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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Best Long And Short Ideas For 2013 Part I 28 comments
    Jul 9, 2013 2:30 PM | about stocks: GPT, TMF

    Here is how things look for the first half of 2013:

    (click to enlarge)

    Disclosure: I am long GPT.

    Themes: Best Ideas Stocks: GPT, TMF
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  • Chris, are you short TMF? Awesome job since Jan 1 with your Bloomberg interview, conviction, and performance.
    9 Jul 2013, 04:25 PM Reply Like
  • Author’s reply » Thanks for the kind words. Yes, TMF is my favorite short for 2013. I also like writing calls on it.
    9 Jul 2013, 04:39 PM Reply Like
  • Great ideas Chris, congrats on the performance so far this year. One question is how are you getting size on TMF? I can't get any size on shares to short, anything over 2,000 is not available from multiple brokers last time I checked. I also feel you would run into forced covers quite easily given the liquidity and shares available.


    I suppose this is a very small position for you?
    10 Jul 2013, 12:05 AM Reply Like
  • Author’s reply » It is not very small; we have structured it a number of ways, mostly with options, typically writing near dated calls and/or buying longer dated puts.
    10 Jul 2013, 08:07 AM Reply Like
  • The amazing thing to note here is not really the performance, but the thesis behind these two ideas.


    Asymmetric bets all around, and you hedged your REIT risk perfectly by anticipating a rise in interest rate. With treasuries at record lows, shorting possessed no permanent loss and GPT sells significantly below intrinsic value.


    Not to mention, TMF will be bound to go to 0 due to decay.


    People will be impressed with the performance, but I'm just in awe by the way you structured these two investments.


    Great job Chris!
    9 Jul 2013, 04:48 PM Reply Like
  • Author’s reply » Thanks, Wilson. They seem to have done what they were supposed to do, with GPT carrying much of the weight in Q1 and TMF doing the heavy lifting in Q2. Now, off to Q3 (which I have so far spent paddle boarding, kayaking, and hiking in the north woods).
    9 Jul 2013, 05:10 PM Reply Like
  • How wonderful is that! Not to mention PCS!


    Enjoy your wonderful vacation Chris!
    9 Jul 2013, 05:14 PM Reply Like
  • Wilson-- I concur with your assessment.


    I now avidly read everything Chris posts and have recommended to several friends that they start following him too. Chris has ideas that are not just good tactically, they have great strategy behind them too--


    Chris--thanks for sharing your knowledge and insight. Gotta run now--I have some poker books to read . . . .
    10 Jul 2013, 04:18 PM Reply Like
  • Author’s reply » Thanks! I enjoy the writing and am easily egged on. -C
    10 Jul 2013, 07:45 PM Reply Like
  • Nice...I've been watching GPT wobble around for a few months now and luckily got in earlier in the year. Do you think we've seen all we're going to see from GPT for the year? 56% YTD is solid, but do you think it has more room to run in 2013? If so, do you have a target price you're expecting/hoping for?
    9 Jul 2013, 05:33 PM Reply Like
  • Author’s reply » Do you think we've seen all we're going to see from GPT for the year?




    56% YTD is solid,




    but do you think it has more room to run in 2013?




    If so, do you have a target price you're expecting/hoping for?


    9 Jul 2013, 08:43 PM Reply Like
  • C, if liquidity is not a problem, ie someone has less than 1 million dollars, do you see anything wrong with taking a large position in a microcap? I am thinking of increasing my stake in SAEX (TRIO), as it seems like they are making excellent returns on invested capital, have a great MGMT team, and have backlogs over the next year+ with a niche in the industry , with a low risk model. But they are a microcap- is it nuts to take a position of 10% or more in a seemingly solid micro?
    18 Jul 2013, 11:10 AM Reply Like
  • Author’s reply » No. If liquidity is not a problem, there is nothing wrong with investing $100 k of $1 million in SAEX.
    18 Jul 2013, 11:21 AM Reply Like
  • Chris, what's the best way to reach you offline regarding your fund?
    9 Jul 2013, 06:16 PM Reply Like
  • Author’s reply » Chris DeMuth, Jr.


