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  • Tower Group: A Classic Overreaction Story [View article]
    @ User101189: I work on insurance valuation, that's my qualification.
    The lesson here is to avoid buying when you just don't know the numbers. Heck, the company couldn't even forecast their own reserves properly, what makes us think we can? It's not like a retail company when you can do channel checks and so forth. That's where the Prof. went wrong. Like I said earlier, the company is toast because AM Best downgrade will follow. Also, there is a chance reserve additions continue...why would anyone buy this company and put their own reserves in jeopardy? It will go into run-off. It's as close as you get to a run on the bank.
    Oct 8, 2013. 09:40 AM | 3 Likes Like |Link to Comment
  • Tower Group: A Classic Overreaction Story [View article]
    As I mentioned before, it's useless to look at p/b ratio because any reserve charges could easily wipe out the company's book value. This is why a few fund managers got burned buying Lehman at 0.4x book value. This company does workers' comp, which has been a miserable line for a long time. Also, CEO Lee has done a few questionable deals in the past such as merging companies he created himself for huge multiples. I would personally not get in at least until CEO goes away. Also, why would anyone buy this company's in ally hose reserve issues when you can just poach entire teams out of it and bring business over without liabilities? I can guarantee you every team within Tower is looking for and exit, that will make selling harder.
    Sep 28, 2013. 05:20 PM | 2 Likes Like |Link to Comment
  • Tower Group: A Classic Overreaction Story [View article]
    Insurance expert here. This is really a falling knife. The issue the Prof. is missing is the fact that when insurance companies lose their AM Best rating, especially below A-, it is game over unless a reinsurer steps in. Tower Group has been unable to secure surplus relief reinsurance to decrease its leverage and protect its rating, despite two months of frantic efforts to that end. This suggests that the reinsurance market has no confidence in the company, its management team, and especially the profitability of its business going forward. With Tower potentially having no reinsurance solution, I consider the possibility of a rating downgrade to be all but certain. When a downgrade occurs, TWGP cannot longer conduct business. If reinsurers don’t trust Tower, other insurance companies won’t either. It's a black hole with a huge unknown reserve gap. Higher reserve charges means tangible equity can be wiped out, so buying only because p/b ratio looks cheap is non-sense.
    Sep 27, 2013. 03:18 PM | 3 Likes Like |Link to Comment
  • Avoid The Fallen Dot Com Angels [View article]
    nflx valuation is now at the same level as those dot coms in the 1990s...I would say away from nflx
    Sep 5, 2011. 10:12 PM | Likes Like |Link to Comment
  • 2 Chocolate Stocks With a Tasty Dividend Yield [View article]
    Guraaf, If you can find a retail company that has grown revenues in the past 3 years let me know! It's actually harder fo RMCF to enter new markets, regardless of its size, given the huge competitors such as Hershey's and Lindt. I like the company's franchising business model. I think the company will do well in the long run.
    Dec 29, 2010. 12:26 PM | Likes Like |Link to Comment
  • Is OpenTable Overvalued? [View article]
    It's based on the 30,000 US numbers in 10K, plus about 90K worldwide that have the capability of taking online reservations. The latest is based on data fro the National Association of Restaurants. Multiply the number of restaurants by the revenue generated per restaurant and you have the worldwide market size.
    Dec 28, 2010. 05:59 PM | Likes Like |Link to Comment
  • Is OpenTable Overvalued? [View article]
    Even if you assume 100% market penetration, the company falls short of its implied market cap value. See:
    Dec 26, 2010. 05:26 PM | Likes Like |Link to Comment
  • Qiao Xing Gets Much Awaited Catalyst, Jumps 40% [View article]
    gebby, the problem is that the cash might have already been burned. I'll the the 40% and leave. You're more than welcome to wait it out, but I'm not in the gambling business.
    Sep 14, 2010. 07:23 PM | Likes Like |Link to Comment
  • Kevin Tang Spots Another Winner: Penwest Sells to Endo [View article]
    Aug 16, 2010. 06:26 PM | Likes Like |Link to Comment
  • Penwest: Change Is Coming [View article]
    yakyu, even without luck, Tang and shareholders would have made 100% in liquidation. He's also up 100% on PPCO and over 70% in RDEA. I don't think luck can be so repetitive.
    Aug 8, 2010. 11:34 AM | Likes Like |Link to Comment
  • Penwest: Change Is Coming [View article]

    Are you familiar with what was happening regarding VNDA? Fanapt had already been rejected by the FDA and they had nothing else on the pipeline. Nevertheless, the company was trading at half its net cash value. Mr. Tang was essencially trying to return the cash to shareholders given the circumstances. On a worst case basis, shareholders would have made a 100% return in liquidation. Fortunately, we all got extremely lucky with the FDA approval after the company appealed. This rarely happens.
    Aug 6, 2010. 11:13 AM | Likes Like |Link to Comment
  • Lorillard: Attractive at This Level [View article]
    George, without looking at charts, LO looks cheap based on its solid operations and strong menthol-based market share.
    Jul 20, 2010. 10:45 PM | Likes Like |Link to Comment
  • Why I'm Not Buying Air T (Right Now) [View article]
    Just found this on AirT report:

    “The Company leases its corporate offices from a company controlled by certain Company officers. The lease provides for a monthly rental amount of$13,626 and extends through May 2010”

    Conflict of interest?
    Jul 7, 2010. 11:15 AM | Likes Like |Link to Comment
  • Why I'm Not Buying Air T (Right Now) [View article]
    I was wondering why it looks so cheap and nobody else is taking notice. I didn't buy because I thought I was missing part of the story.
    Jul 5, 2010. 11:04 AM | Likes Like |Link to Comment
  • Why I'm Not Buying Air T (Right Now) [View article]
    I've been watching this company for a while, good write-up.
    Jun 30, 2010. 09:51 PM | Likes Like |Link to Comment