Tim Eriksen's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/20823/comments http://seekingalpha.com/article/150114-legg-mason-earnings-good-at-first-glance-ugly-after-that?source=feed#comment-597418 597418 Tue, 21 Jul 2009 22:04:10 -0400 http://seekingalpha.com/article/150033-peerless-systems-gets-ready-to-rumble-with-highbury-financial?source=feed#comment-596448 596448
Highbury, an asset manger with around $5 billion of AUM, is also debt free. Has cash of around $1.55 per share, book value is $4.50, and has current annualized cash earnings of 40 to 45 cents per share. At $4.22, it trades at 10 times cash earnings, and just 6 times cash earnings if you adjust for the cash on the books.
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Highbury, an asset manger with around $5 billion of AUM, is also debt free. Has cash of around $1.55 per share, book value is $4.50, and has current annualized cash earnings of 40 to 45 cents per share. At $4.22, it trades at 10 times cash earnings, and just 6 times cash earnings if you adjust for the cash on the books.
]]> http://seekingalpha.com/article/90880-diamond-hill-investment-group-a-wounded-wildebeest?source=feed#comment-229934 229934
Then you brilliantly look at YoY comparisons in EPS and find it falling despite rising AUM. Well if you were smarter you would have also seen how operating income rose YoY and that the lower EPS results were solely due to investment income incurring a loss, which is understandable based on how the market has performed so far this year. It is quite obvious that earnings power is continuing to grow at Diamond Hill.

Then you compare current performance to Buffett's historical performance. So you are using different timeframes in your comparison and in addition most of the time period for Buffett tracks changes in book value not investment performance (meaning it includes operating companies Berkshire owned). If that isn't comparing apples to oranges, I don't know what is.

Keep up the crappy work. I guess it just goes to show that anyone can get their thoughts published on the web these days.
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Then you brilliantly look at YoY comparisons in EPS and find it falling despite rising AUM. Well if you were smarter you would have also seen how operating income rose YoY and that the lower EPS results were solely due to investment income incurring a loss, which is understandable based on how the market has performed so far this year. It is quite obvious that earnings power is continuing to grow at Diamond Hill.

Then you compare current performance to Buffett's historical performance. So you are using different timeframes in your comparison and in addition most of the time period for Buffett tracks changes in book value not investment performance (meaning it includes operating companies Berkshire owned). If that isn't comparing apples to oranges, I don't know what is.

Keep up the crappy work. I guess it just goes to show that anyone can get their thoughts published on the web these days.
]]> http://seekingalpha.com/article/85927-highbury-financial-a-forgotten-money-manager?source=feed#comment-210820 210820
The stock is at $2.75 per share, with no debt, and nearly $1 per share in cash, which is growing 10 cents per quarter. So net of cash, it trades at 4 times free cash flow. That is an excellent investment in my opinion.

I don't agree with the author's argument to repurchase the warrants. They are too far out of the money to worry about at this time. I'd rather see them buy back all the stock they can at these levels. It is incredibly accretive. Their business model is so solid (as you noted AUM would have to fall 70% for Highbury to actually lose money) I would be comfortable with using debt to repurchase shares.

Another aspect that I rarely see mentioned is the Contingent Adjustment Payment. See Item 3 in their 10-Q. Basically when they bought Aston their was a price adjustment feature based on annualized revenue for the six months ending November 30, 2008. If annualized revenues were higher than a specific target Highbury would have to make an additional payment. If annualized revenues were below, they would receive a payment (max. $3.8 million).

As of March 31, 2008, Highbury would receive a payment of $1.5 million. My estimation is that as of June 30, it would now be closer to $2 to $2.5 million (20 to 25 cents per share) due to the market falling in Q2. According to the CEO all of this money would be untaxed, and go to Highbury. That essentially gives the owner a short term hedge if the market stays down or falls further.



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The stock is at $2.75 per share, with no debt, and nearly $1 per share in cash, which is growing 10 cents per quarter. So net of cash, it trades at 4 times free cash flow. That is an excellent investment in my opinion.

I don't agree with the author's argument to repurchase the warrants. They are too far out of the money to worry about at this time. I'd rather see them buy back all the stock they can at these levels. It is incredibly accretive. Their business model is so solid (as you noted AUM would have to fall 70% for Highbury to actually lose money) I would be comfortable with using debt to repurchase shares.

Another aspect that I rarely see mentioned is the Contingent Adjustment Payment. See Item 3 in their 10-Q. Basically when they bought Aston their was a price adjustment feature based on annualized revenue for the six months ending November 30, 2008. If annualized revenues were higher than a specific target Highbury would have to make an additional payment. If annualized revenues were below, they would receive a payment (max. $3.8 million).

