Shawn Wang's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/398279/comments http://seekingalpha.com/article/240461/comments?source=feed#comment-1477940 1477940 Thu, 17 Feb 2011 23:46:12 -0500 http://seekingalpha.com/article/241313/comments?source=feed#comment-1352476 1352476
incidentally, it should be worthwhile noting that my CEF-trading-as-futures theory works in reverse too - BSP's discount to NAV should increase over time as long as NAV continues to decrease.]]> Tue, 14 Dec 2010 09:02:30 -0500
incidentally, it should be worthwhile noting that my CEF-trading-as-futures theory works in reverse too - BSP's discount to NAV should increase over time as long as NAV continues to decrease.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1352440 1352440
thanks for the working through the numbers to show how the distribution is untenable unless bill gross continues to be lucky. I will admit I was lucky I wasn't even planning on the swaps doing well. thats the argument from the income side.

But my thesis wasn't that - it was on the asset value side. it was a bet on the NAV just rising in general due to credit spreads narrowing. As of Dec 09, the bond portfolio "total investments before options written?" was 1.35b. As you say in Sept 10 it was 1.5b. Would I be right to say that that rise in NAV contributed to some part of PHK's 30+% return over that time? and that if I expected NAV to continue rising in future I would bid up the price now before waiting for the NAV to actually rise, thereby producing a premium that is actually rational?

that said, I didn't see it rising 40% more, so I've sold out. if you are right on the divvy cut if Gross does badly on those swaps, then its a real pity there aren't options on PHK.]]> Tue, 14 Dec 2010 08:55:45 -0500
thanks for the working through the numbers to show how the distribution is untenable unless bill gross continues to be lucky. I will admit I was lucky I wasn't even planning on the swaps doing well. thats the argument from the income side.

But my thesis wasn't that - it was on the asset value side. it was a bet on the NAV just rising in general due to credit spreads narrowing. As of Dec 09, the bond portfolio "total investments before options written?" was 1.35b. As you say in Sept 10 it was 1.5b. Would I be right to say that that rise in NAV contributed to some part of PHK's 30+% return over that time? and that if I expected NAV to continue rising in future I would bid up the price now before waiting for the NAV to actually rise, thereby producing a premium that is actually rational?

that said, I didn't see it rising 40% more, so I've sold out. if you are right on the divvy cut if Gross does badly on those swaps, then its a real pity there aren't options on PHK.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1352402 1352402
Zio - have you tried CEFconnect? here is BSP on it: www.cefconnect.com/Det... it clearly shows that the current distribution is 2 times its actual earnings. hope that helps.]]> Tue, 14 Dec 2010 08:37:05 -0500
Zio - have you tried CEFconnect? here is BSP on it: www.cefconnect.com/Det... it clearly shows that the current distribution is 2 times its actual earnings. hope that helps.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1352389 1352389
just on a broad level, you should be very clear that the conditions we faced from Dec 08 to March 09 are NOT the same conditions we are facing in Dec 10. if you are betting money on your 3 reasons, fine, but for certain the broad macro factors are different and less favorable. For example: www.bloomberg.com/news...

also your first reason is questionable as a long thesis. it makes leveraged CEF more attractive AFTER the blood has been shed, not before. you want to worry about both that A) borrowing-cost-to-inco... as well as the B) market value of the bonds as well - which would surely fall if rates rise at the long end. so you're saying a small rise in A will offset a large fall in B. not happening in my view.]]> Tue, 14 Dec 2010 08:31:09 -0500
just on a broad level, you should be very clear that the conditions we faced from Dec 08 to March 09 are NOT the same conditions we are facing in Dec 10. if you are betting money on your 3 reasons, fine, but for certain the broad macro factors are different and less favorable. For example: www.bloomberg.com/news...

also your first reason is questionable as a long thesis. it makes leveraged CEF more attractive AFTER the blood has been shed, not before. you want to worry about both that A) borrowing-cost-to-inco... as well as the B) market value of the bonds as well - which would surely fall if rates rise at the long end. so you're saying a small rise in A will offset a large fall in B. not happening in my view.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1352380 1352380 Tue, 14 Dec 2010 08:26:01 -0500 http://seekingalpha.com/article/241313/comments?source=feed#comment-1350112 1350112
if I may try to describe the current environment - there are two forces at work here: Interest rate risk and Credit risk. if either of those risks go up, these bonds go down.

