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Approximately Right

Approximately Right
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  • Deswell Growing Top Line, But Operational Results Still Worrisome [View article]
    Thanks for the update. My eyes go immediately to the balance sheet each time DSWL releases a quarterly update, but the top-line surprise and dividend cut made this one more interesting than usual. Still feel very comfortable owning shares at the current valuation.
    Feb 19, 2015. 10:42 AM | Likes Like |Link to Comment
  • Chris DeMuth, Jr. Positions For 2015: Banking M&A, Milestone Payments, Litigation Results [View article]
    So the two questions IMO:

    1.) How safe a bet is it that the courts will uphold the decision?

    2.) What is the rate of cash burn in the meantime? Looks like they posted $-4M in OCF for nine months ended 9/30.
    Feb 18, 2015. 04:13 PM | 1 Like Like |Link to Comment
  • Paragon Offshore: Could Old Rigs Offer Good Value? [View article]
    What percentage of those spec builds are on order but not yet under construction? Isn't it possible that if day-rates remain depressed, some of these orders may be cancelled?
    Nov 10, 2014. 12:52 PM | Likes Like |Link to Comment
  • This MLP Fund Is Trading At Close To Its Widest Discount Since Inception, Offering An Attractive Opportunity [View article]
    CEM has something like $8 per share in differed tax liabilities. It seems this liability should at the very least be discounted, since the low turnover suggests they are unlikely to be realized in the near-term. What, if any, consideration should be given to these DTLs? Could one argue that NAV is understated, and thus the discount even more appealing?

    BTW, I'm really enjoying your contributions to SA; I hope you continue sharing ideas.
    Aug 30, 2014. 12:19 PM | Likes Like |Link to Comment
  • Sino Gas International Holdings: 5.7% Gross Profit In 1.5 Months [View article]
    ADR cancellation fee.
    May 13, 2014. 08:10 PM | Likes Like |Link to Comment
  • What Would Baron Rothschild Say About Russian Stocks? [View article]
    The comparison to Japan is a bit spurious. Even after a massive sell-off the Japanese market continued to be very expensive, with a CAPE ratio over 30. It's only very recently that valuations there have converged with global averages. Russia, on the other hand, has one of the lowest CAPE ratios in the world (I believe only Greece is lower).
    Apr 30, 2014. 11:03 PM | 1 Like Like |Link to Comment
  • 'Did You Expect GOOG To Trade At A PE Of 10?' And Other 'Smart Beta' And Factor Investing Questions [View article]
    Don't dumb funds also have a bit of a momentum tilt since they're cap-weighted? They're adding to holdings that have increased in value and trimming those that have declined every time they rebalance.
    Apr 23, 2014. 03:58 PM | 1 Like Like |Link to Comment
  • Chasing Historical Performance [View instapost]
    I too joined Motif purely out of a love of free money (no apologies!), and I agree that it's yet another fascinating window into investor psychology. I typically track fund flows to look for contrarian signals; perhaps I'll start using Motif popularity/withdrawals for similar purposes.

    BTW, I used Motif to build a globally diversified portfolio loosely based on the ideas in Meb Faber's Ivy Portfolio book. I'd say it's an excellent tool for such a purpose. I saved quite a bit of money by incurring only a single transaction fee to construct a portfolio (actually, I was paid about $90 to buy the portfolio if you include the bonus I received) that would have required 10-15 individual purchases through another broker.
    Apr 22, 2014. 12:56 PM | 1 Like Like |Link to Comment
  • Why I'm Buying Aviat Networks Hand Over Fist [View article]
    I think much of the criticism directed towards management is warranted, but look closely at the valuation; this thing has gotten silly cheap recently. Bottom line: you don't get the chance to buy a company at close to net cash unless there are some serious warts. Over the long run, if you buy a basket of beaten down, dirt-cheap companies with quantitative characteristics similar to AVNW, you'll do well, warts and all.
    Apr 21, 2014. 01:38 PM | 4 Likes Like |Link to Comment
  • American Capital and Northstar Realty struggle [View news story]
    Dividend is very likely to resume once spin-off of portfolio investments is complete. Asset manager is held on the books at about 7 times earnings (14% yield). My guess is the market will assign a much higher multiple once it stands on its own.

