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Tom Armistead  

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  • Going Long Wal-Mart [View instapost]
    I think you're right: management has identified the problem and started to do some serious work on it.

    The 20 cents a share cost is trivial. Annually it would be 0.13% of revenue. They could pass it through and nobody would ever notice, they will still be the low cost provider.
    Feb 20, 2015. 04:55 AM | 1 Like Like |Link to Comment
  • Coach: Transformation Developing Favorably [View article]
    Ernie, I like your options trade. I had a similar idea which I wrote up on my instablog. I couldn't get the price I wanted so I stayed with my long LEAPS position.

    http://seekingalpha.co...

    No opinion on The Buckle, I looked at the numbers, what I saw was slow growth and a good balance sheet, priced at a buy point by my preferred method, which is PE5.

    I (re)learned something on Coach. Working on this article, I did the inventory/revenue analysis which I picked up from Harry Domash's book. If I had done that before I invested I could have saved myself a ride down from something in the low 50's which is where I first bought.
    Feb 20, 2015. 04:41 AM | 1 Like Like |Link to Comment
  • Can Greenlight Get Its Groove Back? [View article]
    I just ran a chart of GLRE against RE and PRE from its date of inception. Both of these conventional reinsurers outperformed GLRE, as did TRV, by a substantial margin.

    I know these companies are a bunch of old fuddy duddies the way they invest and try to make an underwriting profit, compared to the glamor of having an ace like Einhorn running your money.

    The bottom line is, GLRE has underperformed and there is no reason to expect it will outperform.
    Feb 19, 2015. 05:39 PM | Likes Like |Link to Comment
  • Can Greenlight Get Its Groove Back? [View article]
    Good luck.
    Feb 19, 2015. 05:14 PM | Likes Like |Link to Comment
  • Going Long Wal-Mart [View instapost]
    You're not alone in that, I don't go there unless I can't get what I'm looking for elsewhere.

    Not very self-consistent, I've done bullish diagonals on it in the past, with good results, and here I am again, trying to catch the falling dagger.
    Feb 19, 2015. 04:38 PM | Likes Like |Link to Comment
  • Can Greenlight Get Its Groove Back? [View article]
    Hi Robin, thanks for the vote of confidence on my insurance thinking. I don't like TPRE either.

    I browsed the 10-Ks here, I forget which one it was, but the thinking is, that they are doing reinsurance of a type that doesn't carry a lot of catastrophe exposure with it, really they are just providing capital. Then somehow the reinsurance becomes the source of the float and they expect to do wonderful things with it.

    In my experience, the insurance company that skimps on underwriting in order to get its hands on capital to invest at hopefully market beating returns usually ends up destroying shareholder value.

    Here's a link to an article on Travelers investment philosophy and the man behind it, this is a company that has outperformed the S&P 500 by 4.4% per year for 10 years.

    http://onforb.es/1Jsc5ay
    Feb 19, 2015. 03:27 PM | Likes Like |Link to Comment
  • Going Long Wal-Mart [View instapost]
    I'm a little surprised watching it today, still down quite a bit.

    Very little comment on the one article here on SA that covered it, I think it's a big deal.

    On the internet if you do an image search on Wal-Mart shoppers you get an endless parade of obese or weirdly dressed people. If paying the help more does anything to dispel this image of cheap and tacky it will help the store a lot.

    Not to mention if this starts a trend you will see the economy in this country pick up rapidly.
    Feb 19, 2015. 02:37 PM | Likes Like |Link to Comment
  • Going Long Wal-Mart [View instapost]
    There was an interview with the CEO on CNBC, he says they want to be ahead of the game, pay raises will be coming down from others there is a first mover advantage.
    Feb 19, 2015. 12:49 PM | Likes Like |Link to Comment
  • Can Greenlight Get Its Groove Back? [View article]
    So here we have a reinsurer with a combined ratio higher than its peers, and a complex investment strategy that doesn't beat the S&P 500, but which undoubtedly has high management expenses. Einhorn doesn't work cheap.

    When the combined ratio goes up and Einhorn goes down, this thing will implode.

