Wednesday, September 28, 2011

The Economy's Coffin Corner

At times, it seems like our government in economy is at a "coffin corner".

From my vantage point, it doesn't seem like the government can stimulate the economy much more than it already has, without quite literally flooding the streets with money. Additionally, with the downgrade of US credit, it is hard to see there being the borrowing that we have historically ben used to. Yet, on the flip side, it doesn't seem as if they can cut off the Keynesian spending binge by pulling trillions of dollars out of the economy- printed, borrowed, or otherwise, without some pretty disastrous effects.

Lost decade? Take a look at a chart for the S&P: we have lost the better part of 15 years. That said, Dell and Microsoft trading at single multiples of earnings should make for a nice bull case. Individually, there are a ton of really nice stocks out there.

Disclosure: None. This is not advice or a recommendation of any kind. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.

Monday, September 26, 2011

Japanese Businesses Are Worth More Dead Than Alive...

Here is a link to a great article written by an e-mail buddy of mine. While I have no investment (or present plans to invest) in Japanese companies, Jake has put together one of the most thought out pieces that I have read in a while.

Disclosure: None. This is not advice or a recommendation of any kind. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.

Buffett Buys Back Stock.

This is one of the most exciting things that I have seen, and, I am not even a shareholder of Berkshire! I am getting ready to dismiss what the crowds say, when they start chiming something to the effect of "Warren Buffett is a hypocrite... he once said that he wouldn't buyback shares due to it being unfair treatment of BRK shareholders!"

Yeah, whatever...

Anyway, this repurchase plan is exactly the kind that I would institute: indefinite, and with no cap as to the amount that can be repurchased. It is nimble and from the wording of the press release, Berkshire (surprise surprise!) actually cares about how the capital is deployed- as in, they care if Berkshire is a better investment than, say, buying some company in India or even additional shares of Johnson & Johnson.

As I have long said, repurchases, just like issuance of stock for an acquisition, is all about what you pay (or give) versus what you get in return. In this case, BRK is obviously going to be getting more in intrinsic value than it pays out of it's hoard of cash.

Does this make me want to go long BRK stock? Well, I am a lot more inclined to now than I was yesterday, however, the ultimate answer is no. Simply put, while Berkshire is seemingly almost always undervalued for the past few years, I keep finding better opportunities. Plus, when it comes to growing earnings, book value, and a host of other metrics that value guys look for, Buffet and Berkshire have constraints due to the large cash hoard that they have. I, and every single company that I invest in, don't have that, yet, they are on sale significantly more than Berkshire is.

That said, if I had a few billion dollars under management, I would probably have already thrown a good deal of money at BRK.

Disclosure: None. This is not advice or a recommendation of any kind.

Thursday, September 22, 2011

Faster than the speed of light.

It's looking like something may actually be able to travel faster than the speed of light.

I hope to God that these claims are true... If for no other reason, than to show just how stupid humans really are. For a skeptic of everything such as myself, it's always nice to see a pillar of the scientific community potentially being torn down.

The Syms Legal Battle Continues On...

With Syms, there always seems to be some sort of wrangling going on... The recent court battle is no exception.

A few weeks ago, Judge Thomas Oliveri gave an order for Syms to turn over it's book to Esopus Creek (Page 1, 2, and 3 of said order)... This was after the company and the activists went back and forth in the courtroom over keeping the company's books hidden from shareholders. When the judge ruled for the plaintiff, Syms immediately requested a stay, which was denied on the spot.

Now, it seems that the parties involved in the case are still going back and forth as an agreement has yet to be reached. Due to the judges scheduling, it seems that there won't be any more clarity until the first week of October. With all of this said, the case has yet to be appealed.

This is particularly interesting, as, during the original hearing on August 1st, it was made known (at several points during the hearing) that there is the potential for a derivative lawsuit against Syms. Here is a quote from Judge Oliveri in the case:

"And the plaintiff seeks to examine books and records of account and minutes of Syms' in order to investigate potential mismanagement of Syms and to investigate the filing of a derivative action."


In addition to this quote from the case, it is reassuring for shareholders everywhere that a case like this (which references club deals and LBOs, similar to that of what Syms could, and arguably, has tried to do) is getting some life breathed into it by a federal judge. This combination could prove to be a catalyst coming to fruition much sooner than I had originally expected... Though, with that said these court cases can go on for a long time. In the meantime, the company is trying to revitalize operations... Plus, there is the mound of real estate that is tremendously understated on their books!

From where I sit, with Syms comfortably selling below tangible book value (and, with what appears to be room to bleed for a while) shareholders presently have a nice margin of safety... Everything else- the activism, the chance of a management buyout, and the chance of a turnaround, is purely icing on the cake that isn't paid for when buying the stock.

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

Wednesday, September 21, 2011

Monday, September 19, 2011

Interview Questions for the CEO of Nevada Gold.

Readers,

I will be interviewing Bob Sturges, the CEO of Nevada Gold on Friday and will be posting the interview shortly thereafter. I thought it would be interesting to ask him some questions from the readers of this blog, so, feel free to email any to ragnarisapirate[at]gmail.com

Disclosure: Long UWN. This is not advice of any kind. This is not a recommendation of any kind. I have received nothing to write/post these notes. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.

