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James Shell

 
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  • Two Harbors Investment Corp: Dump, Hold Or Reinvest? [View article]
    Yes, you are quite right. The details of some of this are in the 10Q. None of this is instantaneous, there are time issues, but on the good side, it is also true that TWO got the mortgages at 78 cents on the dollar... so the "value" of the underlying asset, inasmuch as it can be estimated, might be quite different from the nominal value they have on the books.

    It's still an interesting part of the business, being the "lender of last resort", and it does show up in an improved spread.
    May 15 02:00 PM | 1 Like Like |Link to Comment
  • Two Harbors Investment Corp: Dump, Hold Or Reinvest? [View article]
    Well, I happen to live in ground zero of the suburban real estate catastrophe, and I can tell you that around here, the banks and others are contracting with local realtors, who have a lot of spare time on their hands, to manage some of this kind of activity.

    No one is talking about this, but there are still plenty of distressed properties around.

    The project is still small, only $6M and at $100K per house (you are not talking about mansions here) that's only about 60 houses, so it is not like a big program at the moment.
    May 15 01:57 PM | 2 Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    That is one strategy, and I believe if you had been an owner of MRO when it split last year you would have come out ahead if you had sold the MPC portion and just stuck with the upstream part.
    May 10 05:18 AM | Likes Like |Link to Comment
  • The Annaly Capital Management Annual Report Dissected, Part 4 [View article]
    Funny how that works out sometimes.

    The stock price of a business is some function of a company's ability to make money.

    The ability to make money is a function of costs. We're talking about the net of hedging expense in this case, whether or not you look at it as insurance is immaterial. It's also a function of the forward direction of interest rates, if you are in a business like this one that is borrowing short-term but lending long-term.

    It is also so clear that these businesses need to grow to continue to offer these big dividends.
    May 7 08:10 AM | Likes Like |Link to Comment
  • Long Opportunity: Cott Industries 'Low Income Consumer' Strategy [View article]
    I just have to love the story on this one.

    I have been in meetings in which a company that depends on a giant customer makes the decision to do some "demarketing", and it is never completely deliberate. My guess is that the giant customer is always putting pressure on them to reduce costs. At some point, the bosses decide that there is no way they can .logically cut costs anymore, nor cut prices, so they make the decision to walk away, at least partially.

    So you have to respect them for that

    COT has a couple of dozen bottling plants all over North America working diligently to produce sugary flavored water in a way that is shipping-efficient. Possibly they have figured out that not just anybody can come in behind them, with all of that infrastructure in place, and do the same job.
    May 7 08:09 AM | Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    http://bit.ly/KzNtsw

    This is a question for your shareholder services people.

    I think it takes a few days for the transaction to appear.
    May 4 10:45 AM | Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    This is exactly what happened to MRO right after the split last year. The investor euphoria is gone, there is a lack of information about what is happening inside the company and it is not at all surprising.


    These are basically solid companies and at some point they will seek their own level. As I indicated above you might have to be patient...
    May 3 02:38 PM | Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    That's right. These two companies will be cash gushing machines for a little while anyway, and both have stated their intention to pay nice dividends and also do share buybacks to reduce the float.
    May 3 09:08 AM | 1 Like Like |Link to Comment
  • The Annaly Capital Management Annual Report Dissected, Part 4 [View article]
    Last Sale: $ 31.135
    AGNC up 1.2% in the last five days.

    NLY?
    May 2 08:00 PM | Likes Like |Link to Comment
  • Long Opportunity: The Abbott Labs Split Strategy [View article]
    Yes, there is a lot of analysis yet to do. Thank you for reminding me about the patent issue. There is also this big pipeline of new products that I've effectively valued at "zero" for the purposes of this analysis. This business is about that pyramid of products that start out in the development stage that eventually result in a few commercial products at some point in the future. You have to figure at least over the long run this company is equally competent as their smaller peers in this activity....

    add to that the three-something percent dividend...
    May 2 07:48 PM | 2 Likes Like |Link to Comment
  • The Annaly Capital Management Annual Report Dissected, Part 4 [View article]
    http://seekingalpha.co...

    If you review this post, you can see where that idea came from...
    Apr 27 07:27 AM | Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    I have thought about that a little. Here is the problem: The S&P 500 stocks are traded as part of the index futures system and as a result a certain percentage of the float will always be subject to things like program trading that might make them subject to market reactions that are not be related to the fundamentals of the business.

    At the moment, COP is 72% owned by institutional investors, so we have already long passed the point at which the company is run by oil people rather than financial people, from a corporate governance standpoint.

    If we end up in a situation of another spring 2008 oil shock, with unprecedented refining margins in combination with strong demand, the argument could be made that S&P membership would work against them. They would not get the benefit they would from their fundamental situation.

    You can imagine that if we return to the world of early 2009, with depressed feedstock prices, low or negative refining margins and the sky falling, the stock would be supported by the rest of the market, albeit at a low level.

    So I suppose it depends on the scenario.
    Apr 26 12:59 PM | Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    Well, here is how I look at it: Here you have AAPL which is trading at 15 times earnings, and everyone loves the company and its products. You have XOM which is trading at 10 times earnings, and not everyone loves them. In the opinion of some, their boardroom extends to the nether regions.

    If AAPL disappeared tomorrow, we would all be sad, but we would go on fine for a long time without their products.

    If XOM disappeared tomorrow, the nation would grind to a screeching halt, there would be riots in the streets, and calls for the nationalization of the entire industry because of the effects of the skyrocketing price of the products on the consumer.

    People complain all the time about the exploitative prices that the oil companies are charging. Do you know what XOM's gross margin is? About 12%, and they are at the high end of the industry.
    For awhile last fall, these companies had a negative profit margin for gasoline.

    For AAPL it's 33%, but if XOM raises its prices Mr. Tillerson would be on CNN, sitting at that famous table in front of the congressional hearing, with even the so-called conservatives calling for a windfall profits tax, because of the way that they are exploiting the consumers.

    The refining and distribution companies are transporting and selling 9 million barrels of oil PER DAY, 7 days a week, 24 hours per day, delivered safely within 1 mile of home for about 90% of the US public, with 99.999% reliability.

    If you want to know what a hard job this is, try transporting 10 gallons of lawnmower gas from the station to your house without spilling any.

    The alternate fuels people are finding out that to start up a new distribution system at this scale and level of reliability is practically impossible.

    So, yeah, you may be beaten down owning XOM or COP or CVX from time to time, but you have to be overall sympathetic to them. They're doing a miraculous job, providing a dangerous material at practically perfect reliability. You have to admire them from a systems standpoint.
    Apr 26 09:59 AM | 13 Likes Like |Link to Comment
  • Update: The Conoco Phillips/Phillips 66 Spin-Off And A Buying Opportunity For Conoco Phillips [View article]
    I believe the investors presentation says they are going to pay out a significant portion of their cash generation toward dividends, and will start with .20 per share, and will distribute 20% of 2009-2011 free cash flow to investors.

    They have also stated their intention to buy back shares and increase the dividend.

    http://bit.ly/JIbYWV

    Ref: Page 30
    Apr 26 09:32 AM | 3 Likes Like |Link to Comment
  • The Annaly Capital Management Annual Report Dissected, Part 4 [View article]
    There are perils everywhere.

    I am especially concerned about the news coming out of the friendly nation of the Netherlands, whose people pride themselves on frugality and good business sense, and have shown some signs of catching Euro-contagion.
    Apr 26 07:50 AM | 1 Like Like |Link to Comment
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