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Ocean Man

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  • Target Has Significant Upside Potential [View article]
    Terrific article, Dr. O. I agree with the upside, returning to $60 at the very least and probably to your numbers on the wave of back-to-school season followed by the holiday season.

    This morning on CNBC, they asked Cramer what he thought would be the one stock to be the biggest winner from Obama's jobs speech Thursday night and he said Target without hesitation. Those who will be helped by Obama's $300 billion shop at Target.....
    Sep 8, 2011. 01:44 AM | 1 Like Like |Link to Comment
  • 5 Profitable And Undervalued Targets For Takeover Or Buyout [View article]
    MHP has a couple of activist hedge fund investors pushing it to break itself up into 4 pieces. They claim the stock will go from $40 to $70 if MHP does this. At the very least, they're already planning to spin off the low-margin education division, already working with bankers on the spin off, and that should be worth a good portion of that $30 jump.
    Sep 8, 2011. 01:37 AM | Likes Like |Link to Comment
  • Will Operation Twist Work For mREITs? [View article]
    Excellent article, Todd. Some great new information and scenario forecasting.
    Sep 6, 2011. 10:11 PM | 2 Likes Like |Link to Comment
  • Recent mREIT Regulatory Risk Fears Are Likely Overblown [View article]
    JP - some good points, but here is my response:

    1) You're looking at only one aspect of SEC changes that could affect the mREITs, and I agree that the one you mentioned has a small likelihood of coming to fruition. However, the 2X and 3X bull and bear ETFs are being lambasted every night for adding to the volatility in the markets. If the SEC makes an anti-leveraging ruling against these, it could hit the mREITs too. That's the greater SEC regulatory risk.

    2) It doesn't really matter if Operation Twist is speculation or reality. The yield curve has already flattened as the market expects OT to happen. The bad result for mREITs is already in.

    3) The reason the nationwide refi is viewed as likely is because it doesn't require Congress approval. It also helps those Obama needs votes from. The wealthy won't qualify, nor would they vote for Obama anyway. The only thing Obama wants to fix more than housing is jobs, and your point that the mortgage infrastructure couldn't handle all the additional refi work just allowed The Pres to kill both birds with one stone.
    Sep 6, 2011. 02:38 AM | 1 Like Like |Link to Comment
  • Debunking Dividend Agnostic Assumptions: Here's What Really Makes Income Investors Tick [View article]
    Great article, 5+, and great comments. But let's not argue too strongly how well our methods work. If everyone knew, the stocks we wished to buy would be much more expensive!
    Sep 5, 2011. 12:59 AM | 5 Likes Like |Link to Comment
  • Recent mREIT Regulatory Risk Fears Are Likely Overblown [View article]
    There is a reason this fear is overblown. That's because you're measuring total fear against one threat, and ignoring the other threats adding to the fear.

    1) These regulatory risks could severely harm the mREITs.
    2) The Fed initiating Operation Twist could severely harm the mREITs.
    3) Obama announcing a nationwide refi program could severely harm the mREITs.

    Of course issue #1 doesn't justify the total fear. But if you take the cumulative probability of at least one of the three issues above happening, then the fear is totally justified and probably not yet fully priced into the mREITs.
    Sep 4, 2011. 09:50 PM | 4 Likes Like |Link to Comment
  • Mongolia: Will Peabody Get More, Less, Or The Same Of Tavan Tolgoi? [View article]
    Great article, very informative and presented both positive and negative views for Peabody. I believe in the coal super-cycle, and have small positions in BTU, ACI, ANR, and PCX. However, I've hesitated on which positions to add to as it seems all have trouble getting coal to China in any type of mass quantity due to limited ports to ship from and quantity restraints in those ports. Any thoughts would be appreciated.
    Sep 4, 2011. 09:07 PM | 6 Likes Like |Link to Comment
  • mREIT Concerns Are Overblown: Good Buying Opportunity [View article]
    The SEC rumors are the least of the worries for these. Operation Twist is very bad news and is being seen as more of a sure thing every day. It is already priced into the bond market, where the yield curve flattening is driving down the mREITs far more than the SEC rumors. There is also speculation that Obama could announce a national refi program on Thursday night, so the mREITs are getting bad news from three different directions.
    Sep 4, 2011. 08:49 PM | 2 Likes Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    First off, let's remember that rumors only go away if they are false rumors. Second, if the market moves down on a rumor, and it turns out to be true, you missed the boat to sell. Third, if there are five rumored cataclysmic possibilities for a stock, only one needs to be true to demolish it. That said, enough about rumors, here are some facts:

    1) CNBC reported all day on Friday that Goldman Sachs had told all of their clients that Bernanke was going to announce later this month that the Fed would be doing Operation Twist. If you don't know what that means, read Todd's article titled "mREITs' 4 Worst Case Scenarios", as Operation Twist was one of his Worst Case Scenarios for mREITs.

    2) CNBC also reported that Morgan Stanley had been telling all of their clients that the Fed would be starting Operation Torque later this month, referring to something very similar to Operation Twist but not exactly what was done under that name in the 1950s.

    3) We've all heard many times how the bond market is "smarter" than the stock market. This refers to the bond market positioning itself for an upcoming move a day or two before the stock market does. The headline on Yahoo Finance all afternoon on Friday was that the bond market had positioned itself for Operation Twist. Both Yahoo and CNBC reported after the close that the 2-to-10 part of the yield curve had flattened to the flattest it had been since March of 2009. This flattening was another of Todd's 4 Worst Case Scenarios for mREITs.

