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  • Lululemon's Valuation Is Stretched [View article]
    I won't get into statistics here... I was dying to short this in the 60's and I'm 150% more excited to do it eventually, but I keep waiting for that point when they have "jumped the shark", but their valuation remains silly.

    There is a really good piece of investigative journalism lurking in this stock. Ever heard about them making their store employees and managers enroll in Landmark Foundation courses (batshit nuts cult). Remember when they went to Japan and LuLu's founder talked about naming their company to twist asian tongues. But other than that, this is just and apparel retail business at a huge p/e, so what can possible go wrong.
    Apr 5, 2011. 06:17 PM | Likes Like |Link to Comment
  • TravelCenters, Given New Leases, Is Still Undervalued [View article]
    You raise some valid points, and I agree that cap ex here is material and important (hence why I anchored around simple EBITDA multiples in the 5x range that are consistent with businesses that have real cap ex).

    I do want to point out one error in your analysis, though: you seem to have neglected cash when calculating enterprise value. That changes the multiples you quote materially.
    Feb 2, 2011. 08:28 PM | 2 Likes Like |Link to Comment
  • TravelCenters, Given New Leases, Is Still Undervalued [View article]
    Brian - I agree with your comment... I wrote this up quickly (tried to get this up yesterday morning actually, but took a while to churn through SA) and I tried to refrain from suggesting a "point" valuation, rather presenting a range based on EBITDA and multiples.

    I agree that there is seasonality, though Q4 is usually still much better than Q1. I went back through 2005-2010 on this, and I think it's pretty hard to pinpoint a normalized seasonality given the economic noise that was encountered in the last few years. On the other hand, I think the company still stands to benefit from continuing operational improvements and a better economy, and I didn't try to forecast that either. I think it should be pretty straightforward for folks to come up with their own reasonable range of EBITDA levels, but I agree that it's not really as simple a 4xQ4 and I didn't mean to imply that was how I was thinking of the long term value here.
    Feb 2, 2011. 12:19 PM | 1 Like Like |Link to Comment
  • Here's How to Take 20 Years to Build a Retirement Fund That Lasts Forever [View article]
    Priceless - "who can't earn 14% a year just doing covered calls"

    I love it, but 14% is a little too high on the risk reward spectrum for me. I've got this money manager who is selling calls and buying puts - sticks totally to liquid names. He calls it a "split strike conversion strategy" and he's been doing 10%-12% every year like friggin' clockwork. He's big and legit, he's got tens of billions under management, so you know it's for real. His name is Bernie Madoff - met him on the golf course down in FL. He hasn't been answering my calls recently, but I don't even check on the account much any more because it's always up 12% a year. I'l be on the beach with my sweet margaritas by the time you read this.
    Jan 24, 2011. 01:35 PM | 7 Likes Like |Link to Comment
  • Estimating MPG Office Trust's Ultimate Recovery Value [View article]
    This is something anyone analyzing the situation needs to get comfortable with before investing. Since I'm assuming Rob Maguire wouldn't actually be cashing in here (he would just be getting the cash to pay his tax bill), it's probably in absolutely no one's best interests to see these tax indemnities come due before their maturities. If it wasn't for the tax indemnities, I believe the preferred would probably be trading a lot higher right now. I think the analysis of the risk related to the tax indemnities is centered on how much faith you have in the ability of the management team to restructure the liabilities on the LA CBD properties.

    If you read between the lines of Rob Maguire's letters to the ex-CEO, it's pretty easy to believe that the BoD felt that Maguire was being a real slimeball in trying to use this as leverage to get the company to sell him assets on the cheap. I particularly loved how he wanted the Company to cut him deals, but offered nothing in the way of a compromise on any liability in return. Rob Maguire should be scared silly of these tax indemnities getting triggered, as he could owe a huge amount to the IRS personally, with this liability match funded against the unsecured claim against a corporation that no longer feels that being his personal financial planning tool is a higher priority than the interest of its shareholders.

    My two cents - important question, so would be interested in your analysis. I realize the large magnitude of the numbers, but I think the story is less black and white if you game out how this might unfold.
    Jan 14, 2011. 01:42 PM | Likes Like |Link to Comment
  • Estimating MPG Office Trust's Ultimate Recovery Value [View article]
    I realize there are parking garage revenues, but the most recent comp I was referencing (the Union Bank building) sold for the $332 psf and I believe that price included the parking garage (which was a similar size in terms of spots psf). I want to air on the side of being conservative and make sure I'm not assuming a $300 psf valuation that would likely include the parking and then double count the parking valuation. If someone can point me to concrete info showing this going one way or the other, I will incorporate it in the analysis going forward.
    Dec 31, 2010. 10:05 PM | Likes Like |Link to Comment
  • Estimating MPG Office Trust's Ultimate Recovery Value [View article]
    No separate estimates made for the parking garages - it's unclear to me whether the comps or other valuation benchmarks that I've seen include them or not. I'm happy to update my analysis if anyone can provide the need clarity here. I don't think it would materially change the results of the burn down analysis here.
    Dec 31, 2010. 12:58 PM | Likes Like |Link to Comment
  • Estimating MPG Office Trust's Ultimate Recovery Value [View article]
    The big table above didn't seem to paste into SA very well. The version on my blog posting of this article is much easier on the eyes:
    Dec 30, 2010. 07:50 AM | 1 Like Like |Link to Comment
  • Maguire Properties Office Trust Valuation Analysis [View article]
    Thanks for the reply and good data - I agree with you from what I've read that this market was overbuilt a while ago and you might not get back to replacement value for a long, long time. A couple of interesting data points for me were:

    Commentary about how the Korean Air + Thomas Properties proposed development of the Wilshire Grand site makes little sense. I think one market participant was quoted as saying you probably need leases in the high 30's psf to make the economics work to build, which is touch when MPG et. al have plenty of class A space they'd be willing to give you at 20-25. Per your thoughts above, until they are signing leases up into the 30's I can't imagine these properties selling for 400 psf unless you get someone who is willing to take a really, really long-term view.

