Arohan

http://www.arohanvalue.com

38 Comments

    • ON: Mon Aug 18th 13:19 PM
      Commented on:
      Understanding Brookfield's Malaise
      Nice writeup on Brookfield. This is one of those core holdings that you buy once and hold on to as long as possible (as long as the corporate model/philosophy stays consistent).
      View article »
    • ON: Thu Jul 24th 12:18 PM
      Commented on:
      American Express Calls Investment Banks' Bluff
      Your article is confusing

      It is not impossible to have the following two things occuring at the same time:

      1. Individual consumers are stretched and are having issues with their credit, including the super credit worthy ones. This is what is affecting Amex and,

      2. Asset valuations at the banks for the mortgage assets (created in the past) have been marked down significantly and there is not much markdown left to take. Additionally, the investment banking activitiy may have picked up in pockets. The banks are also restructuring and disposing off assets, etc. Additionally, some consumers may be pulling their deposits out of Indymacs of the world and putting them at Bank of Americas of the world. Therefore it is quite plausible that some of the banks had a better quarter than what the street thought and the things may indeed be improving for some of the banks. In fact, as liquidity continues to come back in the market, you may find a lot of previously marked down assets written up as the market begins to be able to price them

      You are comparing apples and oranges and jumping to conclusions
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    • ON: Fri Jul 18th 12:05 PM
      Commented on:
      As Merrill Reports, Short Squeeze in Financials Continues
      Regarding your last observation on the panic buying failing spectacularly, you may be right. I would also like to add to this: Financials today offer spectacular values to long term investors.

      It always boils down to whether you are a short term oriented trader or a long term oriented investor
      View article »
    • ON: Wed Jul 16th 23:32 PM
      Commented on:
      Why I'm Committed to the UltraShort Financials ETF
      Hmmm Mr Lathrop, you talk about fundamentals of the sector but you do not care to discuss valuations. You may be right but only because you have short term outlook. Long term investors might wish to consider this as an excellent opportunity to buy
      View article »
    • ON: Tue Jul 1st 10:15 AM
      Commented on:
      Predicting the Financial Sector Rebound
      Well written. I would be wary of shorting any financials right now. Some sense is coming back to the credit markets and it will not be long before some of the companies start writing up their assets that were written down too far

      In any case, all this is relevant only if you are looking for the short term. Longer term, financials are terrific values right now. I can't see a world where financial sector is not relevant, neither can I see some of the premier names today disappearing.
      View article »
    • ON: Mon Apr 28th 11:53 AM
      Commented on:
      How To Buy a Bank (and Other Beaten-Down Stocks)
      Loved the analysis. I have been aggressively buying financials over the last few months including C, BAC, CFC and WM and have written quite a bit on this on my blog. IBN and RBS look intriguing so thanks for the tip
      View article »
    • ON: Thu Mar 6th 10:56 AM
      Commented on:
      WaMu: WSJ Backs Up My Sell Recommendation
      I don't understand your sell rating. A stock that is trading at such a discount to its intrinsic value cannot be a sell, unless you have a reason to believe that the company will go bankrupt. As DSX Lover states, if management is an issue for a company like this, it will be replaced

      Even worst companies can be a good stock buy if priced at a sufficient discount to its value. It is heartening to see institutional investors getting caught up in the sentiment of the day and not take a long term view. That means it is still possible to get market beating returns for a savvy investor
      View article »
    • ON: Thu Mar 6th 10:48 AM
      Commented on:
      Will BofA Really Buy Countrywide?
      The deal looks bad if you cannot think beyond the present time. It would be a stretch to imagine that the mortgage market will remain in dumps forever. People will start buying houses. Do you think BAC should wait until the market comes back up, Countrywide gains marketshare and profitability, and then buy Countrywide for $50 a share? Why would Mr Lewis make such a boneheaded decision?