    So not just one, but two of Todd's Worst Case Scenarios for mREITs have already started happening. The bond market has already priced in Operation Twist on Friday, and the stock market often moves the same way a day or two later.

    Those facts are bad enough for mREITs, very bad as Todd described and not fully priced in yet. But wait, a nationwide refi also has a decent likelihood of happening, and could be announced by Obama as early as his address on Thursday night. People are saying that he needs to do something quick and big if he is to have any chance of being re-elected. Since he can't get Congress to agree on anything, maybe he goes with the nationwide refi that doesn't need Congress approval. Plus it said in the Fed minutes released last week that Bernanke and the Fed blessed this idea in their discussions. In mREIT lingo, this would be accretive to Operation Twist in killing the mREITs.

    If that's not enough, notice that I haven't yet mentioned the SEC rumors that were being so hotly debated above. Sure, taking away the tax exemption or leveraging abilities of mREITs would be a huge blow to them, but it might be shooting a dead horse.

    I don't want to be too negative though, so I'll point out a bright side. If one were to sell their mREITs and keep the protective puts, one could make a killing if the above does indeed pan out.

    Good luck to all, it pains me to write this, these used to be my favorite holdings.....
    Sep 3, 2011. 09:55 PM | 1 Like Like |Link to Comment
  • How To Deal With mREITs Plummeting Due To Rumors [View article]
    James - I enjoy reading your articles, but you are way off suggesting that an mREIT would double if the threat of government intervention went away. They'd probably just return to 2011 highs at best. For them to double, their book value would have to double.

    The only way you're going to get a double on these is if they flash crash to half their book value and then get good news, which could happen.
    Sep 3, 2011. 09:04 PM | 1 Like Like |Link to Comment
  • 10 Stocks Currently Yielding 14.4% And Higher [View article]
    Hey Todd. I've been commenting about the mREITs in your "4 worst case scenarios" article the past few days. I sold all of my mREITs Wed morning. Saw the article saying Bernanke and the Fed gave their blessing to the nationwide underwater refi plan which started to confirm my fears. Then saw the WSJ article after the bell today saying the SEC wants to give the REITs the choice of losing their tax exemption or their ability to leverage, either would be a killer - you now need to add a 5th worst case scenario, which unfortunately is worse than the other 4. We've seen that a threat or scare on these can cause a big move, so waiting for confirmation of the rumors might be too late. Glad you're hedged. Selling and getting back in when the water has calmed works too. It will be interesting to see if the hedge funds get out..... I could see a lot of people saying "I do not want to hold these over the 3-day weekend".
    Sep 2, 2011. 02:16 AM | 1 Like Like |Link to Comment
  • REITs And The Cost of Regulation [View article]
    The WSJ article on this topic said the SEC wanted to give REITs the option of giving up their tax exemption or giving up their ability to leverage. Either one would be a significant blow to the highly-leveraged mREITs. So I don't think this is the type of regulation you're looking for. These mREITs have the ability to flash crash the minute there's danger on the horizon as nobody wants to be the last one out.
    Sep 2, 2011. 01:50 AM | Likes Like |Link to Comment
  • Stocks That Shine For Profit And Stability In Any Market [View article]
    Bob J - I see your point, and agree that retired and not-yet-retired investors could have different views on waiting for dividend growth. Robert S makes a good long-term point too.

    But I still say c'mon! I could see not taking a 1.5% yield or a 2.0% yield if you want 3%. But we're talking about a 2.8% yield that most would agree has about a 99% certainty of being raised to over 3% two short months from now. MCD has raised their dividend by at least 10% the past two years. The premise of your article is that MCD does well in both sunshine and stormy weather, i.e. it doesn't have big dips.

    Buy it tomorrow and if you don't have a 3% yield on cost by the end of November, I'll buy you a Big Mac!
    Sep 2, 2011. 01:34 AM | 1 Like Like |Link to Comment
  • mREITs' 4 Worst Case Scenarios From Ben Bernanke's Speech [View article]
    There was an article in the WSJ today after the bell titled The End of REITS?. Said the SEC wants to tell REITs that they can either lose their tax exemption or lose their ability to leverage. Some commenters questioned the SEC's power to rule this, so it's far from a sure thing, but either choice would cut the value of mREITs dramatically. As we all know, all you need is a scare on these and everybody jumps out. If the hedge funds sell, they'll fall fast and then the little investors' stop-loss orders will kick in. This could get ugly. Especially with people not wanting to sit on the risk over a 3-day weekend
    Sep 1, 2011. 11:22 PM | Likes Like |Link to Comment
  • Dividend Danger Zone: 4 Yields That Look Unsustainable [View article]
    PBI's problem isn't so much their earnings, or cash flow, or any other numbers... it's a stigma issue. They're just seen as the dying dinosaur of snail mail, and stock price does reflect popularity. I was actually impressed with PBI's most recent quarter, but there is just no way to get people excited about PBI's prospects for growth. FTR has the same problem, and even Intel has a bit of that problem. Yesteryear tech stigma. It's unfortunate.
    Sep 1, 2011. 03:09 AM | 2 Likes Like |Link to Comment