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Nowacki Asset Management  

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  • Why I Am Buying AK Steel [View article]
    I disagree that you should only buy companies that are difficult to explain. 2009-2011 many great large companies were ridiculously cheap. Not buying them on principle because they are easy to explain doesn't make sense to me. I don't think Buffett screwed up buying Coca Cola, Amex, GEICO, Gillete, or the Washington Post (all easy to explain). And maybe it's just me, but I don't think AKS operations are that difficult to explain.
    Jul 23, 2013. 09:50 AM | 2 Likes Like |Link to Comment
  • Why I Am Buying AK Steel [View article]
    Earnings and FCF are so erratic it is difficult to determine the value of AK. The fact it has a negative tangible book value, with negative earnings, is worrisome. FCF is also negative. The poor generation of FCF is why there has been a tremendous increase in LT debt and shares outstanding the past few years.

    In a few years when it turns around it will likely earn $100 million to $150 million in a good year. That makes the $450 million price today look attractive. The question is will the turn around take place next year or in 3 years?

    With that said, I do agree that it could sell at $6 at some point in the next few years as the industry turns around. It is what Buffett used to call a "cigar butt" (good for one last puff, then throw it away). However, I also think that there is also considerable risk. I don't predict a recession in the next two-three years, but if there is one this company could become insolvent, and dramatically increase shares outstanding again, trying to cover losses. Odds are there won't be a recession and it will hit $6, but we shouldn't pretend there is not real risk involved.

    As far as portfolio management comments on here, I agree about holding a more focused portfolio and not being very diversified (if you are an experienced and skilled investor). However, the point of such a portfolio is to avoid risky investments and only own 5-10 great investments. True you can get good returns with one stock that doubles, but you can also do very poorly with one company that goes down 50%. The "worst case scenario" for AK is too significant and therefore too risky for me and my clients. I've done very well without taking on risky investments. I am one of the few advisors in the country that shows my performance on my website.
    Jul 20, 2013. 05:42 PM | 1 Like Like |Link to Comment
  • Disproportionate Sell-Off Of REIT Preferreds Creates Substantial Opportunity [View article]
    I think there is only $35 million raised by the HCJ note offering. I built a $2 million position, it just took me a month.
    Jul 12, 2013. 04:38 PM | Likes Like |Link to Comment
  • Disproportionate Sell-Off Of REIT Preferreds Creates Substantial Opportunity [View article]
    I bought the NLY-C shares for clients recently. ALLY preferred B shares are another good one. HCJ (senior notes) are also attractive when they get below $26.
    Jul 10, 2013. 10:43 AM | Likes Like |Link to Comment
  • Homeowners Choice: Relatively New P&C Insurer Appears Cheap [View article]
    Equity 380 why do you think that the reinsurance and HCI's ability to raise capital if needed is not suffient to cover hurricane losses? Please elaborate.

    HCI doesn't need to answer questions about real estate investments. Many insurance companies diversify from bonds and stocks and purchase alternative investments such as real estate. There is nothing wrong with this.

    An insurance company that on occassion denies claims and ends up in court? That is a first.

    And as far as calling me a Jokester, look up the price at which I purchased my preferred shares on the date of my postings (between $7-$12). I sold out at $30 recently.

    I sold because the earnings are inflated due to the citizens policy acquisitions. It is no longer cheap, like it was around $7-$12. I did not sell because of conspiracy theories about insiders.
    Jul 9, 2013. 04:07 PM | Likes Like |Link to Comment
  • Federated National Holdings Company - Buying Into A Fixed Income Portfolio At A Significant Discount [View article]
    Gatsby, it is up 45% since this article was written earlier this month.

    Reinsurance has dropped because they completely changed around their book of business the past few years. Look at how much premiums written has changed the past few years. They are now back on the path toward growth and book value will continue to grow. I've followed the company for 6 years and earlier this month made it my largest holding in my asset mgmt business and in my personal holdings.
    Mar 21, 2013. 10:59 AM | Likes Like |Link to Comment
  • Federated National Holdings Company - Buying Into A Fixed Income Portfolio At A Significant Discount [View article]
    Thanks for the article. I am not surprised it is undervalued. One reason is that the company for the past few years has lost money, until this last year. They eliminated the dividend and just recently reinstated it (at a fraction of what it used to be). Those justifiably concerned a lot of investors.

