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immfunds1

immfunds1
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  • Stay Away From American Capital Agency! [View article]
    mREITS represent a "desk" or "department" or "business unit" of a dealer in securities. Before mREITS there was GS or MS or DB or BSC or LEH or CSFB and so on...6-8x leverage hedged out to 1 - 2 years duration over +/- 200 bps range is really quite hedged. This is what a real hedge fund ( a hedged book) looks like. AGNC in particular represent best of breed managers and investors. The true leverage employed by big dealers or banks still dwarfs 7X and they all have significant non-linear exposure. If an investor can stomach any financial other type of financial institution, they should rationally be able to stomach mREITs. Tossing AGNC but owning any other financial institution exemplifies cognitive dissonance. There are many very impressive investor/managers in the mREIT space, relative to say many financial institutions. Investors are getting best of breed hedge fund/ prop trading managers for the price of a low cost mutual fund. Valuentum apparently has little understanding of the company, its business model, the security, the industry, or the risk reward. Don't take my word for it. J Gundlach of Doubline characterized the space as "best value" about one year ago and the space has appreciated > 15% on a TR since then. Most investors of all types simply don't understand how to think about mREITs. Greater transparency should by mREITs themselves should help. AGNC is the leader here too.
    Oct 30, 2014. 04:34 PM | 16 Likes Like |Link to Comment
  • Not Quite A Death Spiral But A Resounding Bayesian No To IBM As Odds Increase That Buffett Got It Wrong [View article]
    No other company has IBM's reach into the enterprise, military and government spaces. More so than DELL, HP, MSFT or ORCL. I'm long and not happy, but this is when you are supposed to buy more. I'm long and long term. I almost bought more yesterday. Dividends and buybacks help. Don't know after this miss. I still think the company is moving in the right direction making the tough decisions, taking difficult actions.
    Oct 20, 2014. 03:31 PM | 12 Likes Like |Link to Comment
  • Accounting Armageddon: Should You Dump Your American Realty Stake And Run For The Hills? [View article]
    AFFO for 2014 was stated incorrectly. AFFO is not a GAAP measure. It's just some metric various analysts have developed over the years, but, its non-GAAP. Hence, its apparent miss-use may not be relevant. The former Officers will argue that they used their discretion and at most they made an honest mistake. Investors need to drill into the compensation plans to ferret out the incentives for this type of honest mistake. Are executives compensated on AFFO growth for instance? Although the news is "bad" I think the Press Release reads well. The Board and its audit committee are taking appropriate actions. The CFO and Chief Accounting Officers resigned and have been replaced. The Board and Audit will look back and into FY 2013. Some large stake hedge fund has become active. Dozens of plaintiff lawyers have algorithmically filed lawsuits. A Class Action lawsuit will evolve. The good news here is that the Board, Audit Committee and its "independent advisors" will continue to do their job. Things sound ominous. Things could be really bad, or, not so bad at all, which makes it all very interesting. I have no position, but ARCP has been on my radar. I don't expect a quick resolution. could be several months. But, on balance the situation attracts me as a potential buyer.
    Oct 29, 2014. 06:04 PM | 8 Likes Like |Link to Comment
  • Argumentum Ad Absurdum: What If Herbalife Made Coca-Cola? [View article]
    Interesting. You make several good points. However, you and Ackman fail to make the most important point of all, namely, the buyer's right to make the bet. In the course of making the bet, the buyer becomes educated in many constructive ways.The buyer learns about direct selling, product mark ups, distribution, pricing and incentives hierarchies, shipping, customer service, product quality and manufacturing, branding, communication among many other aspects of managing a business. Economic arguments aside, it's a great education. I applaud HLF, Mary Kay, so many others. So what if some supposed "poor little guy" supposedly looses a few hundred bucks buying supposed overvalued inventory? Why should it be the business of policy makers to interfere with that person's hope and inspiration?
