Seeking Alpha
View as an RSS Feed

Left Banker  

View Left Banker's Comments BY TICKER:
Latest  |  Highest rated
  • Cost-Efficient Exposure To Momentum [View article]
    I don't get the love for the AQR funds. I have not found a single area where they consistently outperform competitive ETFs. Oh sure, they have that imprimatur of oh-so-academic rigor behind them, but they simply don't measure up. There was a guy on Seeking Alpha who wrote regular articles shilling AQR. He's moved on to other outlets now, but every week there was another article from him spreading the gospel of the AQR adviser.

    Run a comparison between AMOMX and MTUM for example. Sure, AMOMX has a nice record, although you'd have done just as well simply buying SPY. But, more to the point here, it lags MTUM on essentially any time frame since MTUM's inception. Not by a lot, of course, but it lags, so someone tell me why anyone would bother. Either buy SPY or MTUM.

    But if you simply must have an AQR fund you can buy them through a broker's (Fidelity for one) mutual fund portal for a modest charge and ignore that $5M minimum. And who are we kidding here? Does anyone really think AQR has investors dropping 5 megabucks at a shot into their funds? That minimum is nothing more than a marketing ploy to make their advisers look good.
    Mar 1, 2015. 11:03 AM | 5 Likes Like |Link to Comment
  • Buying LQD Is A Waste Of Time [View article]
    Absolutely. That "scary" 128 bonds in 10 companies is less than 10% (128/1341) of the portfolio or, on average, 0.95% per company. Cf. the author's model portfolio: it has 100% in 20 companies. Need I do the math?

    I'm not saying the author's model portfolio is inadequately diversified. Only that the argument that the fund is poorly diversified compared to it (or any individual portfolio of bond holdings) is less than specious. Sufficiently so that it renders the whole premise highly suspect.
    Feb 25, 2015. 03:21 PM | 6 Likes Like |Link to Comment
  • House Price-To-Rent Ratios In Major U.S. Markets [View article]
    You can look at it two ways: Renting from the bank is one. Buying an asset on 80-90% leverage at near 3% interest cost (plus a tax advantage) is another. That powerful leverage generated a lot of profit during the real estate boom/bubble years.
    Feb 24, 2015. 11:27 PM | 5 Likes Like |Link to Comment
  • House Price-To-Rent Ratios In Major U.S. Markets [View article]
    1. I think you're putting too small a price on liquidity (see chasingalpha's comment above for example).

    2. Yeah. It's probably a bit bubbly, which means it's a good place to make money. Basically it gets down to a value vs growth situation. Overpaying for growth is a risk, of course, but so is buying a value trap.

    3. The sorts of things that make homeownership valuable (desirable areas, good schools, etc) apply just as much to rents, so they affect the denominator in the ratio as well. P/R in NYC, SF, LA may be high, but rents are extremely high as well. Although I will agree that it's hard to make money on the income without considering the capital gains accumulations that characterize these markets. But, as I read your article you're not talking about buying property to rent, you're talking about the investment potential of property purchased to live in.

    4. As for your last point, that's an assumption that I do not think will bear careful scrutiny. I don't know LA very well, but rents are rising at a frightening pace in SF, NYC and Seattle.

    I don't mean my comments to be argumentative. I really like your analyses and I found your maps fascinating. I just think parallels between the two markets (i.e. equities and real property) can carried further to show that high P/R, like high P/E, does not rule out opportunities for exceptionally profitable investments. Just look how much money has been made in high P/E stocks. I will admit however that one must be much more nimble to succeed, which is, again, a parallel to equity markets. And one may not want to rely on having to a nimble investor for one's personal residence.
    Feb 24, 2015. 05:54 PM | 3 Likes Like |Link to Comment
  • House Price-To-Rent Ratios In Major U.S. Markets [View article]
    I like your comparison of P/R to P/E. But as for P/E, high valuation for P/R does not necessarily mean profits cannot be made at high valuations. Often they are high for a good reason just as for high P/E stocks. Often low P/R areas are cheap for a reason, just as for low P/E stocks.

    Buying in high (near the top of your scales) P/R valuation areas has been very profitable for me. Others I know who are more aggressively involved in real estate have done extremely well. Momentum in real estate is, I'll submit, a more powerful factor than in the stock market. As is liquidity.

    You might find it interesting to run time-on-market analyses to your maps. I think you'll find that liquidity in some of your highest P/R neighborhoods is massively superior to that of low P/R neighborhoods. In the SF bay area at least liquidity is such that in many of the high P/R areas bidding wars are the norm and asking prices are merely starting points for negotiation upward. Sellers realistically expect to have a contract in under a month.
    Feb 24, 2015. 04:51 PM | 4 Likes Like |Link to Comment
  • There Are Few Bargains In Tax-Free Income... Here's 3 [View article]
    EIV: AMT free
    DSM and BSD: both 11.2% AMT
    Feb 21, 2015. 06:45 PM | Likes Like |Link to Comment
  • Awilco Drilling To Pay $1 Dividend For A 33% Yield [View article]
    Thanks for this, Giffin. The Q&A was not yet available when I wrote this up (SA held it for Pro readers for 24 hrs before releasing it widely).

