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  • Stocks Make Bonds Look Expensive [View article]
    It's simply one piece of information. In the short run I think you have to respect the flows.
    Aug 17, 2010. 08:47 AM | Likes Like |Link to Comment
  • Housing Market May 'Have the Bottom Fall Out' [View article]
    The FT has a piece including some research from Deutsche showing almost 10% of mortgages are delinquent, up sharply over the past two years.
    Aug 17, 2010. 07:50 AM | 2 Likes Like |Link to Comment
  • Stocks Make Bonds Look Expensive [View article]
    That's really not true. If you like the company you ought to be happy for them to retain all their earnings to reinvest them in the business and pay no dividends at all.
    Aug 16, 2010. 09:53 PM | 1 Like Like |Link to Comment
  • Stocks Make Bonds Look Expensive [View article]
    MDMoney: it's probably not clear from the chart, but in 2008 the spread was 3.58, and the return on 10 year treasuries was 6.86% (using Federal Reserve H-15 data, average annual values). The correlation is -0.52 so it's obviously not a foolproof relationship, but I was surprised to see that it was even that strongly negative. It's even more out of line now than the chart shows, since I've used 3.14 as the average 2010 yield (actual month end numbers and assumed 2.6% for the balance of the year) which is 3.14%, versus today's actual yield around 0.50% lower.
    Aug 16, 2010. 02:08 PM | 1 Like Like |Link to Comment
  • Making Sense of Low Bond Yields [View article]
    Thank you for all the comments, very interesting. I understand that fears of deflation and Fed buying have pushed up bond prices and these are the dominant features of the market at present. My point was that stocks and bonds have been unusually negatively correlated over the last couple of years, and that this has caused bonds to be more sought after. It won't always be this way, and when that regime changes the moves will be dramatic. For now we are invested in high grade corporate bonds short and intermediate term. Corporate cashflow is very strong and the Fed's not raising rates in the foreseeable future, so it's still the right place to be.
    Aug 12, 2010. 07:40 AM | 1 Like Like |Link to Comment
  • Just One ETF: A Deep-Discounted CEF With Cash and Insider Backing [View article]
    For a fund that small the costs of being a registered security probably don't make sense. There's always the risk that they could de-list to cut costs, and then you'd be left with a private equity investment. Without more information to support the idea that they'll remain a public company and find a way to close the discount to NAV, I'd be inclined to avoid it.
    Aug 10, 2010. 01:52 PM | Likes Like |Link to Comment
  • Just One ETF: A Deep-Discounted CEF With Cash and Insider Backing [View article]
    Gwailo makes a good point about the non-taxable nature of a potential distribution, which is also something we'd considered. We hadn't considered the history with Doliver, very interesting, difficult to assess its impact.
    Aug 8, 2010. 07:34 AM | Likes Like |Link to Comment
  • Euroseas: Opportunities in Shipping [View article]
    We look for situations that are cheap to tangible asset value. It fits my own risk appetite in that it creates something of a floor on valuation, whereas investing based on earnings multiples and growth expectations doesn't leave you with the same type of floor. Nothing wrong with it, just not to my personal taste. So we didn't start out looking at shipping companies, we regularly run screens to find securities that are cheap P/BV, have low debt and are underperforming, and then see if we can figure out what the assets might be worth. ESEA seemed to fit what we were looking for.
    Aug 7, 2010. 09:06 AM | 1 Like Like |Link to Comment
  • Just One ETF: A Deep-Discounted CEF With Cash and Insider Backing [View article]
    The comment about taxes is an interesting one. It's hard to profit from BIF without it being taxable. A special dividend would of course be taxable, and a buyback would simply create a capital gain, taxable on sale. The entities through which management owns BIF may themselves be tax-exempt, that's unclear to me. But the rise in tax rates next year does create a form of catalyst, in that if they were planning to realize a gain from the discount they'd be better off doing it this year. Since 2011 tax structure isn't yet known, maybe it's worth it for them to wait until Congress decides how to change taxes on dividends, capital gains and ordinary income. Or maybe they'll do something to realize value this year. I'm not really sure why else they'd hold so much BIF if they didn't think it was cheap - they could simply buy the underlying securities. And I'm not sure why they'd hold so much without intending to use that position to create value. But of course they could just hold it indefinitely without doing anything.

    If that turns out to be the case, BIF simply represents broad equity market exposure purchased at a discount with an unnecessarily high fee (1.25% is the management fee but other fund management costs such as administration, legal etc. bring it over 2%). The discount could widen; something could go wrong with BRK; but as a risk/reward, considering all these issues it seemed to us that it was a worthwhile investment.
    Aug 7, 2010. 09:00 AM | Likes Like |Link to Comment
  • Just One ETF: A Deep-Discounted CEF With Cash and Insider Backing [View article]
    We had read Joe Eqcome's piece - he does good analysis and makes some fair points. Our view is simply that we're aligning our interests with management and presume they'll act in their own self interest. The secondary wasn't in the interests of stockholders but frankly owning it at such a high premium was always asking for trouble and this plus the absence of a dividend is what's made it unappealing. In spite of the fees, they have performed respectably at the NAV level.

    With respect to concentration in BRK, yes a tragedy befalling Warren Buffet would be a great shame, but his age isn't news and I would expect BRK to rebound after a couple of weeks.
    Aug 6, 2010. 10:51 AM | 2 Likes Like |Link to Comment
  • Euroseas: Opportunities in Shipping [View article]
    ONAV is too small - ESEA is about as small a company as we would consider. With stocks like ONAV, I'm always afraid the the cost of SOX compliance could induce them to delist.

    We did look at PRGN briefly, favored ESEA because management was more accessible (I had lunch with the CFO since he lives nearby) but will dig out our notes on PRGN because it looks similarly cheap to BV.
    Aug 6, 2010. 10:43 AM | 1 Like Like |Link to Comment
  • Closed End Fund Discounts [View article]
    Yes, I'd have thought so too. In many cases state finances make munis look unreasonably risky to me, although there's little evidence of that in market pricing.
    Aug 4, 2010. 07:44 AM | 1 Like Like |Link to Comment
  • Closed End Fund Discounts [View article]
    On the Muni CEFs, that sounds like the funds Blackrock is referring to have a duration of 6.6, which wouldn't be surprising, suggests an average maturity of arounf eight years.

    Re RMT/RVT we like both of those securities and are long them in a hedged strategy.
    Aug 3, 2010. 08:57 AM | 1 Like Like |Link to Comment
  • Why I'm Long Silver, Short Gold [View article]
    We like the industrial demand aspect of silver and believe that provides some better price support. However, the 17:1 silver/gold ratio derived from relative abundance on Earth doesn't have any real bearing on the relative prices - few commodities are priced that way. We like owning silver miners, they offer more operating leverage and the generation of current income.
    Jul 22, 2010. 07:43 AM | 9 Likes Like |Link to Comment
  • The Case for Silver Miners [View article]
    I'm just not sure why people would engage in manipulation of reported silver inventories, since ultimately the price of silver will go where it needs to in order for the market to clear. Presumably the Silver Institute has as its goal the long term increase in silver consumption and price, which would not be furthered by data manipulation. As for JPMorgan, I worked there for many years and I'd bet alot of money that there's no inventory fraud going on with respect to SLV (as suggested by bullionbullscanada). That's just not how that company operates. But there's a good bullish case for silver anyway based on the data that's out there, so that's good enough for me!
    Jul 20, 2010. 08:42 AM | 2 Likes Like |Link to Comment