    Apr 23, 2014. 11:53 AM | 8 Likes Like |Link to Comment
  • Prospect Capital: Massive Insider Buying In This High-Yielding BDC [View article]
    Insider buying is a strong signal. They know their business better than anyone. When they bought, they bought at or around NAV. Analysts righty note that PSEC is currently not meeting its dividend obligations and so emotional investors liquidate at below NAV. Other storm clouds also have loomed. Independent thinkers need to assess whether management can improve operations sufficiently to offset the probability of a decline in payout.
    Oct 23, 2014. 04:34 PM | 7 Likes Like |Link to Comment
  • Argumentum Ad Absurdum: What If Herbalife Made Coca-Cola? [View article]
    I was once a distributor of a company like this in the 1970's. there were > 100 people at the presentation. I bought ~ $200 worth of inventory and ended up using it myself or giving it away. So what? It was informative. It was an experience. Yes. Very few people will make it. So what? The product is real and not toxic. Consumers can judge for themselves. I just ate a bag of peanut M&M's instead of a so called legitimate "protein bar." So what? It's my choice. Ackman's 300 page mass-market analysis fails to address a citizen's right to choose. Legal remedies already exist. Ackman himself publicly admitted that he initially failed to persuade a major law firm to his point of view. He apparently went back several times and finally the firm relented. Of course, this is just about paying the law firm enough money to lobby ambitious and zealous regulators with a straight face. Yes. His arguments seem valid, but they also negate at least some of the brand proposition, the inspiration the distributor feels. It's not a "con" because a real product is exchanged. Preacher's con their flock. Wall Street con's each other and Main Street too. Ackman doesn't really care about the little guy. That's not his job. His job is make money through any legal means for his investors. Apparently in his mind that includes manipulating the media, legally of course. -- I fail to understand the importance of distribution methods of "health bars" and "protein shakes" as a matter warranting Ackman's attention or any regulatory official's attention in the face of other consumer or industrial products with real toxicity like tobacco, alcohol, drugs, carbon and financial services among which include OTC derivatives that Ackman widely uses and in this case to "own" OTM puts in HLF. I think Ackman has crossed the line, has no public policy interest, is net wrong on balance, and should not be using his PR clout to destroy employment, consumer choice and an individual's dreams and opportunity. Overreaching government does a good enough job at that. If Ackman is concerned about social welfare, why not tackle coal, or fracking? ...Let the free market decide.
    Apr 23, 2014. 08:31 PM | 6 Likes Like |Link to Comment
  • Time To Take Profits In AIG [View article]
    If Greenberg wins his lawsuit against the federal government for $25B, how will that victory map into AIG shares and AIG dilution? Please explain.
    Nov 5, 2014. 02:49 PM | 5 Likes Like |Link to Comment
  • Liquidation in mortgage REITs picks up where it left off on Friday, with nearly the entire sector lit up bright red. Leading today's decline is CYS Investments (CYS -4.6%) after being cut to hold at Wunderlich. No details are available, but presumably the analysts there read the papers: interest margins are declining and mortgage refinance activity (prepays) is on the rise. [View news story]
    This sell off is utterly idiotic. So what if NIM and refi's on on the rise? Look at the yeilds vs any other fixed income or preferred alternative!! So what if yeilds are even cut in half? The credit quality is high and increasing...this isn't a bad sign.
    Oct 15, 2012. 10:16 AM | 5 Likes Like |Link to Comment
  • Sovaldi Versus Abbvie Combination: Analysis Of Abbvie Combination Impact On Sovaldi Market Share [View article]
    I wish all the articles in SA were as lucid. Thanks.
    Dec 2, 2014. 09:16 AM | 4 Likes Like |Link to Comment
  • Chicago Bridge & Iron Shares Are Cheap, But I Am Not Buying [View article]
    "the average U.S. engineering stock has a beta of 1.20, demonstrating that firms in this industry are economically sensitive investments." and CBI has a beta of 1.7...

    1) beta is time series dependant.
    2) beta generally measure the historic price volatility of an asset to a broad market portfolio, also time series dependant. Volatility is the SQRT of variance and the broad market can be any collection of assets...~ 8% of the SP500 is merged away each year on average.