    Your points reflect the comments accurately. I agree there should be two or three solid dividends (0.80 to 1.00, I'd guess) but things will be more stressful after that, especially if Wilhunter is down for an extended time as looks possible.

    Made your comment an author's pick in the hope that readers will be sure to see it.
    Feb 14, 2015. 03:54 PM | 4 Likes Like |Link to Comment
  • Awilco Drilling To Pay $1 Dividend For A 33% Yield [View article]
    Company's presentation (cited above) has slide 12:
    Dividend Distribution
    • Announcement of dividend payable in Q4 of USD 1.00 per share
    • Dividend payable on or around the 20th March 2015
    • Share will trade ex-dividend on 17th February 2015, the record date will be
    18th February

    Obviously, check with your broker.
    Feb 14, 2015. 03:50 PM | 1 Like Like |Link to Comment
  • Awilco Drilling To Pay $1 Dividend For A 33% Yield [View article]
    Yeah, JDoe, I know what you mean. I'm planning to hold it until the end of the year and then consider the tax loss sale. If they can keep up the $1/quarter, or even a bit less, I'm pretty sure this will be a bottom. And, if they do, I'll be ok.

    Everything we've heard from management here would point to something close to a dollar. I was pleased to see that $1 payout.
    Feb 13, 2015. 03:43 PM | 4 Likes Like |Link to Comment
  • Exploiting Market Inefficiency In Closed-End Funds [View article]
    I agree with that completely, George.

    They did look at the Pástor and Stambaugh tradable liquidity factor as one of the five factors they attempted to control for. I'm not completely sure what that factor involves but I suspect it addresses your point. But only to the extent that their results outperform results that account for tradable liquidity. The problem is still there in the 18% they report.
    Feb 11, 2015. 10:42 AM | 2 Likes Like |Link to Comment
  • Exploiting Market Inefficiency In Closed-End Funds [View article]
    I think it's important the realize that investing strategies in an academic research paper are not intended to be real-world investing strategies. They are designed to eliminate as many confounding variables as possible to focus on one a factor of interest. The authors are not suggesting one can take their findings and make 18% a year applying the strategy, simply that they tested its significance.

    This is, of course, what people object to about academic research, but it's really the best way to confirm or reject various hypotheses. It's the way science works. It can inform real-world decisions, but those will ultimately be as much art as science. As I said in this piece, many of us who follow closed-end funds have an intuitive sense that the points made are true. The value of this work to me is that it takes it out of the intuitive realm and puts it on a solid statistical footing -- provides proof, if you will.

    I spent a career doing science (biological, not social science, but the same concepts apply) on subjects of some interest to industry. The industry folks I spoke with were always frustrated by the lack of an immediate application orientation in our work. But that was never the goal. It's up to practitioners to apply the findings of scientific research by applying their artistry to the findings.
    Feb 10, 2015. 11:50 PM | 2 Likes Like |Link to Comment
  • Exploiting Market Inefficiency In Closed-End Funds [View article]
    I've discussed Z-statistic extensively. Try here: http://bit.ly/1z4j5Ad or for a summary or http://seekingalpha.co... for a more recent discussion.

    Basically it's a statistical measure of how far from the average D/P the current D/P is.
    Feb 10, 2015. 09:09 AM | 1 Like Like |Link to Comment
  • Exploiting Market Inefficiency In Closed-End Funds [View article]
    Jmar: Yes. But it's nice to have that assumption confirmed by a rigorous look.
    Feb 10, 2015. 12:21 AM | Likes Like |Link to Comment
  • Exploiting Market Inefficiency In Closed-End Funds [View article]
    Thanks for that. I'll have a look at the Fidelity screener. Have never used it.
    Feb 10, 2015. 12:20 AM | Likes Like |Link to Comment
  • Exploiting Market Inefficiency In Closed-End Funds [View article]
    That is how I read it as well. Premium/discount reverts to the mean at a rate of 8.6%/month. Clearly it's not generating 8.6% on this metric.


    But, it's interesting to look at it that way because the mean is changing as well. So the reversion rate refers to a moving target. At least as far as I understand it.

    Frankly, I'm not sure there's anything to be gained from delving too deeply into the paper. The abstract says it all if you're willing to accept that the analysis is valid. It's just that the nerd in me wanted to see what they did and how they got there.
    Feb 9, 2015. 11:20 AM | 1 Like Like |Link to Comment
COMMENTS STATS
2,281 Comments
2,994 Likes