to GMCR as if they're practically the same. The fact that they both make beverages at home is where the similarity ends. The everyday usage of the two company's products is completely different. Coffee is typically made around the time of consumption, because it's a hot beverage that doesn't get stored or reheated, typically. Without single serve machines one would have to either make an entire pot or go drive to Starbucks or Dunkin Donuts every time they want one cup of coffee for themselves. That's a big inconvenience. On the other hand, soda can be stored for years and is dirt cheap to purchase. Why should anyone make it themselves? They have to buy syrup, CO2, and bottles then keep all that stored away in their cabinets somewhere, OR they can spend $1 for a 2 liter and forget the rest. The value proposition isn't there. It's a fun, novel fad. I don't think it's completely run its course yet, but I don't see it long-term.
    Sep 9 01:43 PM | 1 Like Like |Link to Comment
  • Prolor Biotech Buyout: Is The Opko Bear Case Now Dead? [View article]
    I agree. Selling Apple's tech versus clothing and household goods is completely different. Apple products were so hot the last few years that anyone would have had no problem selling them out of the back of a car. I can't say the same about button-up shirts and patio furniture. If you take the worst horse in the field and put the best jockey on it, it's still going to lose.

    That said, I appreciate the article. Very informative.
    Jun 18 07:58 PM | Likes Like |Link to Comment
  • It's Time For A Dip In Lakeland [View article]
    I like companies that can make tough decisions before they're absolutely forced to restructure. In regard to Tyvek, that appears to have been the case. They still need to continue to improve sales, of course, but this supports Whopper's general thesis of strong underlying margins.
    Jun 7 05:50 PM | Likes Like |Link to Comment