Credit risk is measured as implied by the difference of yields between junk bonds and investment grade bonds or the difference of yields between investment grade bonds and "risk free" treasury bonds. These spreads are at three-year highs: www.bloomberg.com/news... which does not bode well for them going forward. Companies have been doing fine but there are individual pockets of credit risk you need to be wary of, for example as Saul mentions we are still in a giant hole of uncertainty regarding the proper evaluation of real estate-backed credit, so that disproportionately affects CEFs who happen to hold more of those kinds of credit risk.

Interest rate risks are a different kettle of fish. The treasury yield curve is at all time lows, the market reaction to QE2 since November has been a giant collective "meh", and until QE2.5 or QE3 is announced sometime mid next year it is hard to envision any scenario in which it will go down more.

In other words, with a 1-ish year horizon, it doesn't look at all good for junk bond investors. So why this article? as in the first para: you need to be able to sit around and wait for those 10-15% dividends, which WILL come for most of the CEFs listed here. If I had $500k now that means I could lock in a $50-$75k annual income, and all I have to monitor is whether the underlying bonds in my CEF are generating sufficient cashflow for it to deliver what it promises. Yes, my $500k principal will fluctuate every day, and yes it looks likely that it will go down over the next year, but thats part and parcel of being a dividend investor.

i should probably disclose that i don't hold any CEFs at this point as I have a much more short term mentality; doesn't mean that I don't agree with the idea of dividend investing, or of learning more about it to keep an open mind.]]> Sun, 12 Dec 2010 23:20:00 -0500
if I may try to describe the current environment - there are two forces at work here: Interest rate risk and Credit risk. if either of those risks go up, these bonds go down.

Credit risk is measured as implied by the difference of yields between junk bonds and investment grade bonds or the difference of yields between investment grade bonds and "risk free" treasury bonds. These spreads are at three-year highs: www.bloomberg.com/news... which does not bode well for them going forward. Companies have been doing fine but there are individual pockets of credit risk you need to be wary of, for example as Saul mentions we are still in a giant hole of uncertainty regarding the proper evaluation of real estate-backed credit, so that disproportionately affects CEFs who happen to hold more of those kinds of credit risk.

Interest rate risks are a different kettle of fish. The treasury yield curve is at all time lows, the market reaction to QE2 since November has been a giant collective "meh", and until QE2.5 or QE3 is announced sometime mid next year it is hard to envision any scenario in which it will go down more.

In other words, with a 1-ish year horizon, it doesn't look at all good for junk bond investors. So why this article? as in the first para: you need to be able to sit around and wait for those 10-15% dividends, which WILL come for most of the CEFs listed here. If I had $500k now that means I could lock in a $50-$75k annual income, and all I have to monitor is whether the underlying bonds in my CEF are generating sufficient cashflow for it to deliver what it promises. Yes, my $500k principal will fluctuate every day, and yes it looks likely that it will go down over the next year, but thats part and parcel of being a dividend investor.

i should probably disclose that i don't hold any CEFs at this point as I have a much more short term mentality; doesn't mean that I don't agree with the idea of dividend investing, or of learning more about it to keep an open mind.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1350070 1350070
I CANNOT believe I missed this! I have been so used to data services providing price performance data that I did not think to check if finviz's figures were based off total return or just price return. This entirely invalidates my BSP recommendation (obviously its a great buy if its PRICE only moved 0.44% ytd but still offered 15% div yield, but that was false); I would take this article back and delete that if I could. I hope everyone who reads this article reads your comment.

With your help I will be able to churn out more accurate analysis in future. To me this was a terrible oversight, apologies to everyone.]]> Sun, 12 Dec 2010 22:39:37 -0500
I CANNOT believe I missed this! I have been so used to data services providing price performance data that I did not think to check if finviz's figures were based off total return or just price return. This entirely invalidates my BSP recommendation (obviously its a great buy if its PRICE only moved 0.44% ytd but still offered 15% div yield, but that was false); I would take this article back and delete that if I could. I hope everyone who reads this article reads your comment.

