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Glen Bradford is CEO of ARM Holdings LLC; a Hedge Fund Advisory Company and is in the process of obtaining his MBA. His lifelong goal is to empower success. Glen is NOT an investment advisor.
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  • Anthracite Capital to Reinflate 3 comments
    May 18, 2009 12:02 AM | about stocks: C, AHR, GS, WFC

     

    Instead of talking about finance institutions that are being diluted like Citigroup (C) and financial institutions that are so hot they’re already above their November lows like Wells Fargo (WFC) and Goldman Sachs (GS), I’m going to introduce you to a better place where it’s bottoms up from here.

    After getting the wind knocked out of it, Anthracite Capital (AHR) shows signs of life. Granted that the price has probably exploded higher from $0.74 by the time this article gets published, let us use it at a baseline. What do we know about Anthracite at $0.74?

    1.   Anthracite is trading at a P/E of 0.487 if you knock out the Q4 2008 earnings nightmare and look back 1 year from Q3. The reason I took out Q4 is because the loss claimed appears to be a one-time huge write off, followed by positive earnings the next quarter.

    2.   Anthracite Capital is trading at a book value of 0.1.

    3.   Anthracite Capital is traded on the New York Stock Exchange. Let me repeat. This is a company cheaper than the listing requirements on the New York Stock Exchange. It either increases in price or eventually gets delisted.

    All of these figures indicate that Anthracite is priced for bankruptcy. Where’s the good news?

    1.   They have pushed back the disaster twice already and have been in talks to resolve the issue. If I know anything about creditors, the last thing they want to do is run their debtors into the ground.

    2.   Anthracite was profitable in Q1 2009, just not as profitable as it used to be. If you flat line the profit figures from Q1 2009 into the future, your P/E is still 0.685. Note that Q1 of 2008’s Net Income Applicable to Common Shareholders is twice as large of that of any quarter as far back as I can see. So, comparing Q1 2009 to Q1 2008 isn’t fair to begin with. The bottom line here is that comparing the income of Q1 2009 to Anthracite’s history --- things match up but the revenues are weaker.

    So, what am I doing about it? I’m buying. I probably already have a sizeable position. I’d say you could add this to my suggestions for 100% in 1 month, but that would be an understatement. I’d be surprised if AHR didn’t see $2 by June 18th.

    Disclosure: Glen and his investors own AHR and C.

     

    Stocks: C, AHR, GS, WFC
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This post has 3 comments:

  •  
    Glen,
    From atching the portfolio screen shots from your website I can see you netted a nice gain of AHR. I've been following your articles for a while, and as a fellow MBA candidate (Tepper), your last two articles had caught my attention.
    In an undiciplined deviation from my traditional investment strategy, I had bought HBAN at the very top of it's rally following the stress tests and am now thinking about selling it to stop the bleeding and reinvesting in a high risk equity with some potential of recoving my losses. In you're article you were speculating that AHR was going to hit $2 and I can see that you hold a significant position in the company.
    Two weeks later do you still think that AHR is a go at $1? Is there something else that you have your eye on instead?
    Thanks,
    Ben Garber

    PS. Congratulations on the hedge fund!
    May 28 10:58 AM | Link | Reply
  •  
    Ben,

    You may think I'm crazy, but I actually enjoy seeing some of the stocks I own go down. It means that I don't have to sort through the other 20,000 stocks like I normally do in order to find value, cause it's right in front of me and it's getting better.

    AHR in my opinion is cheap because of the CMBS potential crisis. I think AHR is worth $5+. I have been watching AHR and CNO fall in price over the last month waiting patiently as I sit on very large positions of both. I started buying again last wednesday. AHR's got about 7 months based on my understanding before it has to trade above $1 to stay listed on the NYSE.

    I would suggest questioning your framework. Don't sell to cut losses. Sell if you found another better, less risky opportunity. HBAN has about 200% upside and it's fairly "risky" to me. CNO has over 1000% upside and is incredibly low risk in my book.

    Hope this helps,
    Glen
    Jun 28 03:57 PM | Link | Reply
  •  
    Hi Glen

    What is yr opinion on AHR now? I bought after reading yr article in May.

    What are the chances of it becoming bankrupt? Are there any hopes for survival? Why cant parent company Black Rock do anything to rescue it?

    I am now contemplating if I should get rid of everything or buy more to average out. Any advice?
    Nov 18 01:50 PM | Link | Reply
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