As of March 31, 2008, Highbury would receive a payment of $1.5 million. My estimation is that as of June 30, it would now be closer to $2 to $2.5 million (20 to 25 cents per share) due to the market falling in Q2. According to the CEO all of this money would be untaxed, and go to Highbury. That essentially gives the owner a short term hedge if the market stays down or falls further.



]]> http://seekingalpha.com/article/79698-pyramid-oil-shares-set-to-spike-again?source=feed#comment-177884 177884
PDO will beneift in the coming quarters from a natural gas find in Texas, but even with that additional production they will have a hard time hitting 25 cents in quarterly EPS.

Why in the world should PDO make anew run at $30 per share and thus trade at 30 times earnings? It shouldn't. ]]> Mon, 02 Jun 2008 10:01:53 -0400
PDO will beneift in the coming quarters from a natural gas find in Texas, but even with that additional production they will have a hard time hitting 25 cents in quarterly EPS.

Why in the world should PDO make anew run at $30 per share and thus trade at 30 times earnings? It shouldn't. ]]> http://seekingalpha.com/article/77460-wisdom-tree-puts-forth-new-etf-shoots-but-shows-some-earnings-blight?source=feed#comment-168775 168775
Asif your chart makes it look like growth has just slowed. By having nearly a year long gap it misses that AUM peaked last fall and then fell for a while while the markets tumbled. The volatility of growth makes it hard to estimate what future rate of AUM growth to use in a model. I still don't see cash break even until about $11 billion and profitability until about $15 billion. ]]> Fri, 16 May 2008 10:45:32 -0400
Asif your chart makes it look like growth has just slowed. By having nearly a year long gap it misses that AUM peaked last fall and then fell for a while while the markets tumbled. The volatility of growth makes it hard to estimate what future rate of AUM growth to use in a model. I still don't see cash break even until about $11 billion and profitability until about $15 billion. ]]> http://seekingalpha.com/article/75848-why-investment-banks-should-not-buy-hedge-funds?source=feed#comment-163781 163781
Don't get me wrong, I agree with the overall argument that the purchase was extremely stupid. ]]> Wed, 07 May 2008 20:48:32 -0400
Don't get me wrong, I agree with the overall argument that the purchase was extremely stupid. ]]> http://seekingalpha.com/article/73588-phillip-morris-smoke-em-if-you-own-em?source=feed#comment-155548 155548 Wed, 23 Apr 2008 18:50:35 -0400 http://seekingalpha.com/article/59740-clinton-and-obama-hedge-fund-killers?source=feed#comment-109685 109685 Fri, 11 Jan 2008 13:31:55 -0500 http://seekingalpha.com/article/58758-no-end-in-sight-to-banking-crisis?source=feed#comment-107670 107670
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]]> http://seekingalpha.com/article/58604-why-isn-t-the-government-capping-credit-card-interest-rates?source=feed#comment-107534 107534
You do realize that if you capped interest rates on credit cards that finance companies would earn less money yet see little decrease in write offs and they would likely quit issuing credit to higher risk borrowers.

]]> Mon, 31 Dec 2007 15:10:29 -0500
You do realize that if you capped interest rates on credit cards that finance companies would earn less money yet see little decrease in write offs and they would likely quit issuing credit to higher risk borrowers.

]]> http://seekingalpha.com/article/58604-why-isn-t-the-government-capping-credit-card-interest-rates?source=feed#comment-107403 107403 Sun, 30 Dec 2007 14:57:09 -0500 http://seekingalpha.com/article/37154-farmers-merchant-bank-a-solid-investment-in-family-tradition?source=feed#comment-87675 87675 In addition your quick comparison to BBNV is probably not a good one. Book value is only one factor to consider in valuation. I wouldn't use the same book value multiple unless both banks had similar ROE and growth rates, whih they do not. ROA or earnings are probably more important. Off the top of my head, Burke & Herbert might be a better comparison.]]> Mon, 04 Jun 2007 15:33:28 -0400 In addition your quick comparison to BBNV is probably not a good one. Book value is only one factor to consider in valuation. I wouldn't use the same book value multiple unless both banks had similar ROE and growth rates, whih they do not. ROA or earnings are probably more important. Off the top of my head, Burke & Herbert might be a better comparison.]]> http://seekingalpha.com/article/35833-berkshire-hathaway-s-valuation-credit-suisse-or-common-sense?source=feed#comment-86400 86400 Thu, 17 May 2007 11:21:26 -0400 http://seekingalpha.com/article/21955-wisdomtree-riding-the-etf-wave?source=feed#comment-78417 78417
If anyone has any insights I would appreciate hearing them.]]> Fri, 08 Dec 2006 16:06:24 -0500
If anyone has any insights I would appreciate hearing them.]]>