    Another reason is with a $45 million market cap only small investors can buy it. My clients own 1.5% of the company. I bought 10,000 more shares this morning (a mere $60,000) and it pushed the stock up 8% (there was a 5% bid-ask).

    In regards to management, the mgmt at HCI has blown away the management at FNHC, not to mention HCI mgmt are large holders of the stock. I own both but have been disappointed with the performance of FNHC.

    I think FNHC is cheap and could rise 50% within a year if they have earnings like last year and 100% if they have a great year and increase the dividend substantially. However, I am in HCI long-term for its growth and FNHC only until it reaches a more appropriate valuation. Management at FNHC has to find a way to grow, not just exist.
    Mar 6, 2013. 10:56 AM | 1 Like Like |Link to Comment
  • Ctrip Q2 Recap: Staying On The Sidelines Due To Margin Deterioration And Intense Competition [View article]
    I took a position in CTRP at just under $14. If there is something I am missing I would like to know. Please tell me what information is in Mandarin that is not in English that I should be aware of. I appreciate your help.
    Jul 28, 2012. 08:17 PM | Likes Like |Link to Comment
  • Ctrip Q2 Recap: Staying On The Sidelines Due To Margin Deterioration And Intense Competition [View article]
    I think Priceline is very easy to understand if you don't speak English. All you have to do is be able to read financial statements and the annual report and if they are translated into your language it should be simple. Lucky for me, CTRP has financial statements in U.S. dollars, annual report in English, and conference calls with investors in English. I don't see what I am missing by not knowing Mandarin.

    I will ask the same question since you didn't answer it. Can you tell me specifically what I am missing by only knowing English?
    Jul 28, 2012. 08:15 PM | Likes Like |Link to Comment
  • Ctrip.com Attractively Priced, Despite Margin Pressure [View article]
    Companies that want growth and strong market positions are willing to sacrifice margins. Amazon sold the kindle fire at cost. CTRP has competitors but the market is growing fast enough for them to simply maintain market share and grow at a strong pace. CTRP is entering lower margin areas such as lower-end hotels in order to offer more options. They admit they don't have a strong position in lower-end hotels but it will likely be profitable. Growth companies need to invest to grow and margins are often sacrificed to achieve that growth. I don't disagree with their strategy and they will likely continue to grow revenue at a strong pace.
    Jul 28, 2012. 05:33 PM | 1 Like Like |Link to Comment
  • Ctrip Q2 Recap: Staying On The Sidelines Due To Margin Deterioration And Intense Competition [View article]
    Jiang Zhang, if you want to be taken seriously I recommend speaking to people in a more professional manner.
    Jul 28, 2012. 05:25 PM | Likes Like |Link to Comment
  • Ctrip Q2 Recap: Staying On The Sidelines Due To Margin Deterioration And Intense Competition [View article]
    What does reading Mandarin or the news have to do with anything? Give me specifics about why I am wrong about them acheiving double digit revenue growth the next few years. That would be more constructive than asking me what languages I am fluent in.
    Jul 28, 2012. 05:18 PM | Likes Like |Link to Comment
  • Ctrip Q2 Recap: Staying On The Sidelines Due To Margin Deterioration And Intense Competition [View article]
    It is definitely sustainable for the next few years. I base that on management's guidance, their market position, and how much the market is growing.
    Jul 26, 2012. 05:09 AM | Likes Like |Link to Comment
  • 5 Hedge Fund Stock Picks Undervalued By Earnings Growth And Target Price [View article]
    I see references to analysts ratings and institutional purchases (e.g. mutual funds). Which hedge funds have stakes in any of those companies you just mentioned?
    Jul 26, 2012. 05:03 AM | Likes Like |Link to Comment
  • Ctrip Q2 Recap: Staying On The Sidelines Due To Margin Deterioration And Intense Competition [View article]
    What you did not mention anywhere was any reference to valuation. Is there any price at which you would buy the stock?

    Margins are being squeezed, hence the huge fall in stock price. At this price and the double digit revenue growth CTRP will have for years, I strongly believe the stock is undervalued.
    Jul 25, 2012. 06:18 PM | Likes Like |Link to Comment
COMMENTS STATS
110 Comments
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