Monday, September 12, 2011

Brief Update (IBAL and UWN).

I just read International Baler's quarterly... about all I can say is: "Wow... fucking amazing."

Well, that isn't exactly all that I can say.

But in all seriousness, these results are spectacular and totally exceeded my expectations for the company. Just look at the backlog of $4.7 million. Next quarter is going to be great. With their NOLs getting ready to be eaten up (potentially, in a quarter) I won't be a bit suprised if they will be in play to be taken private by the controlling shareholder. After all, it could be done at a significant premium to today's market price, as the company has a glut of cash that could be paid out to Leland Boren; he just needs to buy under 1/2 of the shares... If the share price doubles for the buyout, then he would effectively only have to pay ~$4 million dollars, net of the cash on the balance sheet for the remaining shares. And, that is a number that doesn't include customer deposits, significant amounts of inventory, cost efficiencies of not being public, and a fair amount of accounts receivable...

Literally, the share price could double and he would be getting a good deal the company, especially with the bright future of the baling industry.

Nevada Gold (UWN) is reporting on Wednesday, and has a conference call the following day. I expect good things from them as well. They are a turnaround that makes a whole lot of sense to me and I have been desperately trying to get ahold of shares. But, alas, I am having trouble getting my orders filled.

It will be interesting to see how the market will be reacting to both IBAL and UWN. I won't be shocked if they continue to lag in their march towards intrinsic value, as I think that often, events tend to not be appreciated enough. As I have said before with UWN, right now, with last quarters run rate, you are basically buying the company for ~20x earnings. While on the face of things, this isn't exactly cheap, you are getting a company that is growing like crazy, is buying great properties that they can run efficiently, and a glut of other catalysts where, if say 2 or 3 of the many would occur, you are looking at a stock that should probably trade for multiples of what it is presently at.

And the best thing about UWN, is that everybody and their brother seems to hate them. In all the emails I have received and the many conversations that I have had 2, maybe 3 people actually agree with me on UWN. From what I can gather, the non-bulls on the stock simply don't like the previous performance of the company, or, they don't get the expansion strategy, or, the scalability of their Washington state operations. I am practically giddy at the prospects for the Red Dragon Casino that they just purchased; they now have a monopoly on casinos in the city it is located in as a result. Even with UWN at a multi year high, I still like them. In fact, I like them a lot. With that said, I can't say enough that I have no idea what will happen with the stock in the short term.

I will have some more to write about UWN on Weds/Thurs... Come back for an update. :)

Disclosure: Long IBAL and UWN. This is not advice of any kind. This is not a recommendation of any kind. I have received nothing to write/post these notes. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.

Thursday, September 8, 2011

Obama, the republican.

Just a quick thought:

As I watch President Obama's jobs speech, all that I can think is how much of a republican that he sounds like. He may not sound like a TEA Partier, but, certainly more conservative than John McCain did just a few years ago.

His promise to come out with a new budget proposal and challenging congress to pass further budget cuts is politically brilliant. I doubt that any implementation of this will be good (after all, politicians have a way of botching even the most simple of things up). Still, politically, it's brilliant.


Wednesday, September 7, 2011

Unimaginative Students...

More bothering to me, than the fact that 7 out of 10 students don't buy a text book due to the costs, is that they are apparently apathetic or unimaginative.

When I was in school, I would often goto the teacher and say something to the effect of "Hey, I won't want to spend $150 bucks on the new edition of this book... since I doubt that much has really changed in this class, is there anyway that I can use the last edition, which was published 2 years ago, and costs 35 cents on Amazon?"

It might be that teachers in Kentucky care a little bit more, or are even a bit more polite than others in the country, but, I never had an issue doing this. If nothing else, I would buy the books used on Amazon.com, rather than at the book store (which always inflated the prices).

Even if a teacher is un-helpful, it may show that we as a society are screwed, since students will often be willing to spend thousands of dollars to take a class, but are unwilling/unable to buy a book for it, costing just a few hundred dollars (small by comparison). A lot of times, I get the feeling that people just don't want to spend the money, when they actually can; it has just become so acceptable to blame problems on money, that everyone seems to do it.

Food for thought, from somebody that was in college a few years ago...

Monday, September 5, 2011

Biglari Seeks Board Seat At Cracker Barrel.

Here is Sardar Biglari's newest letter to Cracker Barrel.

It seems as if he builds positions in companies, waits for a nominal period of time for the to screw up, and then uses their own inept words against them...

My favorite snippet:

In your settlement offer you afforded us the opportunity to present names of individuals for consideration to the board…provided that these nominees were “unaffiliated with Biglari Holdings or any other restaurant company.”


It is unfortunate (at best) that CBRL's board is un-receptive to taking on a member that not only has a huge ownership interest, but, is also a smart guy who could add a lot to the discussion. Oh yeah, and he's been integral to the turning around of numerous restaurant companies...

If I were a shareholder of BH of CBRL, I would be thrilled at this most recent letter, since Biglari has announced he is seeking to be on the board. No doubt, if elected, Biglari will be able to unlock intrinsic value for CBRL.

Best of luck, Biglari.

Disclosure: None. This is not advice of any kind. This is not a recommendation of any kind. I have received nothing to write/post these notes. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.