With your help I will be able to churn out more accurate analysis in future. To me this was a terrible oversight, apologies to everyone.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1349371 1349371
the fact that these CEFs are crashing is due to the recent rise in treasury yields, but corporate credit risk hasn't actually increased in my view.]]> Sun, 12 Dec 2010 12:15:42 -0500
the fact that these CEFs are crashing is due to the recent rise in treasury yields, but corporate credit risk hasn't actually increased in my view.]]> http://seekingalpha.com/article/241313/comments?source=feed#comment-1349204 1349204
your reasoning is spot on, though. I don't see any reason why any institutional investor should ever buy closed end funds that trade at a premium to NAV since they can just get all the holdings for cheaper. the question is just how much capital you need to accomplish that.

side note:
although this wasn't a reason I considered in Jan, remember back then (and at various points along this year) we had waves of double dip worries. If I were institutional I might pay a bit of premium to NAV just to get that extra liquidity (imagine - you can liquidate an entire portfolio of bonds just like that!) if things turn bad. However, if my CEF-as-futures-on-NAV thesis was accurate, then the price of the CEF would drop faster than the NAV. So you could say in deciding between buying direct bonds or the bond etf (at zero or small premium) that you are making a tradeoff between liquidity and price volatility. Does this make sense?]]> Sun, 12 Dec 2010 10:42:28 -0500
your reasoning is spot on, though. I don't see any reason why any institutional investor should ever buy closed end funds that trade at a premium to NAV since they can just get all the holdings for cheaper. the question is just how much capital you need to accomplish that.

side note:
although this wasn't a reason I considered in Jan, remember back then (and at various points along this year) we had waves of double dip worries. If I were institutional I might pay a bit of premium to NAV just to get that extra liquidity (imagine - you can liquidate an entire portfolio of bonds just like that!) if things turn bad. However, if my CEF-as-futures-on-NAV thesis was accurate, then the price of the CEF would drop faster than the NAV. So you could say in deciding between buying direct bonds or the bond etf (at zero or small premium) that you are making a tradeoff between liquidity and price volatility. Does this make sense?]]> http://seekingalpha.com/article/240738/comments?source=feed#comment-1349120 1349120
you'd have to go back to 2006 to find the last time the gold-silver ratio was this low (see goldprice.org/gold...). Statistically speaking, silver is due for a period of underperformance vs gold, fundamentals be damned. The reason I did not choose to publish this view is because I don't want to fight a JPM short cover.

The best way to use the data I have presented in this article is actually to long the suggested names AND short SLV, because the only thing I have forecast is that they will outperform SLV. Time will tell.

Data is a little thin on all the other OTC/pink names mentioned on this threat (seriously I think the comments by everyone are real money) otherwise I'd redo the statistical analysis including all those names]]> Sun, 12 Dec 2010 09:50:32 -0500
you'd have to go back to 2006 to find the last time the gold-silver ratio was this low (see goldprice.org/gold...). Statistically speaking, silver is due for a period of underperformance vs gold, fundamentals be damned. The reason I did not choose to publish this view is because I don't want to fight a JPM short cover.

The best way to use the data I have presented in this article is actually to long the suggested names AND short SLV, because the only thing I have forecast is that they will outperform SLV. Time will tell.

Data is a little thin on all the other OTC/pink names mentioned on this threat (seriously I think the comments by everyone are real money) otherwise I'd redo the statistical analysis including all those names]]> http://seekingalpha.com/article/240738/comments?source=feed#comment-1349111 1349111
bigger picture-wise, I really don't think it matters, unless Mexico somehow starts going into nationalization-mode or imposes capital controls on repatriation of profits. (is this actually illegal given NAFTA? I have no personal experience with NAFTA)]]> Sun, 12 Dec 2010 09:44:10 -0500
bigger picture-wise, I really don't think it matters, unless Mexico somehow starts going into nationalization-mode or imposes capital controls on repatriation of profits. (is this actually illegal given NAFTA? I have no personal experience with NAFTA)]]> http://seekingalpha.com/article/240738/comments?source=feed#comment-1348362 1348362 Sat, 11 Dec 2010 14:54:51 -0500 http://seekingalpha.com/article/240738/comments?source=feed#comment-1348090 1348090 Sat, 11 Dec 2010 11:13:37 -0500 http://seekingalpha.com/article/176438/comments?source=feed#comment-1347679 1347679
I wrote a followup to this article from one year ago. You might like to revisit your long play on this =)

seekingalpha.com/artic...]]> Sat, 11 Dec 2010 00:26:26 -0500
I wrote a followup to this article from one year ago. You might like to revisit your long play on this =)

seekingalpha.com/artic...]]> http://seekingalpha.com/article/240738/comments?source=feed#comment-1344771 1344771 www.bloomberg.com/mark.../ It's got quite a few others you haven't mentioned.

