ValueBarbarossa

Estimating Future Dividend Growth

What about predicting future dividend growth by focusing on situations where dividends are CUT (for the right reasons). I've done very well this year buying MLPs that have sound, but overlevered businesses, after a distribution cut in order to pay down excess debt.

Many of these situations are paying predictably low distributions as they pay down debt. However, after the debt load is reduced on these MLPs they're capable of paying out 20-30% distribution yields.

My three favorite this year have been BBEP, EROC, and CEP. I think EROC is quite suitable for new money, as this partnership typically pays out the majority of its cashflow, and it trades at about 2-3X cashflow this should offer a great potential for a long term (if somewhat volatile) high distribution yield. CEP is perhaps more of a cheap long term call option on natural gas.

The great thing about this strategy is that you can buy companies when no one wants them, and then collect a high yield on cost plus capital gain.

Risk Evaluation for China 3C Group

There's an additional $10 million available in the case that CHCG liquidates. Read the 10K, and notice that there's a fund (Similar to Worker's Comp) that 3C can only touch in the case that it dissolves. This adds an additional margin of safety.

Risk Evaluation for China 3C Group

There

Time for California Muni Bond Investors to Take a Stand

Of course it's very unlikely that California will go bankrupt. Remember...State's CAN'T seek bankruptcy protection.

However, they can DEFAULT.

I can't imagine jumping into these OF ALL bonds. You're taking a lot of risk here, and not getting paid a lot for it. I'd rather buy a volatile dividend payer that pays 6% than hold California bonds that will only avoid huge losses if the economy miraculously turns around. I've been tempted to make a bearish bet on California muni's for some time, but perhaps you're right and I'll just watch as you ride this investment train to glorious 6-7% returns.

The Case for RHI Entertainment and Klarman's Increase in Stake

Am I reading the numbers wrong? I would think if the net loss was only based on a non-cash charge that there should be positive free cash flow. But there's not....supposedly RHIE's total cash flow from operations waas -50 million in 2008.

However, I too have great respect for Klarman, so I want to dig deeper as well. I know he loves his royalties, and the nice thing about this is the IP should generate royalties with no additional capital investment.

I'm surprised that you did not mention the large degree of leverage on RHIE's balance sheet. This is of course my greatest concern....we're sitting on 576 million in long term debt and almost $1 billion in total liabilities. The company is very short on tangible assets...of course in this case the argument would be that the intangibles are where the value is in this company.

My biggest question is whether this companies assets are strong enough to not only support the large debt load (and $40 million annual interest payment) but also produce some returns for the common stockholders.

I put in a buy order for a couple hundred shares just to keep this one on my radar.

Seth Klarman's Best Ideas (for Now)

And Klarman has a history of investing in liquidation type situations...hmmmm.

The thing about FACT is that CASH burn could be stopped entirely, cash could be distributed to shareholders, the biotech research sold to a deep pocketed drug company, and shareholders could stand to make a large profit here.

An activist investor in FACT is trying to oust the current board with a whole new board....with the stated purpose of declaring a cash dividend and then selling the pharm operations. Sadly the activist (Wong) only holds a small % of the shares, and Klarman is not able to vote the shares he bought since April 1st (about half his position).

I've got a small position in this. If the present management and directors can be ousted before too much harm is done to the underlying assets I think this is a steal.

On the bright side....who is going to vote on behalf of current management who's idea of a business plan is to spend all the money before they get fired.


On Feb 21 09:41 PM Dean Morel wrote:

> Digging deeper it appears I may be wrong as Klarman has been increasing
> his holding in FACT. 3,985,567 16.68% of shares as of 2009-02-09
>
>
> FACT is selling for less than cash in bank, but being early stage
> biotech it is burning cash.

Convertibles Strategies - An Interview with John Calamos

So does anyone have a list of convertible bonds, or know where I can find one?

I need to identify opportunities before I can research them, and so far I've come up dry.

Thanks.

Convertibles Strategies - An Interview with John Calamos

Any ideas in particular?

I had looked at BAC and WFC non-cum preferreds, but I'd really like to stay away from Financials.

I'd love to find some convertible bonds selling at less than equivalent bond prices with maturities within 5 years like mentioned in the article.

I know how to do security analysis through SEC filings, but I don't know of a way to identify convertible issues to research further. Anyone have a list of convertible issues even? Or the type of SEC filing where you can identify convertible issues.

Thanks

Asbury Automotive Travels on Dangerous Ground

Excellent article. I think these are all valid concerns. I bought a small position of ABG a couple months ago as a "value" play and still think there could be something there. I sold out for a 20% profit shortly after a Barron's article recommending it.

At these levels I had begun to reconsider, but there are so many opportunities available at value prices that we can be picky.