      Yes, there are risks in this acquisition, but nothing that Bank of American can't fix by supporting this in the short run with additional capital. Once the market stabilizes, this should be a huge score for BAC. One forgets that Countrywide was (or maybe still is) simply the best mortgage company in the country. You also forget that BAC has been a growth oriented company and is now hitting a limiting factor in its growth (deposit accounts cap) and buying Countrywide is probably the best way for them to continue growth. Sure they can acquire internationally and they will probably do that but as a shareholder I sure as hell hope that they do not let this golden opportunity to get Countrywide for a pittance go by

      You did the right thing by buying BAC stock, but for the wrong reasons
      View article »
    • ON: Mon Mar 3rd 16:15 PM
      Commented on:
      BofA/Countrywide Merger Arbitrage Opportunity
      As if you read my mind! This trade has been discussed quite a few times in several blogs (links below) and I have to say that this offers a very interesting case study

      www.arohanvalue.com/20.../
      www.arohanvalue.com/20.../

      And also,
      tradinggoddess.blogspo...
      www.princeofwallstreet.../
      View article »
    • ON: Mon Mar 3rd 16:06 PM
      Commented on:
      Lumber and Forestry Companies: Building a Better Future
      I own Lousiana-Pacific. Although it has negative earnings, it has cash on the books to the tune of better than 50% of its market cap and sports a P/B ratio of 0.61. It mainly serves the construction market and has been badly affected by the housing downturn. The question is, whether it can survive long enough to see the housing market come back? The company currently continues to restructure and reduce cost and with 532million in cash on the books I believe that it has the stamina to outlive the housing/construction downturn. With the stock already reflecting the worst case scenario, it is a good buy right now for someone patient enough to wait a few years. The dividend also helps while I wait

      jjason, I don't know if this provides enough data to make an intelligent investment decision but atleast this should be a trigger for starting your due diligence. There is some more discussion on LPX on my blog that you are welcome to read
      View article »
    • ON: Mon Feb 18th 13:38 PM
      Commented on:
      Financials: Insiders Buying on Consistent Basis
      Thanks Todd for a good summary of how many value/vulture investors think that the financials are very good buys right now. I have been advocating my readers to start buying financials for some time on my site (www.arohanvalue.com) as this may be an opportunity that one finds very rarely for some outsized gains
      View article »
    • ON: Wed Feb 13th 15:20 PM
      Commented on:
      Pundit Failure: We Are in a Bear Market and This Is a Recession
      Good work. I have been insisting that the recession is here for quite some time now in my blog (www.arohanvalue.com). Needless to say it has generated quite a discussion

      www.arohanvalue.com
      View article »
    • ON: Tue Jan 22nd 16:55 PM
      Commented on:
      BofA/Countrywide Risk Arbitrage Opportunity
      Agreed that CFC is trading at a discount to its deal closing value even after adjusting for tvm and this is a very good strategy for above market returns in a short time frame with very little risk.

      However, as a long term investor who views BAC as a great company to own for a long time and who also views BAC to be severely undervalued at this time, buying into Countrywide today actually gives a way of acquiring BAC stock at a discount to even the depressed stock price today. I am inclined to just buy CFC, let the deal close and convert to BAC stock and just let it ride

      Another thing to consider. CFC has a larger dividend yield than BAC today (10.9% to 6.9%). Also the deal does not seem to have a provision to adjust the exchange ratio of shares if CFC pays out dividends in the interim. If CFC does not cut its dividend, it would appear to me that buying CFC today, and reinvesting its dividend would actually get you more BAC stock for your CFC shares at the deal closing than what was announced. Of course, this difference in dividend yields also helps in the risk arbitrage strategy you discuss as you get a net payment for 2-3 quarters in dividends just to maintain your position and do nothing.

      I am surprised as you are that this kind of mispricing exists, but in todays volatile markets anything is possible

      www.arohanvalue.com
      View article »
    • ON: Thu Jan 17th 12:54 PM
      Commented on:
      Jim Cramer's Mad Money Lightning Round, 1/16/08: Countrywide Recession
      Why would you sell Countrywide now? Does Cramer think that Countrywide will go bk before the acquisition by BAC closes?

      www.arohanvalue.com
      View article »
    • ON: Tue Jan 8th 14:45 PM
      Commented on:
      American Capital's Value Continues To Improve Despite Writedowns
      Agree with your positive take on ACAS. Street.com has it wrong (once again) but the problem is that there is no rebuttal that the company will put out to street.com's stance. In the long term though, the returns to the shareholders will do the talking

      arohanvalue.blogspot.c...
      View article »
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