Two Plus Two Publishing LLC Two Plus Two Publishing LLC
 

Go Back   Two Plus Two Poker Forums > >

Notices

Business, Finance, and Investing Making money, investing in markets, and running businesses

Reply
 
Thread Tools Display Modes
Old 11-27-2011, 10:44 AM   #76
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by Hielko View Post
I think that's the wrong way to value a company. It's not relevant how good of a buy MSFT was 10 years ago. The fact that the company has been able to grow intrinsic value and increased the dividend yield while the share price hasn't done much is exactly the reason why today it might be good value.
Agreed. I think it is funny that people buy purely on change in price (market cap). Finding something that has grown like gangbusters in the past is an excellent strategy if you own a time machine.

It is much more work (ok, just takes a bit of patience) to find something that has a decent chance of growing in price in the future and has limited downside. Seems to me that MSFT just isn't fashionable currently since there are so many more exciting plays to make that come along all the time (CRM, DMND, NFLX, GMCR, COH, CMG, AAPL, etc.).

Would be really funny if people were buying MSFT because its market cap had kept up with its earnings growth over the past 10 years.
BrianTheMick is offline   Reply With Quote
Old 12-06-2011, 09:53 PM   #77
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

I'm going to try to start reading more 10-Q/Ks. I got a few companies on my screen, but are there any companies you guys want to discuss?
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-06-2011, 11:12 PM   #78
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
I'm going to try to start reading more 10-Q/Ks. I got a few companies on my screen, but are there any companies you guys want to discuss?
Yep. On the "omg, it too cheap to pass up" front:

— Alpha Natural Resources (XNYS:ANR)
— American International Group (XNYS:AIG)
— Bank of America (XNYS:BAC)
— Computer Sciences (XNYS:CSC)
— First Solar (XNAS:FSLR)
— Janus Capital Group (XNYS:JNS )
— MEMC Electronic Materials (XNYS:WFR)
— Monster Worldwide (XNYS:MWW)
— Netflix (XNAS:NFLX)
— U.S. Steel (XNYS:X)
BrianTheMick is offline   Reply With Quote
Old 12-08-2011, 08:15 PM   #79
Xaston
Pooh-Bah
 
Xaston's Avatar
 
Join Date: Oct 2005
Location: UYD Nation
Posts: 4,441
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
I'm going to try to start reading more 10-Q/Ks. I got a few companies on my screen, but are there any companies you guys want to discuss?
I think (and own) CNRD, ITIC, DWA, DELL, and TSRA are all significantly undervalued with good assets and cash balances putting "floors" beneath the stocks price at some level not much further below where the stocks are at. I think you might agree on some and maybe can tell me why I might be wrong on some.
Xaston is offline   Reply With Quote
Old 12-08-2011, 08:49 PM   #80
Hielko
old hand
 
Hielko's Avatar
 
Join Date: Nov 2005
Location: alphavulture.com
Posts: 1,798
Re: Value Investing and Longer Term Investing

The companies I know something about:

JNS: I like it. AUM is down mostly because of markets going down, not because of outflows. Lots of cash flows, paying down debt.

BAC: Impossible to really value for me, but just based on how many people hate bank stocks I kinda like it.

NFLX: I don't like it. They have a huge amount of debt, spend a lot of cash buying back shares at sky high prices, and a it's questionable how succesfull the business model can be in the future.
Hielko is offline   Reply With Quote
Old 12-10-2011, 09:34 AM   #81
Leftwise
journeyman
 
Leftwise's Avatar
 
Join Date: Mar 2011
Posts: 248
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by Xaston View Post
I think (and own) CNRD, ITIC, DWA, DELL, and TSRA are all significantly undervalued with good assets and cash balances putting "floors" beneath the stocks price at some level not much further below where the stocks are at. I think you might agree on some and maybe can tell me why I might be wrong on some.
Regarding ITIC, I don't know much about title insurance, but do you have any idea why their provision for claims has been falling so sharply since 2008? I mean ~23%of premiums in 2008 (15.2M on 63.9M), ~13.5% in 2009 (8.4M on 62.3M), ~7.2% in 2010 (4.4M on 61.6M) and ~1.5% for the 3Q of this year (350k on 24M)… and although some of its been favorable revisions of expected claims for previous periods, which very may well be appropriate, a lot of the reason has been a decrease in an estimate in claims for policies written in their respective current periods.