However it doesn't mention Tahoe yet, or Minefinders or Gammon Gold. GRS actually I like a lot as a silver play.]]> Thu, 09 Dec 2010 13:19:47 -0500 www.bloomberg.com/mark.../ It's got quite a few others you haven't mentioned.

However it doesn't mention Tahoe yet, or Minefinders or Gammon Gold. GRS actually I like a lot as a silver play.]]> http://seekingalpha.com/article/240738/comments?source=feed#comment-1344760 1344760
i'm under no illusions about silver's performance so far; in fact I love presenting this chart: finviz.com/futures_per... However I was just repeating the case that the video was making - in fact I've distanced myself from actually saying that I'm long silver for pretty much the entire article. This is because I am no longer long silver (*cringes for wave of retaliation from you guys*) as you'd have to go back to 2006 to find the last time the gold-silver ratio was this low (see www.goldprice.org/gold...). Statistically speaking, silver is due for a period of underperformance vs gold, fundamentals be damned. The reason I did not choose to publish this view is because I don't want to fight a JPM short cover. Instead, I published this statistically motivated piece which I had more confidence in looking at the data. the SA editors turned my suggested title into "Top Silver Plays", which wasn't really my intention. Clearly FRMSF is more "Top" than any stock mentioned here.

you and I both know that Wharton degree is worth absolutely zero, possibly negative, compared to real trading experience. that bio is just the obligatory "me in a few words". don't read too much into it, and cut us nerds some slack ;)]]> Thu, 09 Dec 2010 13:12:53 -0500
i'm under no illusions about silver's performance so far; in fact I love presenting this chart: finviz.com/futures_per... However I was just repeating the case that the video was making - in fact I've distanced myself from actually saying that I'm long silver for pretty much the entire article. This is because I am no longer long silver (*cringes for wave of retaliation from you guys*) as you'd have to go back to 2006 to find the last time the gold-silver ratio was this low (see www.goldprice.org/gold...). Statistically speaking, silver is due for a period of underperformance vs gold, fundamentals be damned. The reason I did not choose to publish this view is because I don't want to fight a JPM short cover. Instead, I published this statistically motivated piece which I had more confidence in looking at the data. the SA editors turned my suggested title into "Top Silver Plays", which wasn't really my intention. Clearly FRMSF is more "Top" than any stock mentioned here.

you and I both know that Wharton degree is worth absolutely zero, possibly negative, compared to real trading experience. that bio is just the obligatory "me in a few words". don't read too much into it, and cut us nerds some slack ;)]]> http://seekingalpha.com/article/240738/comments?source=feed#comment-1344737 1344737 Thu, 09 Dec 2010 12:56:07 -0500 http://seekingalpha.com/article/240738/comments?source=feed#comment-1344717 1344717 don't apologize when you know you are right. comments like yours are the very reason I write to seekingalpha. thanks.

the plain and simple answer why FRMSF was not included is because I wasn't even aware it existed, being an OTC stock. I had screened using finviz (link in the article), which I now know does not include OTC stocks. I went further and both the usual standbys Yahoo and Google Finance did not throw up FRMSF in their Silver lists for probably the same reason. It seems only Bloomberg would have given a comprehensive survey of all Silver mining companies: www.bloomberg.com/mark.../

Lesson learnt.]]> Thu, 09 Dec 2010 12:46:17 -0500 don't apologize when you know you are right. comments like yours are the very reason I write to seekingalpha. thanks.

the plain and simple answer why FRMSF was not included is because I wasn't even aware it existed, being an OTC stock. I had screened using finviz (link in the article), which I now know does not include OTC stocks. I went further and both the usual standbys Yahoo and Google Finance did not throw up FRMSF in their Silver lists for probably the same reason. It seems only Bloomberg would have given a comprehensive survey of all Silver mining companies: www.bloomberg.com/mark.../

