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  • Argo Group: Hedge Fund Manager With A 7x PE And Selling At 48% Discount To Book [View article]
    I now speak for 15.6% of Argo Group's outstanding shares (that's 25.0% of the external shareholder base), and it may be time for a change:

    Argo Group…Time for a Sale and/or a Wind-Down?

    http://bit.ly/1w9M9J6

    If you're an Argo shareholder, I urge you to contact me - via Seeking Alpha, or (preferably) by email, as per my Contact page:

    http://bit.ly/1j9fBd7

    Kind regards,

    Wexboy
    Sep 9 12:05 AM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    How do I think they are doing? Well, depends on if you mean the company or the share price!? We're still seeing quite a divergence between them...but obviously the continued progress of the company is what matters in the end. This is from a very recent email of mine:

    'I see little reason to depart from my Nov-13 methodology...

    AUM now stands at $63.8 billion (up 17% yoy) (plus another $7.4 billion of dry powder). YTD, the run-rate for management fees is 0.95% of AUM, while incentive fees are at 0.58% of AUM, and Fund Management DE (equiv. to operating profit) is at 34%. Net cash/investments are $3.03 per share. Assuming a 0.95% rate for management fees, a 0.74% long-term average for incentive fees, and a 3.5 P/S multiple, we get:

    ($63.8 B AUM * 1.69% Total Fees * 3.5 P/S) / 434.1 M Shares + $3.03 Net Cash/Inv = $11.73 Fair Value per share

    That offers 56% Upside Potential vs. the current $7.53 share price.

    I continue to be perplexed how many investors still seem to hate/fear $FIG - and I see no reason why, except for an aversion to its long-term chart & original post-IPO ludicrous market valuation. If the entire sector was under a cloud, I'd understand a little better, but peers still enjoy generous valuations. However, despite that statement, I would highlight a divergence I noticed recently in the sector - $KKR, $BX & $CG (for example) are trading near their highs, while $OAK & $APO are trading well off. I believe the latter group (& $FIG) rely on far less leverage in their underlying funds/investments than the former group (who are more classic LBO-type PE houses) - so Wall St is actually favouring what are potentially far more risky alternative managers, in my opinion. [I haven't checked it out properly yet, but $ARES recently IPOed - worth a look, I guess it now belongs in this peer group too].

    From my perspective, $FIG continues to offer very decent upside for a large-cap stock, and my comfort level essentially remains the same. Obviously we have to think/wonder about the Fed's trajectory from here, but I have little other US-listed exposure so owning a higher-beta stock like $FIG doesn't pose a problem for me - and the high level of net cash/investments at the parent level, the lower reliance on underlying leverage (vs. some of it peers), and its specific exposure to certain attractive long-term investment themes (unlike many of its peers), provide a great deal of comfort also.'
    Aug 9 10:54 AM | 2 Likes Like |Link to Comment
  • Argo Group: Hedge Fund Manager With A 7x PE And Selling At 48% Discount To Book [View article]
    Argo's funds were set up when 2 & 20% was pretty much de rigueur. And note the AREOF management fee is EUR 2 million pa, regardless of assets - i.e. it's 2% pa of the original EUR 100 million raised. This pegs overall management fees at slightly under 2% of AUM, and it explains why this fee revenue hasn't changed much in the last couple of years despite the reported declines in AUM. Of course, actually getting paid the AREOF fees is another matter..!

    There's no one/right answer re profitability. Strictly from a cash flow perspective, Argo is indeed running around break-even. But if you examine the details, there's some asymmetry there - it would be difficult for cash flow to get worse, but it could surprise on the upside quite easily. Of course, a step change in the business/AUM would change all that, possibly substantially. However, I'd certainly argue any TAF investment gain is real cash/profit - albeit it's 'trapped' in TAF for the moment.

    Here's a perspective I think is useful: Argo's market cap is $15.2 million - let's treat that as 'equity' for a minute. I think an average 8.1% long-term return on the TAF investment is reasonable - that equates to a 10% Return on Equity. Now consider the overall net profit of the business, if there were no bad debt write-offs - that would equate to a 30%+ RoE. You can obviously debate where the true underlying RoE (in terms of actual/potential cash or net profit) stands along this spectrum...but it clearly illustrates that Argo is NOT a company that's destroying value. You can also speculate how much upside's presented in terms of net cash & investments, net asset value and/or the intrinsic value of the business.

    I will continue to communicate with management.
    Jul 11 01:50 AM | Likes Like |Link to Comment
  • Argo Group: Hedge Fund Manager With A 7x PE And Selling At 48% Discount To Book [View article]
    Nice article, and I'm delighted to see it here! I would never have thought of looking on/posting on Seeking Alpha re Argo Group (ARGO:LN). I've posted a number of write-ups on Argo to date here:

    http://bit.ly/1j9fAWP

    Including my most recent (public) letter to management:

    http://bit.ly/1j9fAWR

    If you're an Argo shareholder, I urge you to contact me - via Seeking Alpha, or (preferably) by email, as per my Contact page:

    http://bit.ly/1j9fBd7

    Kind regards,

    Wexboy
    Jul 7 03:30 PM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    08-Apr-14: I’ve nw increased my Fortress Investment Group $FIG portfolio holding frm 5.0% to 5.9%
    Apr 9 02:10 PM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    That's $FIG for you - always two steps forward, one step back...so the price action is not that surprising. Also, I guess some investors are reacting to the insider sale of stock - over-reacting I should say, it's quite understandable & no big deal in my opinion. Clearly, the management team remains very motivated to keep growing the business.

