Wednesday, April 27, 2011

Other People Are Looking At SYMS.

Here is a good article from contributor Michael Glikstein at gurufocus and here is a really in depth PDF file that his research company (G Asset Management) published.

To readers of this blog, the undervaluation of SYMS comes as no surprise, as much of the same research had already been published here, on RagnarIsAPirate... almost a month and a half ago!

The pickup in the volume of SYMS shares has been an interesting thing to watch.

EDIT: now says that SYMS is attractive as well (and, has historically), on a p/b ratio. I guarantee you that as far of the liquidation value of the assets alone go, Syms is by far the safest.

Disclosure: I am long SYMS. This is not advice of any kind. Always do a ton of your own research when so much as thinking about anything that I write, talk, or even think about doing.

Tuesday, April 26, 2011

Jack Conway...

So, it seems that that Attorney General in my state wants to be in the public eye again, after getting destroyed by Rand Paul... Even if he is doing this PSA to be a good guy (actually, I am serious here. From what I can gather, he is the kind of guy that you would be happy to share a beer with), I am still firmly on the list of people that thinks he is a political jack-ass. :)


All I have to say at this article is "wow." Which is neither a positive or negative statement, just one of sheer awe. Actually, I take that back. I kind of resent that my government decided to invest in such a shitty company on my behalf. I, and the rest of the nation make decisions daily as to whether or not we invest in companies...

Frankly, I don't think that I could get drunk or drugged enough to ever think it was a good idea to invest in a company like Chrysler.

Some snippets from the article:

The refinancing would allow Chrysler to repay $5 billion that it still owes the U.S. government and $1.6 billion that is owed to Canada, money the governments loaned the automaker to keep it alive and get it through a 2009 bankruptcy filing. Chrysler has been trying for months to refinance the loans, which have high interest rates and cost the company $1.2 billion in interest payments last year.

Marchionne, who also runs Italy's Fiat SpA, said last week that Fiat will spend $1.3 billion to raise its ownership stake in Auburn Hills, Mich.-based Chrysler. But to do that, the company must first repay the government loans.

The U.S. government owns 8.6 percent of the company, a United Auto Workers health care trust fund owns 59 percent and the Canadian government holds 2 percent. The governments got their stakes after handing Chrysler a total of $9.4 billion in bailout loans. All owners could get more money back when the stock is sold.

Chrysler lost $652 million in 2010, but that represented a huge improvement over its staggering $8 billion loss the year before. Marchionne said he expects to report net income of $200 million to $500 million this year.

This sort of deal not only wreakes of political agenda but also shows the ineptness of government officials to appropriately allocate capital. While the government will say something to the effect of "well, we made money, and saved the economy in doing so." I say "Bullshit!"

If the federal government had thrown darts at common stocks around the time that they invested in Chrysler, they would have made more money. Additionally, due to how our bankruptcy laws are (as are highlighted in this book), the economy would not have crumbled in the event of an implosion of a few defunct car companies.

Ron Paul For President... again.

Here, we see the guys at yahoo talking about Ron Paul running for President.


International Baler: Still a value (even when it trades at a dollar a share)

Now that International Baler has gone to $1.00 a share (even if it is only on a handful of shares), since my original write up at .50/share let's review some things, as I have not written on the company in a while.

In the most recent quarterly filing from International Baler, we can see that the company has done a tremendous job in the past few years...

Year over year, the company's sales backlog has more than doubled, going from a nicely profitable $1.59 million to an astounding $3.295 million (more than what was recently the company's market cap)! Additionally, the company has generated some nice amounts of cash, as is a result of said backlog and customer deposits. I would imagine that the large order would be a relatively high margin, niche type of baler, such as the larger synthetic rubber balers that the company has sold all around the world; to places such as China, Russia, and the like.

Presently, their income stream has been rather nice, with the company having a P/E of ~16. While that isn't super low, it isn't bad, considering that over half of the company's market cap consists of cash. Remember, the company is still debt free.