Lesson learnt.]]> http://seekingalpha.com/article/240562/comments?source=feed#comment-1341896 1341896
item 2) can be especially damaging to a short, and in fact I'd be game for going long if WCRX threw up some compelling story for a new drug or acquisition.]]> Wed, 08 Dec 2010 02:41:43 -0500
item 2) can be especially damaging to a short, and in fact I'd be game for going long if WCRX threw up some compelling story for a new drug or acquisition.]]> http://seekingalpha.com/article/225121/comments?source=feed#comment-1210758 1210758
it's really simple, Felix. Sell side thrives on relationships, networks, power. Buy side on track record, results, objectivity. It is easy to see where the more political people are drawn to, is it not?

although if one takes the blogosphere's assertions that GS is a giant hedge fund at face value, you are quite mistaken in equating GS with sell side.]]> Wed, 15 Sep 2010 09:31:15 -0400
it's really simple, Felix. Sell side thrives on relationships, networks, power. Buy side on track record, results, objectivity. It is easy to see where the more political people are drawn to, is it not?

although if one takes the blogosphere's assertions that GS is a giant hedge fund at face value, you are quite mistaken in equating GS with sell side.]]> http://seekingalpha.com/article/221906/comments?source=feed#comment-1179811 1179811
if you are not saying that Bradley is right here, then I surmise that you could argue for ETFs to include illiquid stocks. Could you flesh this argument out? is it nothing more than the SEC not wanting to appear unnecessarily paternal?]]> Tue, 24 Aug 2010 14:05:28 -0400
if you are not saying that Bradley is right here, then I surmise that you could argue for ETFs to include illiquid stocks. Could you flesh this argument out? is it nothing more than the SEC not wanting to appear unnecessarily paternal?]]> http://seekingalpha.com/article/221932/comments?source=feed#comment-1179688 1179688 Tue, 24 Aug 2010 13:04:21 -0400 http://seekingalpha.com/article/213112/comments?source=feed#comment-1097671 1097671 Mon, 05 Jul 2010 14:58:10 -0400 http://seekingalpha.com/article/198216/comments?source=feed#comment-975134 975134 Mon, 12 Apr 2010 13:41:43 -0400 http://seekingalpha.com/article/148338/comments?source=feed#comment-585925 585925 Mon, 13 Jul 2009 12:31:58 -0400 http://seekingalpha.com/article/139189/comments?source=feed#comment-517012 517012
1. Why do you assume all this debt is unpayable? Be responsible when you use loaded words like that.
2. just so you know what base of knowledge i'm coming from, I have done some work on government debt-to-income figures but not private sector. The concerns are slightly different but suffice to say that your usage of GDP as a scalar for private debt isn't a good metric and I hope you were aware of that but just went ahead with it because it is in fact easy to understand, which is always a plus.
3. my biggest quibble with this treatment of debt (and its so widespread I do not blame you in the least bit) is that indebtedness should never be considered in isolation. If the nonfinancial businesses and financial sectors in your chart had issued equity instead of debt, would they have shown up in your chart? no. Should you be worried about it anyway? Yes. what does that tell you about how reliable Debt-To-Income ratios are in assessing creditworthiness at the macro level? Its useless in isolation. I think people tend to overextend their personal finance analogies when they try to explain macroeconomics. This was the failure of the classical school and we should all remember that.]]> Mon, 25 May 2009 15:22:47 -0400
1. Why do you assume all this debt is unpayable? Be responsible when you use loaded words like that.
2. just so you know what base of knowledge i'm coming from, I have done some work on government debt-to-income figures but not private sector. The concerns are slightly different but suffice to say that your usage of GDP as a scalar for private debt isn't a good metric and I hope you were aware of that but just went ahead with it because it is in fact easy to understand, which is always a plus.
3. my biggest quibble with this treatment of debt (and its so widespread I do not blame you in the least bit) is that indebtedness should never be considered in isolation. If the nonfinancial businesses and financial sectors in your chart had issued equity instead of debt, would they have shown up in your chart? no. Should you be worried about it anyway? Yes. what does that tell you about how reliable Debt-To-Income ratios are in assessing creditworthiness at the macro level? Its useless in isolation. I think people tend to overextend their personal finance analogies when they try to explain macroeconomics. This was the failure of the classical school and we should all remember that.]]> http://seekingalpha.com/article/131942/comments?source=feed#comment-472026 472026 Tue, 21 Apr 2009 22:46:54 -0400