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TheBaronInvesting

TheBaronInvesting
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  • Tree.com: When Investors Ignore, You Win! [View article]
    No one in corporate America went to jail for what happened, if the consequence is small fines and an implicit backing by the government, why the heck would they change their business practices?

    The major banks are a no-brainer in America as their investment in the US government has started paying dividends.

    The major banks in Europe are replacing their figure-heads, so are a good investment for the polar opposite reason... Or at least they would be if the American government would stop suing them...
    Aug 1 02:05 PM | Likes Like |Link to Comment
  • 3 Things To Like About Atlantic Power Corporation [View article]
    Management was not clear enough with investors regarding the terrifying downside risk involved in the renewal of their long-term contracts. They destroyed millions of dollars of shareholder value in one announcement, instead of over the course of years as they should have.

    They also maintained from the beginning that regardless of the results of the contract negotiations, and debt renewals, the dividend would remain safe. The messages were so clearly crafted to increase confidence that management and the company could maintain it's dividend over time, making up the gaps with new projects, that even some professionals at Seeking Alpha started posting positive articles regarding the company.

    The damage they did to everyone who did not realize the risk, those that did not sell early like some lucky few did, is truly horrendous. Anyone who sold needed to realize the risk despite the overwhelming communications to continue accumulating from management.

    The assets they hold definitely hold some value, but the true value in a company like this is in management's ability to initiate and sign value-add long term contracts. A management team that is not up-front about the risk involved, one that does not disclose that the contract renewals were at a time when they had absolutely no bargaining power, is one that makes itself hard to trust.

    You can argue that people investing in these companies should have already know this, that the risks were well known... But no company drops 45%+ after a contract renewal unless a majority of their investor base was not pricing such a massive decrease into it's prospects.

    I've convoluted the message, so let's brake down why I hesitate with Atlantic Power:

    1) They lack the pricing power needed to continue to add additional value from it's facilities.
    2) Management has shown itself to be dishonest with investors, at best relying on them to calculate and understand the risk themselves, at worst actively misleading them regarding their own prospects.
    3) They have consistently had issues producing positive net income, due to a highly leveraged structure that caps long term growth, and slowly decreases the value of the company.
    4) Although they are "clean" in the sense they aren't "dirty", most of their assets are natural gas plants, that do not offset the dirtiness of potential suitors as much as other purer-play renewable power producers could, decreasing their value as a take over candidate for any reason other than it's sub book-value price.
    5) I haven't found any information on the lawsuits filed against Atlantic Power on their website (or much attached to their Google Finance feed). Perhaps it's old news, but it should be addressed actively, especially when there is such a strong case with recorded audio of the CEO calmly saying the dividend is safe (I normally hate ambulance chasers, but this is one instance where it may be justified). The one filed in Ontario is for $200 million... A ridiculous number to be sure, but an expensive "leave us alone" settlement might be important to disclose.
    6) They are actively seeking ways to increase shareholder value with Goldman Sachs advising them. They've refused to discuss what's been happening or what the outcomes are likely to be. More information would help us value them better, and over-hang's the stock as I detest when a company is so lost they need to hire consultants to help them add shareholder value.

    I mean, these may or may not be big issues, and the discount to asset value is juicy, along with that dividend yield! But, yeah, I still get nervous when I can't be sure of anything management says, and so much of the information on the company comes directly from them.
    Jun 26 09:32 PM | 10 Likes Like |Link to Comment
  • 3 Things To Like About Atlantic Power Corporation [View article]
    I did the same thing, saved myself some serious hurt. I always liked the companies assets, but management has me hesitant. The assets sure tempt me though, especially since i haven't suffered the losses keeping so many away... Feel like if I'm one of those that warm up to it first I can ride another wave... Just not as confident I can catch lightning in a bottle twice and sell in time if they screw up again.
    Jun 26 08:27 PM | 2 Likes Like |Link to Comment
  • Sony: A Hidden Opportunity [View article]
    Great article, there are a lot of risks with Sony, but you've definitely shed some more light on the headline numbers that have kept me away.
    Jun 9 01:40 PM | 3 Likes Like |Link to Comment
  • Prospect selling knee-jerk, or something more? [View news story]
    I am long PSEC, but the biggest problem is a management team that is not shareholder friendly is very unpopular right now.

    If PSEC was shareholder friendly, they would have restated financials a long time ago (been accounting for owned businesses the entire time) and been purchasing stock whenever it trades below NAV (like now, its trading ~8% below NAV, and saves them a 13% dividend per unit... That's a no-brainer). The reason they won't is the smaller the size of the company, whether it's smaller through buybacks, or smaller through re-statement, cuts into the management's compensation.