    The fixed income ALM strategy is far superior to what GLRE is doing. Reinsurance buyers are going to require a discount on the price to compensate for letting Einhorn game the market with money that will be needed to pay their claims. If GLRE can't turn an underwriting profit for the past five years, now with the market getting very soft due to yield chasers buying up CAT bonds, not to mention reduced catastrophes, it doesn't look good.

    The business model here is backward, placing investment return above safety.


    Feb 19, 2015. 05:03 AM | 2 Likes Like |Link to Comment
  • IBM Investor Briefing: What Lies Ahead [View article]
    I'll give it a shot, it will be interesting to see if they can provide some details in support of the idea that top line growth can eventually be reached, along the line of my back of the envelope scenario.


    Feb 18, 2015. 06:09 PM | 2 Likes Like |Link to Comment
  • A Big Financial Sector Hurts Economic Growth [View article]
    The BIS study is just scratching the surface, and staying away from some sensitive areas.

    Financial abuse of risk transfer mechanisms, such as futures or CDS, creates profits for financialists at the expense of losses in the real economy. The prime example is the creation of CDOs of adverse selected synthetic ABS, specifically designed to create risk where there had been none, in order to bring about a transfer of wealth with no production of any valuable product. Both in 2008 and again recently, speculation in oil futures has destabilized the industry. Not to mention created a lot of bad loans.

    The big banks should be forced back into their role as servants of the real economy, as financial intermediaries, rather than as parasites.
    Feb 18, 2015. 04:15 PM | 2 Likes Like |Link to Comment
  • CSX Train Derails, A Material Event? [View article]
    In the insurance business, there is an old saying, frequency leads to severity. This is the second incident for CSX, and the have been other incidents by other carriers, most notably in Canada with multiple fatalities at Lac-Megantic.

    Bakken crude can't be shipped safely by rail, due to the huge amount of natural gas that is dissolved in it. Shippers and railroads have a history of misclassifying it by just sort of conveniently forgetting how volatile it is. It's wink wink while the public bears the risk.

    I should add that the gas can be removed by heating the oil, making is safe to ship. But it doesn't always happen, a cost saving by hard-pressed over leveraged shale oil companies. The gas pressure can be measured, and should be, before it is accepted.

    We all know what happened to BP when they pushed the envelope on risk while drilling in the Gulf. CSX could suffer the same fate.

    Also, railroad infrastructure is frequently old. Maintenance can be deferred while scarce capex goes to more pressing issues like terminals for container handling. Railroads have been dragging their feet on safety issues, among them computerized methods for preventing collisions. You get a collision with one of these rolling Bakken bombs and you will have serious trouble.

    I made a nice profit on CSX, sold covered calls and the stock was called away at $32.50. I will defer re-entry until I see clear evidence that management is going to fix the risk issues here permanently and effectively.
    Feb 17, 2015. 04:49 PM | 2 Likes Like |Link to Comment
  • Rogue Banks, Not Rogue Regulators [View article]
    I noticed this article is still getting the occasional page view, to include 3 today.

    So I reread it.

    Then only thing I would change is, I would substitute 99% for 98%, in order to comply with customary usage about the "1%", that and change the title to "Rogue Banks and Harlot Regulators."
    Feb 17, 2015. 05:40 AM | 1 Like Like |Link to Comment
  • Louisiana-Pacific: Economics Do Not Justify Valuation [View article]
    FHFA loosened mortgage rules substantially, after long discussions with the banks. Part of it weakened the representations and warranties, so the banks won't have to worry too much about having to buy back defective mortgages.

    The banks said they couldn't loosen lending standards without the government letting them off the hook for malfeasance. The old take the ball and go home ploy, to which the government ultimately caved. It could be they felt that the housing industry should be doing well in advance of the 2016 elections.

    They haven't quite finished negotiating the fines and so on from the last round, but as soon as memory fades it could be off to the races.
    Feb 17, 2015. 04:57 AM | 1 Like Like |Link to Comment
  • IBM Investor Briefing: What Lies Ahead [View article]
    Don't complain, the yield is higher than when you bought it...
    Feb 16, 2015. 06:32 PM | Likes Like |Link to Comment
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