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Kirk DeBaun  

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  • Bnccorp, Inc.: A Bakken Bank With Upside [View article]
    I have to admit, the oil boom story caught my attention a while back, but after looking long and hard at this stock, I chose to stay away. Here’s why:

    The 2012 earnings results benefited quite a bit from one-time items, like the fraud insurance settlement and the reversal of the valuation allowance the bank had taken against the deferred tax asset, both of which occurred in Q3 2012. Those two items totaled over $13 million, or about half of their 2012 earnings. Still, the trailing PE would only be about 4 removing those two items, so on that basis it still looks somewhat undervalued.

    Then, there’s that Tier 1 capital ratio, which seems excessively high. It turns out the bank has approximately $21 million in TARP funds (included in Tier 1 capital), which it will presumably be repaying sometime. Even so, the bank would still be considered “well capitalized” should they choose to repay those funds. In fact, I thought they would when I saw the cash balance at the end of Q1 at $90 million. But the Q2 report showed that they had invested that cash, so I’m not sure what the plan is. I actually think repaying those funds would be good for stockholders, but perhaps there’s more than meets the eye here.

    Also, as was pointed out earlier in the comments, the bank has benefited from gains on sales of mortgages and investments, which during periods of rising interest rates won’t be likely to continue. In fact, the Q2 report shows $8.2 million in unrealized losses on securities available for sale. Since they’re unrealized losses, they don’t show up on the income statement, but have had a negative effect on stockholders equity, and could be cause for concern in the future, particularly if the bank finds it needs to liquidate those securities.

    Off the top of my head, there’s just one other thing that bothers me about the financials: besides the one-time items that gave a big boost to net income in 2012, the big growth story seemed to be mortgage banking revenues. Unfortunately, Q2 saw these revenues actually decline yoy, at least in part due to rising mortgage rates which, while still low, will likely continue to rise.