    Also - I thought the recent sale of the Union Bank tower is a great comp to show where full price is in the market. They fetched $331.56 per square foot against occupancy of 96% (and I believe UBOC had recently signed a long-term renewal).

    Since you seem to know something about the market, I'd be interested in your thoughts on Tri-Cities and Orange County, as well as the marks I've discussed on the hotel, development land and JV interest. Also - can you give me some clarity on how the parking is factored into all of this? Are the prices you are quoting including the parking, or do I need to break that out?

    In any case - I'm a much, much bigger fan of the preferred stock because I'm probably leaning much closer to your valuation range than 400 psf. I think the preferred does have value, and you can layer a *small* amount of common on top of a position (which would effectively act like warrants in a sub debt deal). I'm going to update this analysis going forward to hone in on a more exact valuation.
    Dec 29, 2010. 08:11 PM | Likes Like |Link to Comment
  • Why We Added PDL Biopharma [View article]
    Well - I don't have the basis to question your results, but what I would say is that if you choose not to "over analyze", then why even bother with the business description, etc. that you include above. I have no gripe with people working on a technical or momentum only basis - but you should disclose it as such. The original writeup gave an impression that you were basing your position on a combination of fundamental and technical work whereas it is clearly 100% technical.

    If being 100% technical has generated your superior track record, then following that methodology is only logical. But it shouldn't be said to have any relationship to the underlying business fundamentals of the stocks being bought. Indeed - with fundamental work, having just a little knowledge is probably worse than doing no work at all.
    Dec 22, 2010. 04:06 PM | 1 Like Like |Link to Comment
  • Why We Added PDL Biopharma [View article]
    Not looking to see if mine is bigger than yours or vice versa. But if you write something about a stock where I have spent a lot of time doing research... well I imagine a great investor would be interested in some additional information.

    Again - I like this stock, but I invite some fact checking vs. your article. I think you pulled some old information when doing your write up....

    Case in point: you mention all of PDLI's R&D focus and their hospital sales force. If i didnt know the company, you'd make me think it was an active biotech developing new drugs. In fact, PDLI has only 7 full time and 2 part time employees (10K). Doesn't seem to jive with your article. Don't take me wrong - it's a positive... The company is doing the right thing and not wasting their owners cash with any more than is strictly necessary to monetize the patent portfolio. Amen - wish more mgmt teams acted that way with a cash cow on their hands.

    Analysis of this stock has to do with a DCF of the cash flow (which is extremely concentrated in Genetech royalties, which don't last forever). On the downside, the patent litigation situation is fully disclosed, but complicated (and mgmt has had some wins here). On the upside, there could always be extensions, additional monetizations, etc. Beyond that, you also have to have faith the management continues to be rational capital allocators... I do believe they've proved their quals here.

    I have no reason to question your great returns, but I drank the Klarman/Buffett kool-aid long ago and spend all my time worrying about the underlying business vs. technical voodoo. I do encourage people to dig into PDLI, because I do think it's a really interesting story at the right price.
    Dec 21, 2010. 05:09 PM | 5 Likes Like |Link to Comment
  • Why We Added PDL Biopharma [View article]
    PDLI is an interesting stock that I am long, but for zero of the reasons mentioned here. The analysis above was either done by a robot or someone who should be looking for a career outside of investing. The author might want to verify the factual accuracy of statements about the hospital sales force, etc...

    For anyone interested - this stock is basically a deep value runoff play based on the cash flow of it's existing patent portfolio. Anyone who talks about a P/E ratio and earnings growth based on revenue streams that terminate over 3-10 year timeframes is not too be taken very seriously :). That said, people willing to do some DCF work and sensitize recent developments may find a pretty interesting value play here. Management has been shareholder friendly in realizing value and returning it to owners over time.
    Dec 21, 2010. 08:27 AM | 5 Likes Like |Link to Comment
  • Pressure on the Euro [View article]
    Are there really that many marginal sellers of EUR/USD sitting on the sidelines right now waiting to see what happens and then driving the price further down on bad news? What potentially bad news isn't already priced in? It feels like the short side is really crowded here... what are the odds on a pop back up to 1.38/1.40 on any type of announcement or supportive talk from EU officials?
    Apr 21, 2010. 04:09 PM | Likes Like |Link to Comment
  • Earthlink: P/E of 3 but Still Not Cheap [View article]
    The "decelerating churn" argument is valid, and I do think subscriber losses are slowing as the base gets more tenured. I'm doing some final work on a detailed model to run these numbers out, but from a high level it still looks like a better entry point is needed. I will share soon.
    Mar 15, 2010. 10:41 AM | 1 Like Like |Link to Comment
  • FreightCar America (RAIL): 50% upside to intrinsic value [View instapost]
    See presentation at the following link to address your questions about the fleet size/age:

    I have a number in my head about the weight difference being in the range of 10-15K lbs, but I don't have the source... might be off on that.
    Mar 2, 2010. 08:35 PM | Likes Like |Link to Comment