    Intrinsic value continues to grow steadily with each & every quarter, and the most recent buyback was another super deal - I still like the stock as much as ever.
    Mar 30 03:06 PM | 1 Like Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    Hey, what did I tell you! A beautiful year-end reward for $FIG shareholders:

    http://bit.ly/1jBAjS3

    And what a buyback price..?!
    Feb 13 10:07 AM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]

    earljr1 - All asset managers are ultimately a 'leveraged' play on the market, so any decline's likely to hit them harder. But I shd clarify: I don't think a 10% correction is that meaningful for $FIG, as its AUM performance isn't necessarily directly/immediately correlated with public market performance. Plus most of their AUM's in permanent or locked-up vehicles, so they face little near-term risk of losing AUM (in fact, they have billions of 'dry powder' AUM they can call on at any time). However, investor sentiment's ultimately a key driver in the short-medium term, so despite my comments (& good underlying fundamentals) $FIG would probably still get hit harder in a decline. [Apologies, I neglected to reply in December - I think what you've seen since confirms my comments here].

    galicianova - I see no substantive change to my latest valuation. Now is a good time to highlight two things I particularly like about $FIG: i) obviously they employ leverage, but they aren't completely dependent on it (like Blackstone, for example) to earn decent returns - that's reassuring, and ii) unlike most of the alternative managers, $FIG mostly tries to invest according to a handful of investment themes (ideally via permanent vehicles) - I think these themes exploit some unique & compelling secular trends/opportunities.

    I've no reason to believe their upcoming Q4 results will bring any bad news, and they've clearly committed themselves to a significant top-up dividend (or buyback) - so I think these results will be fundamentally positive for the stock.

    Cheers,

    Wexboy
    Feb 11 02:16 PM | Likes Like |Link to Comment
  • Hedge Fund Strategies In Your Sleep [View article]

    Thks, Chris! Wow, ValueWalk also just linked to a new post - when it rains, it pours...in a good way ;-)

    There's also plenty of listed closed-end alternative/hedge funds in London, for example - I'd recommend yr readers check 'em out also, well worth it! This post pretty much covers the gamut:

    http://bit.ly/1d7m00F
    Dec 10 08:35 PM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]

    Ever since I bought $FIG, I've never been able to make sense of the share price reaction to quarterly earnings..!?

    As per above, my assessment/valuation of $FIG is based entirely on Fortress' AUM, latest management fee rate, LT average incentive fee rate & net cash/investments. Quarterly DE/EPS is completely incidental to my investment thesis, which I think makes perfect sense - actually, I think investors who (appear to) trade solely on that basis are plain crazy...

    I topped up $FIG from a 5.0% to a 5.4% portfolio holding this week.
    Nov 13 10:25 PM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    Thanks. The $0.31 'top-up dividend' is somewhat arbitrary: The current run-rate for DE is about $0.85, which is $0.61 in excess of the current dividend - I've simply assumed 50% of these excess earnings get paid out.

    Note I've highlighted this top-up dividend could also occur as some type of share repurchase instead - Fortress actually opted for this alternative last year, buying back $179 mio of stock at yr-end (equivalent to $0.36 per share). Noting this, and considering DE's significantly higher this year & management's repeatedly promised a reduction in balance sheet cash/investments, my estimate of a $0.31 top-up distribution (in whatever form) might actually prove conservative.

    Cheers,

    Wexboy
    Nov 13 03:39 PM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    Ta DVL, Hard to buy & hold this one originally - but looks like everybody is coming 'round to loving $FIG now!
    Nov 12 11:29 AM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    And take a look at the blog:

    http://bit.ly/MVFfyk

    Search for 'Fortress' and '(alternative) asset managers' - you might enjoy some of my previous articles on both topics.
    Nov 12 11:28 AM | Likes Like |Link to Comment
  • Fortress Investment Group - Up On The Ramparts [View article]
    Thks twhite,

    Yes, FIG should definitely be rewarded for what seems clearly a better risk/reward proposition, on a relative basis. But it really hasn't - it's been the neglected step-child among the marquee alternative asset managers in the last few years. I really can't point to any specific reason why - except perhaps how over-valued FIG was originally in the market. But sentiment's steadily improving now!

    Enjoy,

    Wexboy
    Nov 12 11:15 AM | Likes Like |Link to Comment
  • Weight Watchers: A Plan At Last [View article]

    I'm just operating from a 1,000 foot view here: Fixing the basic/core business is obviously the most important priority here. But it also seems like management are fairly clueless about seizing emerging market opportunities. And I'm not talking about a future growth opportunity, I'm talking about today - I'm constantly noticing how far emerging markets have come already. Mexico's now the fattest nation on earth, the Middle East is perhaps becoming one of the most overweight regions globally, and more & more middle-class Indians are now flaunting spare tyres. Considering the social culture in these countries, it seems like WW meetings would be a real winner! And I'm sure there are plenty more opps. like that out there...
    Nov 7 04:46 PM | Likes Like |Link to Comment
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