With the glut of cash on the balance sheet, I wouldn't be suprised if the company would instate a dividend, or even spend some money to expand and improve their facility. When I went to Jacksonville to see the facility, I was skeptical that I would actually be in favor of such a project (which has been mentioned in previous annual reports), however, once I saw the efficiencies that having new cranes, more covered space, and the like would have, I was immediately won over. If the company would be able to not store things outside, where they generate surface rust, which needs to be cleaned, that alone would make the facility run more smoothly and profitably (take a look at the facility on Google Maps).

As another option, the company could always be taken private by the controlling shareholder. In that event, I am sure that there is no way that the company could ever be taken private below book value; additionally, as long as the company is earning money (which, historically, it does a great job of doing) they will have to be taken out at a nice premium to book.

There is presently an outstanding lawsuit, however, it has been turned over to the company's insurer, which, should protect the company from any significant losses.

I am not shocked one bit at the recent developments. The company is top notch, with a great product and wonderful management. I am happy to own shares in the company, as even at a dollar a piece, they are still undervalued. Stay tuned for more developments from these guys, as it will be really fun to see what revenue and profitability are in the coming quarters!

Lastly, there is a book called "The Goal" talks a lot about smartly making things efficient, which, is along the same lines of the type that the company is going for. As an example, making a machine in a production line 35% more efficient, can quite often make no improvement to production, if the process taking place afterwards has no room for better performance. Thanks go out to my brother for telling me about the book.

Disclosure: I am long IBAL. This is not advice of any kind. Always do a ton of your own research when even thinking about anything that I do, say, write, or so much as think about.

Thursday, April 21, 2011

Apple is now big brother.

Apparently, Apple is using the new Iphone OS to track people...

Kinda gives their 1984 "Big Brotheresque" commercial a new meaning, right?

Given the familiar subject matter of my last post, I think we may be seeing the new generational divide emerging... I am guessing that I may be one of the last people who is very bothered by this sort of tracking, whereas future generations (people who are, say, in elementary school), will wonder why they wouldn't want their cell phone to keep track of them.

EDIT: It seems that this quote from this article gives my theory some traction:
"Autumn Bradfish, 20, of Lake Zurich, Ill., poses for a picture at the Iowa Memorial Union in Iowa City, Iowa. Bradfish said she had heard little about the reports of her location being collected on her iPhone and she said she was not particularly concerned about the practice. "If they use it just for ads, I don't see that as a problem. Facebook does that. If I'm going to have ads thrown at me, they might as well be relevant to my location."

Wednesday, April 20, 2011

Cell Phones vs. Landlines.

Here is an interesting article about poor people dropping landlines in favor of cell phones.

My reaction when reading it was : "People still use landlines!?"

I would be interested to see what the demographics, age wise look like for this. Now that I am finally old enough where a good deal of my friends have, what I will refer to as a "real" job, I know no one that is my age, who actually has a land line phone. Hell, I've had a small rental home business for going on 6 years, and have always run it from my cell... Actually, I'd have it no other way.

There is a generational divide here. My mom, still doesn't give her cell phone number out to anybody except for close friends and family. It probably just goes to show that younger people, who have been exposed to constant updates on facebook and such, not only want, but also need constant social media stimulation to function. My mom, on the other hand, hates the idea of being contacted at anytime.

Really, it's kind of comical, now that I think about it. Just 3 weeks ago, I was hiking in the middle of nowhere, and was able to take a call on my phone, regarding a rent house... How much of human history has that been possible for?

Chimps vs. Humans.

I think this video does a good job of showing human learning. What do I get from it? We do some really stupid things; in fact, it isn't a stretch to think that we do very similar things in adulthood (h/t to Kent on this one).

As a side note, I would be really interested to see how chimps that would have been roughly at the same developmental level as the human, would have fared at the task.

Monday, April 18, 2011

US Outlook Cut.