I guess it could all just be housing bubble stuff, and like I said I don't know much about title insurance, but for some reason I feel like premiums written written would be more affected by something like that, not so much expected claims. And even if thats the case, and you can throw the really high #'s in 2008 out, why were estimates for claims against premiums written in 2010 significantly lower then those in pre-housing bubble burst years (2003-05)?

Also wow, i never want to buy title insurance, even if a standard claims provision is more like 10-15% instead of 1%, pretty sick house edge
Leftwise is offline   Reply With Quote
Old 12-10-2011, 12:41 PM   #82
ahnuld
Carpal \'Tunnel
 
ahnuld's Avatar
 
Join Date: May 2005
Location: buy side
Posts: 17,267
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by Xaston View Post
I think (and own) CNRD, ITIC, DWA, DELL, and TSRA are all significantly undervalued with good assets and cash balances putting "floors" beneath the stocks price at some level not much further below where the stocks are at. I think you might agree on some and maybe can tell me why I might be wrong on some.
I looked at TSRA. Didnt pull the trigger because the founder owns a sizable chunck and doesnt seem to care to pay out dividends which is obviously what I would want.

CNRD still plugging away and doing awesome, im going to write more about them soon.
ahnuld is offline   Reply With Quote
Old 12-10-2011, 12:43 PM   #83
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by Xaston View Post
I think (and own) CNRD, ITIC, DWA, DELL, and TSRA are all significantly undervalued with good assets and cash balances putting "floors" beneath the stocks price at some level not much further below where the stocks are at. I think you might agree on some and maybe can tell me why I might be wrong on some.
I am somewhat familiar with CNRD and think its a good pick from what I know. I printed out ITIC's 10-k and hope to get around to reading soon.

I was just looking at FRD. It looks attractive with a lot of cash and no debt. Also, they have two business segments and one has just turned around because they only have one customer who shut down a factory and reopened sometime in the last 2 years (from what I remember). It looks like it has a value of at least 100m and is currently trading at ~75m. I'm unsure of any catalyst other than an improved economy, but you'll collect a >4.5% yield while waiting. I have done all my homework here yet, but it is something I'm putting on my radar (ahnuld has a pretty good write up on his site about this company).

Also, I'm pretty sure I'm going to pull the trigger on NICK. It looks like it has a value somewhere between $18-24 and is currently at ~12. One thing I wanted to look at was competitors, but I couldn't find any in my quick look. Anyone know some subprime auto lenders?
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-10-2011, 01:30 PM   #84
ahnuld
Carpal \'Tunnel
 
ahnuld's Avatar
 
Join Date: May 2005
Location: buy side
Posts: 17,267
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
I am somewhat familiar with CNRD and think its a good pick from what I know. I printed out ITIC's 10-k and hope to get around to reading soon.

I was just looking at FRD. It looks attractive with a lot of cash and no debt. Also, they have two business segments and one has just turned around because they only have one customer who shut down a factory and reopened sometime in the last 2 years (from what I remember). It looks like it has a value of at least 100m and is currently trading at ~75m. I'm unsure of any catalyst other than an improved economy, but you'll collect a >4.5% yield while waiting. I have done all my homework here yet, but it is something I'm putting on my radar (ahnuld has a pretty good write up on his site about this company).

Also, I'm pretty sure I'm going to pull the trigger on NICK. It looks like it has a value somewhere between $18-24 and is currently at ~12. One thing I wanted to look at was competitors, but I couldn't find any in my quick look. Anyone know some subprime auto lenders?
ya FRD is looking to be pretty fairly valued to me now. Id rather own it than cash but I wouldnt buy it here with so many other cheap things out there.
ahnuld is offline   Reply With Quote
Old 12-10-2011, 03:08 PM   #85
SmileyEH
Carpal \'Tunnel
 
Join Date: Jun 2004
Posts: 8,038
Re: Value Investing and Longer Term Investing

Quote:
Anyone know some subprime auto lenders?
Carfinco in Canada.