    At any rate, I don’t know whether this stock is a buy or not. I do know that it isn’t for me. There are too many unanswered questions.
    Sep 2, 2013. 05:04 PM | 1 Like Like |Link to Comment
  • Is Stanley Furniture Ready To Turn Around? [View article]
    Nothing really new. I've been following their Twitter account since I wrote this, and there's been some good comments from people, and apparently they threw a great party at the Spring Market. :) There was another insider buy for a couple thousand shares about the same time as I wrote this. Other than that, I haven't seen anything, and I was waiting until earnings to write an update. I did open a small position at $3.88 on a whim, but it's really just speculation at this point.
    Jul 4, 2013. 03:50 AM | Likes Like |Link to Comment
  • Arrow Financial: Safety With A 4% Dividend Yield [View article]
    Emerald, thanks for the comment. My biggest concern at this point is that long-term rates have risen much more quickly than I expected, which might be good for AROW (because of the widening spread) or it might hurt due to declining mortgage applications and falling asset prices. Still, I think AROW's capital position is strong, so I don't foresee any real difficulties for them. Good luck!
    Jun 21, 2013. 04:01 PM | Likes Like |Link to Comment
  • Arrow Financial: Safety With A 4% Dividend Yield [View article]
    Hi Insider. Thanks for the comment. Of course, the 4% dividend yield that I specified is the current dividend yield, and you are correct, the actual expected yield from holding the stock for 1 year is probably closer to 6 or 7% given the annual stock dividend. I don’t think that would affect the analysis much, though, because the stock repurchases in the past haven’t reduced share count; in fact the share count has been steadily increasing, while the forecast included what would have been an increasing cash dividend on a per share basis. Still, for someone who owns the stock, the return has been higher because the bank has managed to grow net income at a faster rate than the increase in share count. Given the time frame that I was looking at (1 year), the difference is really minimal. I should, probably, have made more mention of the stock dividend than I did, so thanks for pointing that out.
    Jun 21, 2013. 03:55 PM | 1 Like Like |Link to Comment
  • Trans World Entertainment: Who Says You Have To Grow Sales? [View article]
    Okay, so I went back and looked at the conference call, and saw that the company had mentioned cash of $111 million. Dividing net income by eps yielded 32 million shares, which results in cash per share of $3.47. Thanks for pointing that out, RJM.
    Jun 5, 2013. 02:18 PM | Likes Like |Link to Comment
  • Trans World Entertainment: Who Says You Have To Grow Sales? [View article]
    Hi RJM2,
    Thanks for your comment. By not changing capital structure, I meant not taking on debt. I don't know where you got the cash per share figure, but $3.42 is possible. What I reported here was based on the latest information available to me at the time of writing.
    Jun 5, 2013. 01:16 PM | Likes Like |Link to Comment
  • Finish Line: A Weak First Half May Produce Significant Buying Opportunities [View article]
    LOL. If lack of page views is a bullish indicator, then everything I write about should be about to skyrocket.
    May 28, 2013. 10:41 PM | Likes Like |Link to Comment
  • Finish Line: A Weak First Half May Produce Significant Buying Opportunities [View article]
    Hi Alan. Thanks for the welcome and comment. You, are probably about right about investors being more focused on the Macy's deal after Labor Day. By then, FINL should be up and running in around 50 Macy's stores and the deal should be making a positive difference at least in revenues at that point.
    May 28, 2013. 12:25 PM | Likes Like |Link to Comment
  • Is Stanley Furniture Ready To Turn Around? [View article]
    Thanks for the comment. I think you're right about the "new found wealth." It could really turn things around for Stanley. I think the next couple of years could be great for Stanley, and I'm encouraged by the insider buying, as well as the improving real estate market.
    May 18, 2013. 09:37 AM | Likes Like |Link to Comment
  • Housing And Auto Sectors May Be Weak For Decades [View article]
    Hi Steven,
    Interesting article, even though I don’t agree with your idea that the solution may be for the government to pay for education. I think that much of the inflation in education costs has been exacerbated by government subsidies of higher education. Still, I do have to agree that student loan debt is definitely going to be a drag on the economy for a long time.
    Apr 21, 2013. 06:20 AM | 6 Likes Like |Link to Comment
  • This Great American Auto Manufacturer Has 50% Upside [View article]
    Nice article! I appreciate that you made the effort to show how you arrived at your valuation, rather than expecting people to take your analysis on faith. That said, if I were valuing Ford, I would be a bit more conservative. For example, I think a 6% WACC, even with low interest rates, is a little too low. I also think that we should expect some additions to working capital if we're going to expect sales to increase, but there isn't any in your chart until 2016. One last thing, I glanced at Ford's balance sheet, and the total debt was 100,000 or so, so I'm not sure where 86,000 came from. Maybe I missed something. At any rate, nice article, and I hope you're right, since I'm long. I've always liked Ford.
    Feb 13, 2013. 02:24 AM | 1 Like Like |Link to Comment
  • Buy Amazon On Global Prosperity [View article]
    Not to nitpick or anything, but I always have a problem when people project smooth sailing for the next 5, 10, or more years. There really isn't any reason to actually think that global GDP will to $100T by 2012, other than that works out to about 2.5% per year. Sounds like a World Bank projection, and I wouldn't put a lot of faith in it. As far as per capita GDP, I don't read a whole lot into that either. It makes it sound like everyone is just going to be that much better of, but in reality, most of that per capita growth ends up in a minority of the "per capita" pockets. The rich get richer, and I don't know for sure, but I don't actually think a lot of rich folks do their shopping on Amazon. The statement that around 55% of the world population will be using the internet might also be a little misleading. About 30% of the world population is not of the age of consent, and so can't legally conduct business with Amazon. This might explain the large increase in traffic I read about somewhere without a commensurate increase in revenue.
    There are some inconsistencies in your analysis as well. In one breath, you claim no one can compete with Amazon, but in the next you say they need to focus on and increase its competitive advantage. If I were an investor, I would want to reap some of the reward some time in the foreseeable future.
    And speaking of reaping the reward, it seems to me that Amazon could easily wind up in the same situation as Apple; lots of cash overseas that can't be brought back to the U.S. because of repatriation taxes. I think I read that nearly half of Amazon's sales are overseas. The point of having those cash flows is that someday they'll be returned to shareholders.
    In the end, all of that is beside the point. What I'm really wondering is how do you arrive at such lofty earnings projections now, when they aren't making any profits? And on top of that, the PE ratio you've projected is still about 112 for 2018, which implies a pretty steep growth rate well into the future.
    I don't know about other people, but I'm really just a little tired of reading all the rosy outlook analysis... everything is a buy... and stocks just keep going up, everyone looks like geniuses, but it has nothing to do with the company or the stock.
    Feb 4, 2013. 09:20 AM | Likes Like |Link to Comment
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