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  • 4 Attractive Senior Loan Closed-End Funds For 2012 [View article]
    In the universe of CEFs that specialize in corporate loans, which do you think are the best now?
    Sep 24, 2014. 04:11 PM | Likes Like |Link to Comment
  • When Will The Swiss National Bank Go Japan On The Franc? [View article]
    With extended quantitative easing in Europe, you would think Euro could go quite low here, maybe lower than 110 against USD (historical lows). Do you personally believe that Swiss National Bank will follow the Euro to any level and stay with the 1.2 ratio if Euro breaks down to those levels?

    I certainly see Francs as an interesting place to hold a cash balance if it goes below 95 against the USD. But if they are serious about holding against the Euro, I wouldn't want to predict a bottom for the Euro and Swiss Franc could become very artificially low chasing after the Euro.
    Sep 17, 2014. 08:49 PM | Likes Like |Link to Comment
  • Preferred Stock Buyers: Time To Change Tactics For Sub-$25 Purchases [View article]
    One thing that concerns me with preferreds is that most of them are perpetuals. They can therefore be priced using the same models used for long-term bonds. If 10 year treasuries go to 6% over the course of a year, a typical $25 perpetual preferred should get theoretical pricing under $20, and many of them did exactly that when long-term rates threatened going higher in late 2013.

    It would be really nice if you showed rate-related risk exposure here by creating a tabular format for each preferred and showing its theoretical value at different long-term rates. There are many web sites that allow such calculations manually, but bringing it together in a table would have substantial value for readers.
    Jul 26, 2014. 07:43 PM | Likes Like |Link to Comment
  • Preferred Stock Buyers: Time To Change Tactics For Sub-$25 Purchases [View article]
    Which are the three best brokers for OTC trading? I find the lack of liquidity and transparency in trading OTC markets really treacherous.
    Jul 26, 2014. 07:33 PM | Likes Like |Link to Comment
  • Hercules Offshore - Becoming A Market Leader In HPHT Drilling [View article]
    As long as you understand that this is a leveraged commodity price bet, okay. This is not a company that is paying down debt and strengthening its balance sheet from operating results. The review here gives a very misleading impression and hides the fact that the company's balance sheet is DETERIORATING while their income statement simultaneously looks better.

    In addition, day rates are not a function of commodity price alone. It's supply of the rigs and the bulk of HERO's fleet could easily have its dayrates plunge in less than a year with oversupply.
    Jun 13, 2014. 05:46 PM | 2 Likes Like |Link to Comment
  • Netsuite's Massive Moat: Amazing Growth For The Next 5-7 Years [View article]
    VEEV is interesting. When do you think growth there will flatten out. It's trading inline to growth rate now.
    Jun 13, 2014. 05:41 PM | Likes Like |Link to Comment
  • Hercules Offshore - Becoming A Market Leader In HPHT Drilling [View article]
    They are not just using cash flow from operations to "improve" their debt situation and seek additional newbuilds. They are going deeper into debt and using money far beyond what their operating cash flow can supply.

    I'm positive on the company, but your review is less useful because you don't frankly address their growing debt and negative cash flow after accounting for capex and investments.

    It looks like the company is making a double-or-nothing bet on a future turnaround, and if the market for their rigs deteriorates in 2015 they will be buried by debt and will go out of business from liquidity problems.

    It's high risk and high reward.
    Jun 13, 2014. 03:13 PM | 1 Like Like |Link to Comment
  • Hercules Offshore - Becoming A Market Leader In HPHT Drilling [View article]
    The rising EBITDA is fine, but free cash flow has been growing increasingly negative, because capex looks to be out of control. They keep getting more and more into debt in order to fund their capex.

    At what point in this business transformation does HERO start to produce real free cash flow, and when does the debt stabilize and stop growing?
    Jun 12, 2014. 06:53 PM | 1 Like Like |Link to Comment
  • Netsuite's Massive Moat: Amazing Growth For The Next 5-7 Years [View article]
    Who do you think are the best shorts in the SAAS space?
    Jun 6, 2014. 01:45 PM | Likes Like |Link to Comment
  • Netsuite's Massive Moat: Amazing Growth For The Next 5-7 Years [View article]
    Netsuite's growth only exists because Netsuite runs the company at zero earnings. If they spent the amount of money on sales and marketing that allowed them to make a high net margin (20%+), their sales growth would collapse.

    This is 1999 all over again.

    The absurdity of this company is easily demonstrated by simple math. Assume that they grow 30% per year through year end 2016. That gives them about $909M in sales. Assume at this time that they run the business to make a 29% net margin, so net sales at $264M. This is Oracle-like margins, by the way, and I don't for a second believe they can sustain that. But let's give you the benefit of the doubt.

    Assume the growth slows to 20% in 2017 and the market values them at a fair PE of 20 against $264M in net earnings. That gives them a market cap of roughly $5.2B. But the market cap today is almost $6B.

    You have to make almost heroic assumptions to just get the price in three years to match what the price is today. You can come up with plenty of scenarios where the price is 1/5th of what it is today.

    This isn't an investment. This is hedge funds chasing growth at any cost.
    Jun 5, 2014. 10:30 PM | 1 Like Like |Link to Comment
  • The Long Case For Security National Financial [View article]
    What people never seem to mention in these discussions is that mortgage origination is a commodity business with no barriers to entry. Typical small mortgage origination businesses will sell at a PE of only 3 to 4 times earnings. That reflects the low value of these businesses.
    Mar 21, 2014. 01:56 PM | Likes Like |Link to Comment
  • MBIA's Next Earnings Announcement Could Be The Start To A Rally [View article]
    In terms of sector valuations, what would be a normalized valuation for a municipal insurer against tangible book? In a buyout they might go for two times tangible book? More than that? I'm using a conservative valuation metric that might be more appropriate for a bank buyout.
    Mar 5, 2014. 08:04 PM | Likes Like |Link to Comment
  • On Track Innovations: Improving Ops And Valuable IP Is Formula For Multi-Bagger [View article]
    Without intending to, are you accidentally facilitating a stock pump and dump scheme? As with many of your posts, three days before your 11/15/2013 article there was suddenly massive buying volume in the stock. By itself that is not a concern, but when you visit the Yahoo discussion forum it is quickly obviously that OTIV is the subject of a massive pump and dump effort. There are multiple posters in that group who have an extremely shady history of pumping lowcap stocks that ultimately have failing businesses behind them.

    I would actually take your article more seriously if there were not massive buying volume accompanying its publication. I would also take the article more seriously if the traffic on Yahoo didn't have 20 times the normal volume for a stock in the sub $100M market cap.
    Dec 15, 2013. 06:10 PM | 2 Likes Like |Link to Comment
  • AGO- Still A Buy Despite Puerto Rico And Detroit Problems [View article]
    If people were betting on a bankruptcy, that would show up in weakness of common shares before it hit the preferreds. It almost looks like the market is anticipating them raising more capital. What is their guidance on that?
    Nov 19, 2013. 05:43 PM | Likes Like |Link to Comment
  • AGO- Still A Buy Despite Puerto Rico And Detroit Problems [View article]
    Do you have a view on why the preferred shares remain under pressure when the common is behaving so strongly?
    Nov 18, 2013. 09:19 PM | Likes Like |Link to Comment
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