Really confuzzled by that stock (you'll know what I mean in about 10 seconds after looking at their financials).
SmileyEH is offline   Reply With Quote
Old 12-10-2011, 04:26 PM   #86
ahnuld
Carpal \'Tunnel
 
ahnuld's Avatar
 
Join Date: May 2005
Location: buy side
Posts: 17,267
Re: Value Investing and Longer Term Investing

I met with the CEO sometime in July. Seems like an expensive version of NICK. Also they said very complementary things about NICK management, even though they dont compete.
ahnuld is offline   Reply With Quote
Old 12-10-2011, 09:31 PM   #87
Lucky LITE
old hand
 
Join Date: May 2009
Posts: 1,383
Re: Value Investing and Longer Term Investing

Ahnuld do you have a blog or any advice for good reads?
Lucky LITE is offline   Reply With Quote
Old 12-10-2011, 09:44 PM   #88
Xaston
Pooh-Bah
 
Xaston's Avatar
 
Join Date: Oct 2005
Location: UYD Nation
Posts: 4,441
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by Lucky LITE View Post
Ahnuld do you have a blog or any advice for good reads?
I'm pretty sure it's http://www.freenpv.com/
Xaston is offline   Reply With Quote
Old 12-11-2011, 01:50 PM   #89
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

Is there any easy way to get company's financials into Excel?
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-11-2011, 03:12 PM   #90
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
Is there any easy way to get company's financials into Excel?
You should be able to do so using the screener on your brokerage's website. Usually there is a button for "export to excel."

The only problem is whether the fields you are interested in is available for export. I'm curious as to what others are using...
BrianTheMick is offline   Reply With Quote
Old 12-11-2011, 03:18 PM   #91
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Any thoughts on long-term prospects for GLW?
BrianTheMick is offline   Reply With Quote
Old 12-11-2011, 05:33 PM   #92
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

Starting to build a checklist/questionnaire that should give a pretty good summary on my ideas. Here's NICK's:

What’s the company’s name?
NICK (Nicholas Financial)

Briefly, what do they do?
Invest in subprime auto loans

Is it cheap?
Yes

How cheap is it?
Current price is ~$12 with a value between $18-24

What makes it cheap?
Low Normalized P/E for a high return business

What is the downside/primary risks?
Deterioration of underwriting standards,not as many high return loans available. Low case of $10 a share if earnings stay normal and no growth.

How does leverage (fixed costs and debt) affect the company?
Fixed costs are branch offices, but according to the company, on average each branch could generate more loans (economies of scale would allow more profit relative to each branch’s fixed costs). Debt seems manageable and the company is unlevered relative to industry.

How can I measure how the investment thesis is progressing (e.g. margin improvement)?
Reserves for losses as a percent of gross ARs stay consistent. The company continues to make loans at a high rate.

Approximately how much of a return will a dollar invested into the business create?
A dollar reinvested in the company would go into ARs which generate >20%. Some money would be leaked in variable expenses (like incentive compensation).

If the number above is abnormally high, what competitive advantages does the company have that will protect this return?
Stricter underwriting guidelines, local branches should create local monopolies

What’s my take on management?
Great. Increased reserves in downturn and stayed profitable. One small criticism is that I’d rather see a buyback program rather than dividend.
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-11-2011, 06:55 PM   #93
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
<snip>How cheap is it?
Current price is ~$12 with a value between $18-24<snip>
Your $18-24 is arrived at quantitatively?

Do they have anything approaching a moat if economic conditions improve and one of the big boys with deeper pockets wants to go toe to toe with them in their core business?
BrianTheMick is offline   Reply With Quote
Old 12-11-2011, 07:26 PM   #94
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by BrianTheMick View Post
Your $18-24 is arrived at quantitatively?
Yes.

