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Toby Shute  

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  • A Stock Trading For 20% Of NCAV [View instapost]
    Good question.

    Short answer:
    Because it's cheap.

    Slightly longer answer:
    Because it's cheap, I can identify why it's cheap, and while I can't imagine sentiment getting much worse, I can imagine several scenarios where sentiment improves and the discount to NAV narrows.

    Additional commentary:
    There's a lot of uncertainty here, but I do believe the cash on the books is real. This company built a real mine and sold it to an arm's-length ASX-listed third party. The question is will I ever see any of that cash, or benefit from it in any way whatsoever, as an outside passive minority investor.

    I can't predict what the outcome will be here, but I do think it's reasonably likely that the company will buy something and the suspension on ASX quotation will be lifted. I'm not expecting fireworks by any means, but even a mediocre deal should see the company trade at a narrower discount to NAV. That could produce a 2x or 3x return from these levels.

    About the worst outcome I can dream up is that the controlling shareholder orchestrates a deal with a related party, disclosed or otherwise, that funnels all or most of the cash out of the company, leaving it worthless. But even in that case, there would be some legal recourse. In that regard, it's very helpful that this company is incorporated in Australia.
    Jun 16, 2015. 11:06 PM | Likes Like |Link to Comment
  • A Stock Trading For 20% Of NCAV [View instapost]
    It was a conscious choice not to, given how illiquid and crazy this idea is.
    Jun 16, 2015. 02:00 PM | Likes Like |Link to Comment
  • Merger Arbitrage Forum (PART 2) [View instapost]
    Alter NRG (TSX: NRG) has a C$5/share cash offer from a Chinese buyer subject to a 45-day CFIUS investigation expiring July 20th. Stock is at C$4.53. Could make for a blistering IRR. I don't know how to handicap such things, but someone here might.
    Jun 10, 2015. 12:23 PM | Likes Like |Link to Comment
  • Rosetta Stone confirms buyout interest; shares +11.5% [View news story]
    RST had $45.9M of cash and an undrawn $25M revolver at the end of Q1. They have no debt, aside from some leases. I hope that you would review the balance sheet before taking a position, or even before posting an uninformed comment like this.
    Jun 8, 2015. 12:12 PM | 2 Likes Like |Link to Comment
  • 8% Yield With Interest Rate Protection From PennantPark Floating Rate Capital [View article]
    That $5.30/share figure announced today looks familiar!
    Jun 3, 2015. 06:22 PM | Likes Like |Link to Comment
  • 3 Of Seeking Alpha's Best [View article]
    Chris, if he's not already on your list, Mike Arnold should be there. Check out his work on $RDCM and $RSYS.
    May 27, 2015. 06:14 PM | 2 Likes Like |Link to Comment
  • Agilysys Shares Could Be On The Cusp Of Breaking Out [View article]
    MAK's regulatory AUM is ~$575M, but I don't know what their net AUM is. Pretty sure it's well north of $160M, which might be all that shows up on the 13F.
    May 26, 2015. 11:58 PM | Likes Like |Link to Comment
  • Alberta Oilsands Update [View article]
    Stock up to C$0.125 on news of receipt of C$35.1M

    Strategic review ongoing..
    May 26, 2015. 11:53 PM | Likes Like |Link to Comment
  • Time To Go Active [View article]
    My understanding is that HYLD was overweight energy going into the correction last year, which is the primary reason you are underperforming a passive high yield index by ~1380 bps over the past 12 months, per Morningstar. So you did separate yourselves when the market got volatile, just not in a good way.

    I agree that your active management approach can add value going forward, now that you're being selective with your energy exposure following the big drop in crude prices. That said, the very recent experience of the fund, which weakens your argument that active beats passive in volatile environments, is a bit of a glaring omission.
    May 21, 2015. 05:45 PM | 3 Likes Like |Link to Comment
  • South Korea: Home Of The World's Best Equity Opportunities [View article]
    Some have already cited the concentration in the large conglomerates. Their governance is poor and capital allocation decisions are often troubling. The most flagrant one recently was Hyundai's $10B land purchase in Seoul for its new HQ. Various classes of Hyundai preferred comprised 23% of Weiss' NAV before that event, so that stung when news of the purchase broke and the shares rightly got whacked.
    May 5, 2015. 04:33 PM | 5 Likes Like |Link to Comment
  • Bad News Is Good News For Tetra Tech [View article]
    Good questions, mtbattie. I'll tell you up front I have no position in the stock currently and haven't scrutinized the latest results.

    I believe the stock is up on results and outlook rather than the acquisition, which was very small at $30M in revenue. But to your general line of inquiry on contingent consideration revaluations, I have a thought or two.

    On the one hand, whenever you have a company writing down an acquisition - either the carrying value or the future contingent consideration - that's rarely encouraging re: the performance of the acquired biz. On the other hand, you have to distinguish between these two very different cases. The former is a pretty unambiguous capital allocation fail, because the acquirer overpaid and is owning up to that fact by writing down the goodwill. The latter case is different, because contingent consideration is to some degree a stretch target. The fact that TTEK is lowering its contingent consideration payable means that the acquired biz is not tracking to that stretch target. That's not to say TTEK didn't overpay - there could be more writedowns in the future - but the contingent consideration built in a buffer to help avoid that outcome. I'm perfectly happy with an acquirer structuring its acquisitions in this way.

    I 'm not following closely enough to address your other questions.
    May 4, 2015. 01:52 PM | Likes Like |Link to Comment
  • MCG Capital +14.5% on tender offer; more on Q3 results [View news story]
    Perhaps, but who in their right mind would vote against the deal?
    Apr 30, 2015. 04:25 PM | Likes Like |Link to Comment
  • MCG Capital finds a buyer [View news story]
    Nice outcome for anyone buying MCGC mid-last year, whether ahead of the tender announcement or afterward.
    Apr 29, 2015. 11:56 AM | Likes Like |Link to Comment
  • MCG Capital +14.5% on tender offer; more on Q3 results [View news story]
    Sale today at an implied $4.75 is well ahead of the conservative wind-up liquidation value we discussed last year. Nice outcome.
    Apr 29, 2015. 11:55 AM | Likes Like |Link to Comment
  • Merger Arbitrage Forum (Though Any Arb Can Be Discussed) [View instapost]
    Yep, that works. Hadn't noticed the "next arrow."
    Mar 9, 2015. 02:23 PM | 1 Like Like |Link to Comment