    Rangeley Capital
    3 Forest Street
    New Canaan, CT 06840
    ccdemuth @
    9 Jul 2013, 08:30 PM Reply Like
  • Any plans on writing another update on GPT?


    The management team has done an exceptional job at finding quality real estate properties at attractive cap rates.
    9 Jul 2013, 09:03 PM Reply Like
  • Author’s reply » Wilson, I don't really have anything to say. Next stop: dividends.
    9 Jul 2013, 09:31 PM Reply Like
  • True. How do you think the DELL fiasco will play out?


    The spread at 12.87 was far too large for me to ignore. A 6% spread? No way Jose.
    9 Jul 2013, 09:33 PM Reply Like
  • Author’s reply » $13.65, I think. Some chance that the buyers walk, some chance that shareholders vote it down, but the middle ground of $13.65 looks like a reasonable outcome. It was very wide Friday and still okay today.
    9 Jul 2013, 09:36 PM Reply Like
  • Thanks for the quick response Chris!
    9 Jul 2013, 09:39 PM Reply Like
  • Hey Chris,


    I wanted to say thanks for the advice, I caught your segment on Bloomberg in February and after doing some dd bought a few shares of gramercy. I did have a question as to what you thought of the recent presentations removal of "additional preferred dividends". I found this a little worrying in that previous presentations included it and also made a point of the 6% carrying cost on preferreds. I was wondering if you think that gpt might try to issue new preferreds at a 2% discount (6%) and call the current ones to save a million-plus on the bottom line? I was also interested to know if you think that gpt paying off all accrued dividends and then tendering an offer for warrants exercisable in common stock at a $2.03125 per ahare discount after the announcement date would solve the fact gpt needs to grow its bottomline quickly?
    18 Jul 2013, 02:10 AM Reply Like
  • Author’s reply » You are welcome.


    I am not worried by the omission. They are in the middle of working through the best way to handle the prefs. I own a lot of the prefs and am completely confident in this management's reaching the best way to handle the situation. The tax consequences are the most problematic for tax paying pref holders. They will pay off the prefs shortly, probably sometime around the end of this quarter. Then what? There are a number of good solutions. I like yours.
    18 Jul 2013, 08:02 AM Reply Like
  • Thanks for the timely response, I also hold some prefs. I agree that they will be brought up to date soon. Do you think they will be converted in some way post div payment? The $7 million they cost in annual payments seems to be an obstacle to getting a descent div on the common mgmt and us all would like to see.
    18 Jul 2013, 05:07 PM Reply Like
  • Author’s reply » Yes. I think that they will be converted in some way post div payment.
    18 Jul 2013, 06:02 PM Reply Like
  • I understand the tax issues, especially given the length of time you have been a holder of the prefs , end of the day this is a REIT after-all, so tax treatment is generally not going to be favorable. Would you take a 5 for 1 on prefs at a $.20 discount per share common in warrants? as you said there are many ways to handle it but dilution seems to be the word of the day, unless I'm missing something? Guess the board gets smaller relatively smaller soon.
    23 Jul 2013, 12:09 AM Reply Like
  • Author’s reply » That is a conversation that we would have directly. We will try to be helpful and relevant to the process. But regardless of what, specifically, I would accept, I think that such a plan would gain broad acceptance from pref holders.
    23 Jul 2013, 08:45 AM Reply Like
  • Understood, and appreciated. Thanks again for bringing GPT to my radar. Any opinion on BKSC, growing earnings, solid div, habitual insider buys, and small, it's one of my favorite banks
    23 Jul 2013, 02:46 PM Reply Like
  • Author’s reply » No view; I'll take a look. Thanks. -C
    23 Jul 2013, 03:15 PM Reply Like
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