    BTW, I'm referring to a spin-off of the portfolio investments and not a spin-off of the asset manager based on the CFO's comments from the most recent conference call:

    “The better way to think of it would be that you would spin out the BDC and leave the asset manager at ACAS. And ACAS really transforms itself to ACAM.”
    Apr 11, 2014. 01:21 PM | Likes Like |Link to Comment
  • Is The Smart Money Rotating Out Of Social Media And Into Emerging Markets? [View article]
    My favorite way to play this is the EM fundamental index ETF (PXH). The valuation is even more compelling than other EM funds because it breaks the link between price and weight; in fact, Rob Arnott recently mentioned that the 10 year P/E on the index was in the single digits (towards the end of this video: http://bit.ly/1edQTRl).

    Another great option is the newly launched Global Value ETF from Meb Faber and Cambria Investments. It buys the ~10 cheapest countries in the world on a CAPE basis. It adds a bit of heterogeneity to your holdings while still giving you exposure to lots of cheap emerging markets (including Russia).
    Apr 2, 2014. 08:04 PM | Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    This looks like a case of temporary headwinds and self-inflicted wounds masking a very high ROC business with a proven model of success.

    I'm sure long-term shareholders are (justifiably) angered by the foolish decision to saddle the company with debt in an ill-timed buyback designed to benefit Artal. However, as a recent buyer I look at the debt-load as a significant restraint on management's capital allocation decisions. With the dividend suspended, every bit of FCF will be directed towards debt repayment. Since debt repayment elevates equity-holders claims to future cash flows and reduces interest expense, it is (IMO) nearly on par with dividends and repurchases in terms of shareholder friendliness.
    Mar 30, 2014. 01:11 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Free App Fad Will Soon Dissipate [View article]
    The nice thing with WTW is that you don't even need EV/EBITDA multiple expansion to earn a solid return. As the company uses its ample FCF to pay down debt (this is a very high ROC business), the already depressed multiple will compress further unless the equity portion of EV rises by a commensurate amount.

    Any revaluation of the shares adds additional upside, as does the potential for ACA mandated coverage through the preventative services benefit, or dissipation in the free-app fad (which I also believe is likely). I'm a buyer here and hoping for a chance to add shares below $20.
    Mar 22, 2014. 05:03 PM | 1 Like Like |Link to Comment
  • Strayer Education: Definitive Improvements, But Is It Still Cheap? [View article]
    You'd be hard pressed to find a company with such consistently high returns on invested capital trading at a lower multiple to FCF (about 6.5 using TTM figures, even lower if you take a 5 year average).

    I agree with you on STRA being the best of breed with great management; I think it's the proverbial baby that's been thrown out with the bathwater. You can look at Tom Harkin's scathing report on for-profit institutions from a few years ago and you'll find nothing but reluctant praise for Strayer.

    I've also been thinking a lot about this Warren Buffet quote recently (saw this in a GuruFocus newsletter last month):

    "In an environment with low interest rates, companies that aren't capital intensive will be undervalued and companies that are capital intensive will be overvalued. If you are paying 0%, you could borrow all the money you needed to operate. The ability to generate excess returns isn't very valuable...until interest rates rise."
    Feb 24, 2014. 01:16 PM | 3 Likes Like |Link to Comment
  • Everyday Arbitrage Forum [View instapost]
    $1 currently on sale for $.75

    http://bit.ly/1hbAOh9
    Feb 20, 2014. 04:11 PM | Likes Like |Link to Comment
COMMENTS STATS
27 Comments
19 Likes