    3) beta can be computed on an expected basis but it's far more labor intensive.
    4) Your comment suggest that CBI's price change has been driven more by economically sensitive factors than other peers. If so, why? Will it continue?
    5) Do you expect that CBI with a PEG of <.6 will fall 1.7x more than the SP 500 in a down market?
    6) Isn't a good move to be leveraged up at the bottom of a cycle?

    I'm long CBI at ~ $53.00.
    Nov 25, 2014. 09:36 AM | 4 Likes Like |Link to Comment
  • J.C. Penney Is A Lotto Ticket [View article]
    So, you balanced DCF model suggest $10 in three years. Not bad. That return will be substantial higher than any fixed income investment and the current share price is below BV. What does the same DCF approach suggest for a one and two sigma positive set of events? Suppose they shutter 20% of their stores, suppose the so called trickle down effect begins to take effect, suppose median incomes increase finally, suppose household formations and birth rates tip slightly positive, suppose energy prices don't increase domestically from here but that the US increases energy exports, suppose meaningful headway in entitlements and taxation matters occurs over the next 5 - 10 years....what happens to valuation then?...It explodes to the upside, right?! Obviously this is no "lottery ticket!" This term is insulting and highly inflammatory. The downside is known. Why don't you change a few drivers in your model and run the numbers again?
    Nov 11, 2014. 11:07 AM | 3 Likes Like |Link to Comment
  • J.C. Penney: Have We Already Seen The Bottom? [View article]
    I'm long JCP long term post RJ at lower prices. Big believer in the brand and the turn around. Haven't shopped there since mom took me as a 10 year old. Went to JCP site to shop to check out pants (jeans) prices...Why go to JCP?... Access, quality, price, service on everyday apparel...What did I find. Great prices! Traditional styles and materials! I'll buy something to check out digital service and returns. I expect an Amazon quality experience...Yes, everyone is doing omni channel and retail is competitive...Great...... has a national footprint...the middle class will come back with their hard won dollars...the 1% will be just fine...leave that for RL...All else equal JCP will take market share from weaker merchants (SHLD)...JCP should perform well operationally. It constitutes a quality and value experience for working and middle class consumers..By my calcs, JCP trades at a BV discount and smart money thinks its DOA...We'll see how the holiday's play out, but, assuming financial distress is off the table for the time being, the odds favor a higher share price.
    Nov 10, 2014. 09:02 AM | 3 Likes Like |Link to Comment
  • Prospect Capital: Massive Insider Buying In This High-Yielding BDC [View article]
    I was a LT holder of PSEC at ~ $10.00. I sold 100% at ~ 9.50 recently. The Soros and Greenblatt ownership hardly constitute a "position." PSEC is probably part of a quantitative long/short strategy. It means nothing to either of them if so. As for insiders, they take a very long term view. They bought because they wanted to send a signal to the market and they apparently did no before bad news. Management is not always right, but they do know more about their company and public investors. As for undisclosed hedging like buying puts, what would be their incentive? IMHO, PSEC is dead money for awhile. That's why I sold it. I expect dilution and distribution cuts.
    Oct 29, 2014. 09:51 AM | 3 Likes Like |Link to Comment
  • 2 Big Elephants Afraid Of A Mouse: What Apple Is Not Telling You About BlackBerry [View article]
    Well said.
    Jul 29, 2014. 06:08 PM | 3 Likes Like |Link to Comment
  • There Is A Lot Of Misinformation About American Capital Agency's Q3 Earnings - They're Decent [View article]
    Good points. Frankly, I was disappointed and I expected strong improvement in BV. I think them overshot. But, this exemplifies the challenges in the core business model.Humans make the marginal re-balancing decisions. I hope they're not being shaken by a need to please. They're very solid, successful and competent managers. As investors we need to let them exercise their discretion. That said, I'm a bit disappointed with last quarter's performance and see real value in the space.
    Oct 30, 2013. 01:18 PM | 3 Likes Like |Link to Comment
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