Seeking Alpha

Rubicon Associates'  Instablog

Rubicon Associates
  • on Bonds
Send Message
Rubicon Associates is headed by a Chartered Financial Analyst with over 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, he has analyzed and invested in both public and... More
My blog:
Follow me on twitter @RubiconAssoc
View Rubicon Associates' Instablogs on:
  • Jobless Claims And Thoughts.

    Initial claims fall to 15yr lows, a sign of strength in the labor markets despite the abysmal payrolls number earlier this month. While this helps the Fed's "liftoff" argument, they are still held in check by a variety of other factors, not the least of which is a lack of inflation (although rising oil prices should give some legs to the inflation numbers). S&Ps are still below the close and rates are higher (Px lower) on the news due to the perennial Fed implications.

    Dept of Labor report:

    In the week ending April 25, the advance figure for seasonally adjusted initial claims was 262,000, a decrease of 34,000 from the previous week's revised level. This is the lowest level for initial claims since April 15, 2000 when it was 259,000. The previous week's level was revised up by 1,000 from 295,000 to 296,000. The 4-week moving average was 283,750, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised up by 500 from 284,500 to 285,000.

    The advance number of actual initial claims under state programs, unadjusted, totaled 250,815 in the week ending April 25, a decrease of 28,982 (or -10.4 percent) from the previous week. The seasonal factors had expected an increase of 3,253 (or 1.2 percent) from the previous week. There were 318,127 initial claims in the comparable week in 2014.

    The highest insured unemployment rates in the week ending April 11 were in Alaska (3.6), New Jersey (3.1), Connecticut (2.8), Puerto Rico (2.8), California (2.6), Pennsylvania (2.6), the Virgin Islands (2.6), Massachusetts (2.5), Rhode Island (2.5), and Illinois (2.4). The largest increases in initial claims for the week ending April 18 were in New York (+8,902), Connecticut (+1,831), California (+1,343), Michigan (+387), and Vermont (+212), while the largest decreases were in New Jersey (-5,997), Pennsylvania (-5,566), Kentucky (-3,338), Texas (-2,163), and Kansas (-2,030).

    Apr 30 8:49 AM | Link | Comment!
  • OilPro On Private Equity And Energy

    Article here

    Interesting article about the amount of capital waiting to be put to work in E&P and what some of the players are thinking. Personally, I agree that there is too much money chasing (or waiting to chase) the sector, and there is more pain on the horizon. That said, for the time being, investors are willing to put money to work in 1st and 2nd lien bonds with nearly unbridled optimism.

    From the article:

    In discussing the state of energy private equity investing, Mr. Ryder pointed out that the industry raised approximately $50 billion in each of 2013 and 2014. For 2015's first quarter, the industry has raised $15 billion in new capital. These are significant sums of money. Mr. Ryder estimated that there was about $200 billion of uncommitted capital available within the energy private equity industry. He also suggested that the top three investing groups - Blackstone, EnCap and Natural Gas Partners (NGP) - currently hold about $15 billion of uncommitted capital in search of opportunities.

    The uniformity of thinking among private equity players is a bit scary. Group-thought is usually not a successful strategy. The volume of public capital is not only surprising, but discouraging if one believes the industry needs to experience pain before a true recovery can begin.

    I have taken a small position in Sandridge (NYSE:SD) - a flyer if you will (and a small position). Committing capital in any real way still seems somewhat silly. Just my thoughts.

    Tags: BX, SD, oil, private equity
    Apr 22 4:49 PM | Link | Comment!
  • AEC - Getting Taken Out By Brookfield

    Just in - Associated Estates is getting taken out by Brookfield Asset Management for $28.75/sh. 17% premium from yesterday's close

    Associated Estates Realty Corporation ("Associated Estates") (NYSE, NASDAQ: AEC) today announced its Board of Directors has unanimously approved a definitive merger agreement under which a real estate fund managed by Brookfield Asset Management ("Brookfield") (NYSE/TSX: BAM; Euronext: BAMA) will acquire all outstanding shares of common stock of Associated Estates for $28.75 per share in cash. The transaction is valued at approximately $2.5 billion including the assumption of debt.

    Brookfield is a global alternative asset manager with more than $200 billion in assets under management. Brookfield has over a 100-year history of owning and operating assets with a focus on property, renewable energy, infrastructure and private equity. Brookfield Property Group, Brookfield's largest investment platform, comprises of sector-specific portfolios in the multifamily, office, retail, industrial, and hotel sectors.

    Jeffrey I. Friedman, Chairman and Chief Executive Officer, said, "In December 2014, we announced that our Board was undertaking a thorough business review with the assistance of our financial advisor. After analyzing the Company's strategy, assets and other opportunities, including running a process involving a number of qualified potential buyers, the Board unanimously determined that this transaction is the best course of action to maximize shareholder value. We are pleased that Brookfield recognizes the value inherent in our income producing properties, development projects and the platform we have built. We are also excited that this transaction will deliver compelling, immediate and certain value to all Associated Estates shareholders."

    Approvals and Anticipated Closing
    Completion of the transaction is contingent upon customary closing conditions. The Company will convene a special meeting to seek the approval of Associated Estates shareholders, and the annual meeting previously scheduled for May 22, 2015 has been postponed indefinitely. The transaction is not contingent on receipt of financing by Brookfield.

    Closing is expected to occur in the second half of 2015. Associated Estates' headquarters will remain in Richmond Heights, Ohio.

    First Quarter 2015 Financial Results and Dividend
    Associated Estates will release financial results for its first quarter 2015 on Friday, May 1, 2015. In light of today's announcement, the Company will not hold a conference call to discuss its first quarter financial results.

    The Company intends to pay the previously announced common stock dividend of $0.21 per share on May 1, 2015 to shareholders of record as of April 15, 2015. The Company does not expect to pay additional dividends prior to the closing of the merger.

    Recall Land and Buildings is involved.

    According to them:

    The presentation highlights why Land and Buildings believes Associated Estates is grossly undervalued and what the opportunity is in AEC's stock:

    • Unlock 49% upside to fair value of $37 per share with Land and Buildings' Board nominees driving change.
    • Cap rates have decreased at least 25 basis points in AEC markets since last summer based on "boots on the ground" this month.
    • Deliver 5-10% upside to net operating income through experienced and professional management.
    • Establish clear capital allocation plan exploiting arbitrage between public and private real estate markets, unlike current Board that has overseen funds from operations per share decline 4% since 2008 due to a more than tripling of its share count despite a persistent discount to net asset value.
    • Instill a culture of excellence, as many of Land and Buildings nominees have implemented at prior companies, in contrast to the current culture that appears to be supportive of bloated expenses and a lack of revenue maximization.
    • Implement best in class corporate governance, including the elimination of significant existing conflicts of interest related to family and personal relationships, and the removal of a 4% ownership limit.
    • Create a differentiated Class A apartment REIT by focusing in the core markets and exploiting market inefficiencies, rather than the existing strategy of expanding into new markets when AEC's cost of capital does not support such investments.

    Uh-oh. Going to get interesting. $28.75 vs $37. Of course, Litt started at $18. That doesn't suck either.

    Tags: AEC
    Apr 22 9:29 AM | Link | Comment!
Full index of posts »
Latest Followers


  • $REXR results look decent, strong FFO and NOI growth as well as both GAAP and cash renewal rates.
    May 6, 2015
  • Another day of bloodletting in REITs. Ouch.
    May 5, 2015
  • $AEC getting taken out by Brookfield - $28.75-Shr 17% prem from close
    Apr 22, 2015
More »

Latest Comments

Most Commented
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.