We totally deserve to have our credit outlook cut. Who in their right mind would want to lend us money?


Our Treasury Secretary is confident that we won't lose our AAA credit rating. He has more faith than I do. In light of his statement, I am more confident than ever that we will lose it.

Tuesday, April 12, 2011

Another Reason Why My Senator Kicks Ass.

Ironically, it's because he doesn't like for our country to kick another country's ass, without our representatives debating the matter first.

Monday, April 11, 2011

More Gold for Nevada Gold.

Nevada Gold has seen a substantial increase in shareprice, but is it still a value? I believe so.

Item 1) The company is now profitable- which is completely expected due to previous filings and conference calls. Additionally, the company isn't done improving operations; which they have historically been excellent at! If you take the earning of last quarter and extend them to the whole year, you are looking at a P/E of under 40 (while still having a p/b that is well under 1). Again, this, to me, seems reasonable when looking at how they just acquired the casinos in the past year, and have only been reporting their results for 2 quarters. Turnarounds take a lot of time, and these guys are improving operations in a way that would make Sardar Biglari look like a turtle! As noted here, this is no small feat.

Item 2) There is a decent chance that gaming laws in Washington State will change, which has the potential to significantly help the company. Given that the operator has 13% of the mini casino market, this is REALLLLLY nice. Just look at this chart to see the gross receipts, and where Nevada Gold's properties lie on the list...

Let's say that the article is right, and the additional gambling machines will bring in $190 million to the state. With an effective tax of ~1/3 of revenue generated by the machines, this means that there will be ~$570 million in revenue coming from said machines. If UWN gets ~13% of that, as that is the share of the mini-casino market that they have claimed in the past, we are looking at ~$74 million in revenue for UWN. If they can achieve a super low 5% profit margin (which is below the industry average), we are looking at $3.7 million in new profits for a company that is presently trading for just over $21 million. That number alone makes the company compelling, even if you value the rest of the business at nothing... In which, there are very valuable assets, and as I have written about here, some super potential on the acquisition and development front.

I will note that this is an overly broad caculation, and, you should change the metrics of it as you see fit. Additionally, I don't believe that the state will generate the type of revenue that has been estimated in the article (they never seem to). Furthermore, it is important to realize that when people are not spending money on video machines, as is currently the case, they will be spending it in the pre-existing casino operations, so, there may be some self-cannibalization of the company's business, or more entrants to the market.

Regardless, even if the company is forced out of one of their casinos, they will do well in this new environment. As the article points out, just a single city gets 450 jobs and $2.1-$2.4 million in revenue from gambling. With state and local budgets in such a tight spot, can the state (or even this locality) afford to not be as accommodating as possible to gambling in the area? I think not.

Item 3) Insiders are buying, and, they are buying at a recently high price.

Disclosure: Long UWN. This is not advice of any kind. Always do a ton of your own research in regard to anything that I say, write, do, or so much as even think about!

Thursday, April 7, 2011

Syms Update: New Real Estate Info.

I recently gained knowledge of another 2 owned Syms locations. One is in Tampa and the other is in North Randall, Ohio (which, on Google Maps, appears to be for sale). The Tampa location has an assessed market value of $2.765 million, while the 2 parcels in Ohio are assessed at $3.79 and $.154 million.

This only furthers my thesis that the company is significantly undervalued based on the real estate of the company alone. Additionally, we are getting ready to see some of the effects of the Filene's Basement acquisition in the coming quarters. Over 200 unneeded employees were laid off in late January and the company hired a Chief Integration Officer last year. As we saw with Steak 'n Shake, turn arounds take time (even with a guy as shrewd as Sardar Biglari!), but, are often worth the wait.

Lord willing and if the creek don't rise, I plan to attend the company's annual meeting this year... So, look for my notes sometime in mid July.

Disclosure: Long Syms. This is not advice of any kind. Always do a ton of your own research when so much as thinking about doing anything that I do, talk, think, or write about.