Quote:
Originally Posted by BrianTheMick View Post
Do they have anything approaching a moat if economic conditions improve and one of the big boys with deeper pockets wants to go toe to toe with them in their core business?
I thought I answered this at least partially in one of my questions but I should elaborate. They have local branches which allows them to look at factors beyond a simple credit score (e.g. job stability, interview impressions, etc.) This is much different than the rest of the industry where some companies may use call centers and credit scores to gain customers and others who securitize their products and don't have strict underwriting guidelines. Also, securitization creates a much more levered asset and NICK is not too levered compared to the industry.

A potential competitor may enter the industry by one of two ways. They can focus on operational efficiency, which would mean they most likely use call centers. Or, they can mimic the NICK business model of local branches. However, it would be a bad business move to create a branch in a place that NICK already operates so NICK should continue to see high returns in the places they operate.
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-11-2011, 07:46 PM   #95
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
YesI thought I answered this at least partially in one of my questions but I should elaborate.
You did, and yes, elaboration is good. I'm playing doubting Thomas below because I think it is useful, not to slam your analysis...

Quote:
They have local branches which allows them to look at factors beyond a simple credit score (e.g. job stability, interview impressions, etc.)
Making loans based on interview impressions is legal in Canada? Completely illegal in the US...

How is their salesforce paid? If on commission (rather than loan performance), I'd suggest that every interview is likely to go swimmingly.

Quote:
A potential competitor may enter the industry by one of two ways. They can focus on operational efficiency, which would mean they most likely use call centers.
All a competitor needs to do is offer an interest rate .1% below NICK's to steal all the business and/or NOT require a face-to-face interview. Whether this would be a good idea or not is another matter, but if NICK is healthy, a slightly more efficient competitor would be healthy undercutting them.

Quote:
Or, they can mimic the NICK business model of local branches. However, it would be a bad business move to create a branch in a place that NICK already operates so NICK should continue to see high returns in the places they operate.
I don't know if you have noticed, but restaurants tend to open across the street from each other. Same for car dealerships, doctor's offices, etc. The general business rule of thumb is that if you know an area is profitable for a competitor, you [i]should[/] open up an office across the street from them.
BrianTheMick is offline   Reply With Quote
Old 12-11-2011, 08:12 PM   #96
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by BrianTheMick View Post
You did, and yes, elaboration is good. I'm playing doubting Thomas below because I think it is useful, not to slam your analysis...



Making loans based on interview impressions is legal in Canada? Completely illegal in the US...

How is their salesforce paid? If on commission (rather than loan performance), I'd suggest that every interview is likely to go swimmingly.



All a competitor needs to do is offer an interest rate .1% below NICK's to steal all the business and/or NOT require a face-to-face interview. Whether this would be a good idea or not is another matter, but if NICK is healthy, a slightly more efficient competitor would be healthy undercutting them.



I don't know if you have noticed, but restaurants tend to open across the street from each other. Same for car dealerships, doctor's offices, etc. The general business rule of thumb is that if you know an area is profitable for a competitor, you [i]should[/] open up an office across the street from them.
The interview is part of the process, not the only part.

Incentives are based on performance not origination.

What you describe is the biggest risk with the company (if someone can duplicate the business model and be more efficient). This is completely opposite how the industry works though. If someone was operationally focused, they most likely would not build individual local offices. However, it is definitely a risk just one I assign a low probability to.
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-11-2011, 08:52 PM   #97
BrianTheMick
Pooh-Bah
 
Join Date: Mar 2006
Posts: 3,928
Re: Value Investing and Longer Term Investing

Quote:
Originally Posted by DOOM@ALL_CAPS View Post
The interview is part of the process, not the only part.
In the US, it is illegal for it to be any part of the decision making process in offering a loan or setting rates... (not related to the discussion, just a factoid)

Quote:
Incentives are based on performance not origination.
That is very very very good.