    As I mentioned, I'm long the company, and like jrs03n mentions, I'm also okay with the company paying out their 10% yielding investments, along with a small portion of returned capital (as they are just shy of covering the dividend right now), and allowing them to collect the fee income due to stellar business-side management.

    Poor stewardship might be unpopular right now, but I'll accumulate a punished stock since it can make me a consistent return. As long as they are good stewards of lended-capital, I'll forgive their self-interested anti-shareholder lack of stewardship on the share-capital side.
    May 29 01:55 PM | Likes Like |Link to Comment
  • Kinder Morgan: The Newest Member Of Goldman Sachs' Conviction Buy List [View article]
    I agree, I've been fairly agressive, holding KMR due to the discount and dividends paid in more stock (granted I just purchased, so whether this will work the same as a foreign holder I'm not sure).

    It's been a tremendous opportunity, now that I'm fully invested I've been hoping for some good news to get it closer to fair value... We will see how that plays out.
    May 16 03:39 PM | 1 Like Like |Link to Comment
  • Blackstone Crushes KKR [View article]
    My thoughts exactly.
    May 7 12:04 PM | Likes Like |Link to Comment
  • Why Should You Maintain A Balanced Diet Of REITs? [View article]
    Great alternative way to look at portoflio diversification.
    May 6 02:04 PM | Likes Like |Link to Comment
  • 5 ETFs For A Reliable Retirement Portfolio [View article]
    Great article, I think I might look into this for a Canadian listed equivalent... Good old Canadian on an American site. Thanks for the write up, I definitely like the idea's here.
    May 6 01:23 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    I echo this, absoutely valuable information, with informative examples. I really appreciate the way you categorize your investment ideas, great way to look at it.
    Apr 16 01:44 PM | 6 Likes Like |Link to Comment
  • BlackBerry: I'm A Buyer On Monday - Yes, Again [View article]
    Cash flow position and in the black are two different animals.
    Apr 13 08:56 PM | 2 Likes Like |Link to Comment
  • Emerging Markets, Should They Be In Your Portfolio? [View article]
    I keep thinking that the best way to play this might be with an active fund, rather than passive. What is your opinion?

    I keep thinking active is better for the smaller cap, emerging markets, and special situations, then passive for large-cap and developed markets. What are your thoughts?
    Apr 10 01:30 PM | Likes Like |Link to Comment
  • Analysts Hate BlackBerry, Which Is Exactly Why You Should Buy [View article]
    Just my two cents, if any investor is worried about a market correction, they should start allocating a position to John Chen's Blackberry, and Prem Watsa's Fairfax.

    Blackberry is priced so low, it's constantly trading back and forth between traders, scared longs, and aggressive shorts. It trades on news, and rarely trades with the market, since so many opinions battle it out each day, there's hardly time!

    Fairfax on the other hand is a well run company that made a massive (almost comically large) bet on a market correction taking place. The same bet he placed before the crash. As a very poignant article posed the question "Is he trying to catch lightning in a bottle twice?". Maybe, but if you agree that a corrections coming, there is hardly any place safer than in Prem's lovingly option-filled arms.

    On the other hand, Blackberry could go bankrupt, and Fairfax could sit on a massive losing trade for a looooong time... Hence... No position.
    Apr 3 10:46 PM | 1 Like Like |Link to Comment
  • Analysts Hate BlackBerry, Which Is Exactly Why You Should Buy [View article]
    I think it's more likely they told Chen to "do whatever it takes to recover Blackberry, including posting terrible numbers... If the public and other institutions can't see the value we'll gladly increase our stake each time, so long as there is a recovery happening".

    That's the thing, Prem Watsa is loaded with cash expecting a crash in a overly valued market, they have the spare capacity to purchase entire companies. Waiting for the stocks to become cheap during the turn around, then selling when the company recovers... I mean that's classic Prem. A hardcore value investor.

    Placing a turnaround specialist like Chen and tempting him with free rain to do whatever is necessary... And Prem gets to load up on weakness... I mean, it's a win-win if I've ever seen one.
    Apr 3 10:37 PM | 5 Likes Like |Link to Comment
  • Opower: A Utilities Derivative With Proven Growth And The Potential For So Much More [View article]
    Awesome opportunity and business strategy. Just need the right price, post-IPO is always a heck of a risk.
    Apr 2 09:21 PM | Likes Like |Link to Comment
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222 Comments
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