Theodor Tonca

Theodor Tonca
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  • Is There A Merger Arbitrage Opportunity In Cleco?  [View article]
    There does seem to be some underlying safety in Cleco as a standalone entity, regardless of if the proposed transaction occurs or not.

    - Fixed interest and defined benefit charges covered more than 2x in each of the past 5 years plus.

    - Stable, increasing dividend over past 20 years (from 1.7% yield in 1995 to a little over 3% today).

    - Serves over 200,000 individual customers thus passing the minimum size test for a regulated utility investment.


    Company does have some un-capped off-balance sheet commitments and guarantees to operating subsidiaries and affiliates which is somewhat disconcerting, but the majority of their contractual agreements in this respect are relatively small and fixed (under $5 Mil. USD).

    Arbitrage opportunity still yields approx. 4.9% on an absolute basis as i write this.
    Jan 26, 2016. 04:13 PM | Likes Like |Link to Comment
  • Jim Grant Explains An Equation For How To Value Gold  [View article]
    I agree with Jim Grant's assertion, but there is another (not as simple) way to value gold.

    That is based on production, since gold is a rare mineral which has to physically be mined out of the ground its quantity is naturally finite.

    Like all commodities, be it food stuffs or oil, etc. the less there is available (as inevitably is the case over time) the more it will cost.

    Major gold field discoveries have slowed considerably this past decade, new discoveries are down over 30% in the past 12 years compared to the prior late 90's period.

    This is coupled with the fact that gold's industrial use has grown substantially over this same time period. Gold's industrial demand increased by approx. 20% in 2010 alone over the previous year.

    There is also the value of labor which goes into mining, refining and smelting gold which adds value, just as a fine tailored men's suit costs more than one off the rack at a department store because of the more expensive material and labor which went into making it.

    The fact that fiat currencies are being devalued around the world in addition to the points above is simply icing on the cake.

    Gold's value is essentially its reproduction value or what would it cost to come up with a replacement with identical features and uses? I think if one thinks about that they will find that cost to be much, much more than the present $1,800 per ounce gold price.
    Sep 21, 2011. 01:06 PM | 3 Likes Like |Link to Comment
  • BofA Revisited Following Buffett's $5B Cash Infusion  [View article]
    I looked at BAC myself back in early 2009 when it was even more unpopular than it is now.

    The trouble was attempting to find even an approximate value for its assets as they are represented on its balance sheet.

    With the relaxation in mark to market by the FASB, large derivative and MBS, CMBS holdings i am simply unable to ascertain even a ball park fair value figure for these securities and therefore unable to make a reasonable asset based valuation.

    There is also the question of the character of management. As Warren Buffett himself has stated in the past: "integrity, intelligence, and energy. And if they don't have the first, the other two will kill you."

    Judging by their lending standards and practices of the past decade i fail to see the most important part of the equation: integrity.

    Also, at its present size and presence i doubt there is much growth and earnings upside left to justify purchasing a stake in the business as it stands today.
    Sep 7, 2011. 06:20 PM | 1 Like Like |Link to Comment
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