Quote:
What you describe is the biggest risk with the company (if someone can duplicate the business model and be more efficient).
This could be an issue. McDonalds didn't duplicate the business model of corner grocery stores, but it did/does effect revenues of corner stores...

Quote:
This is completely opposite how the industry works though. If someone was operationally focused, they most likely would not build individual local offices.
In the US, we have "buy here, pay here" car lots for those who are not financially healthy. No visit to a separate lender necessary. Would it damage your thesis if a well-capitalized version came to Canada? Any regulations that make this unlikely?

Seems to me that the lack of current sub-prime lenders (especially given the past overabundance of them and that demand for sub-prime loans hasn't changed by much) is good for business today. I'm nearly convinced of your thesis on the short- and medium-term prospects of NICK just by this fact.
BrianTheMick is offline   Reply With Quote
Old 12-17-2011, 02:34 PM   #98
DOOM@ALL_CAPS
old hand
 
Join Date: Feb 2010
Posts: 1,262
Re: Value Investing and Longer Term Investing

Looked over ASFI's 10-k and while I think the company is still very cheap, there are a few red flags:

- The company only purchased ~$70,000 worth of stock when they approved a $20 million dollar buyback. I heard that on the call they implied that this was all they could legally purchase which seems false

- The company bought $14 million in mutual funds. If cash is just going to be dumped into a mutual fund, why not just give it back to shareholders?

- The company invested $3.8 million in the litigation funding business

- There was a related party transaction: "On December 12, 2011, the Company and A. L. Piccolo & Co., Inc. (“Piccolo”), which is owned by Louis Piccolo, a director of the Company, entered into a Consulting Agreement, pursuant to which Piccolo will provide consulting services which include, but are not limited to, analysis of proposed debt and equity transactions, due diligence and financial analysis and management consulting services (“Services”). The Consulting Agreement shall be for a period of two years and Piccolo will receive compensation of $150,000 per annum payable monthly, a bonus of $25,000 per new transaction closed by the Company with Piccolo’s assistance (excluding any potential pending transactions), and 30,000 options per year, with such options vesting in three equal annual installments on the first, second and third anniversaries of the grant date."
DOOM@ALL_CAPS is offline   Reply With Quote
Old 12-17-2011, 08:25 PM   #99
Hielko
old hand
 
Hielko's Avatar
 
Join Date: Nov 2005
Location: alphavulture.com
Posts: 1,798
Re: Value Investing and Longer Term Investing

1) I think this item is the biggest issue, and if it doesn't improve the next quarter I'll probably reduce my position. Given how big a stake the Stern family has in ASFI it would suprise me if they don't want to execute a policy that should improve shareholder value. But what they have done so far wrt buybacks is pathetic, and what counts are actions.

2) I don't think it's great, but on the other hand; just a bunch of cash doing nothing is also not great.

3) Think this should be expected: they have made it clear that they want to do something with the cash, and looks like they are at least conservative and start small.

4) Not a big fan
Hielko is offline   Reply With Quote
Old 12-17-2011, 11:41 PM   #100
PurpleStars
banned
 
Join Date: Dec 2011
Posts: 9
Re: Value Investing and Longer Term Investing

What are people's opinion on Urnaium investing , namely in the mining sector . This industry took a huge hit after Fukushima , and negative press seems to have affected these stocks prices more than any other factor , infact China and India are in the midst of building a lot more (by 2020 there will be a lot more up and running)Germany said they would cease nuclear power however that may have been more of a PR move than anything ...

Some of my picks have been URZ , DNN And CCJ . A large % of my portfolio is in uranium mining and i have thus far done quite well over the past couple months . Opinions ?
PurpleStars is offline   Reply With Quote

Reply
      

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Forum Jump


All times are GMT -4. The time now is 04:41 AM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Search Engine Optimisation provided by DragonByte SEO v2.0.33 (Pro) - vBulletin Mods & Addons Copyright © 2017 DragonByte Technologies Ltd.
Copyright © 2008-2010, Two Plus Two Interactive
 
 
Poker Players - Streaming Live Online