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Monthly Archives: August 2012

Hitting The Century (V – Ireland)

17 Friday Aug 2012

Posted by Wexboy in Uncategorized

≈ 10 Comments

Tags

% of world GDP, Andrew Langford, COR, default, Emerald Isle, Europe, European sovereign debt crisis, Event Driven, Fairfax, FBD Holdings, Greece, home bias investing, Ireland, Irish value investing, ISEQ, Prem Watsa, Price/Book, Return on Equity, taxes, Thatcher, Total Produce, Trinity Biotech, UK, Wilbur Ross

Continued from here. OK, let’s take a look at my next investment allocation:

Ireland (16%):   So much for all my rabbiting on about home-bias, what a terrible job I’ve done here..! Ireland accounts for a whopping great 0.3% of world GDP, and yet I’ve got 16% of my portfolio invested in the Emerald Isle (yes, please visit, all tourist revenues gladly accepted)!? OK, so, in my defence:

i) C’mon, everybody’s doing it! I’m confident 16% is far lower than the average Irish investor (and US investors are just as bad – how many realize US GDP is now just 22% of world GDP?).

ii) As Philip O’Sullivan (taking off the green jersey?!) reminded me, these stock picks are not that Irish anyway! Total Produce (TOT:ID/LN) is essentially pan-European, Trinity Biotech (TRIB:US) operates primarily in the US (& Europe) – I guess FBD Holdings (FBD:ID, FBH:LN) is my only true Irish exposure!

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Hitting The Century (IV – UK)

16 Thursday Aug 2012

Posted by Wexboy in Uncategorized

≈ 1 Comment

Tags

alternative assets, benchmarking, currency allocation, emerging markets, Eurogeddon, Europe, frontier markets, home bias investing, portfolio allocation, rationing, thematic investing, UK

Hitting my 100th blog post (hence the title!) in late June, I thought I’d celebrate with a more in-depth series looking at my portfolio construction (i.e. approach to stock-picking), allocation & valuation metrics. Part I briefly revisited (plenty of other commentary recently) my stock-picking approach, and then tackled currency allocation – a surprising introduction for some readers, perhaps!? I suspect it was also my most footnoted post ever…aah, those were fun! Part II touched on the risk of home-bias, and then reviewed my portfolio investment allocations from an overhead perspective.

Part III would logically have continued with a drill-down into these allocations… But I’d just updated a few missing figures in my valuation & analysis file(s), so I opted to first share some detailed portfolio valuation (& performance) metrics. I was actually surprised not to see greater feedback on this post – I don’t think I’ve seen many (any?) analyses of this sort across the web. Anybody out there fancy doing something similar? – I’d love to see it 🙂

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Livermore Investments (II)

10 Friday Aug 2012

Posted by Wexboy in Uncategorized

≈ 2 Comments

Tags

catalyst, delisting risk, intrinsic value, investment companies, Livermore Investments, MBO, NAV discount, Oddball Stocks, Owner-Operator, portfolio allocation, principal-agent problem, Richard Beddard, risk management, share buyback

Continued from here.

…We also have the elephant in the room – insider ownership! With the share buybacks, insiders now own 84.6% of Livermore! Gulp…

Jesus! Investors would normally be diving for the exits, at any price, based on the potential de-listing threat this represents… LIV’s actually defied this by marching ever higher. So much so, LIV was recently forced to announce they knew of no non-public reason for the sharp price increase (22% in a single day!). Was this sharp jump the drying up of supply in the face of share buybacks, an abrupt switch in market-maker/investor sentiment, or on the back of a genuine market rumour? Well, the takeover of an investment company by management is relatively rare… And an actual de-listing rumour usually seems to prompt selling, not buying, as it appears to terrify most investors…

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Livermore Investments (I)

09 Thursday Aug 2012

Posted by Wexboy in Uncategorized

≈ 4 Comments

Tags

activist investors, Baker's Dozen, CLOs, closed-end funds, delisting risk, Everest Capital, intrinsic value, investment companies, Leverage, Livermore Investments, NAV discount, Net LTV, Owner-Operator, principal-agent problem, private equity funds, real estate, safe-havens, share buyback, TER

Livermore Investments Group Ltd. (LIV:LN) is one of my 2012 Baker’s Dozen stock picks. And doing v nicely too…up +79% YTD! This post isn’t just specifically about Livermore – LIV also offers great perspective on owner-operators, share buybacks & shareholder value. Oh, and – shhh, draw the blinds – I’ll whisper it: De-listings...

LIV is a London-listed (closed-end) investment company. Its portfolio is focused on 3 different investment areas:

i) Real Estate:   The major holding is $38.2 mio (net of related debt) invested in Wyler Park, a commercial/residential Swiss property. It’s fully let, on a gross 5.1% rental yield, with development potential for another 37% of floor space. The other significant investment is $14.7 mio of convertible debt in SRS Charminar, an Indian real estate company. Unfortunately, the stake’s been subject to long-running litigation. But with ample initial over-collateralization, and an agreed settlement this year, continuing uncertainty’s now hopefully related to timing & expenses, rather than recovery value. Net of interest rate swaps, total net property investment is $45.9 mio, or about 32% of NAV.

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Universe Group – So, Where Does This Place Us?

03 Friday Aug 2012

Posted by Wexboy in Uncategorized

≈ 3 Comments

Tags

Brookwell Ltd, Brulines Group, dilution, Ennismore, HTEC, Jewel in the Crown, Margin of Safety, placing, Universe Group, Vianet Group

I posted last w/e about Universe Group (UNG:LN), having first used it as a bit of a blind stock valuation challenge. If you’re ever bored waiting for some news on a stock, just write a blog post – all too often, news will pop within days..! In this case, a Placing was announced just two (working) days after my post, wow! Which reminds me – note to self:

I Must Remember:   If you find yourself saying something like ‘I can’t imagine management would do X…‘, you can be reasonably sure they’ll actually do X¹!

I Must Remember:   Most management are agents, not owner-operators – they (always) believe in raising/utilizing cash to expand the business².

I Must Remember:   Management’s compensation is usually far more rewarding than the impact of a rising/falling share price – again, they’re not owner-operators. Their compensation also generally grows with the business… Therefore, expansion at all costs is usually far more important than share price, or intrinsic value per share.

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Chasing Some Dividend Tail (III)..?

01 Wednesday Aug 2012

Posted by Wexboy in Uncategorized

≈ 8 Comments

Tags

Autozone, Bernie Madoff, Big Ang, Character Group, dividend coverage, dividend yield, enhanced EPS/NAV, gold, income/dividend bubble, investment companies, JAKKS Pacific, Liquidations, Livermore Investments, M&A, share buyback, tender offer, trading sardines, wind-down

Continued from here. OK, so dividends kinda suck…but what’s the alternative? Well, let’s tackle that from the corporate perspective first:

– Obviously, share buybacks (and/or tenders & capital returns) are generally a far more tax-efficient means of distribution to shareholders. They enhance earnings, or significantly increase NAV/book value. [Just look at the amazing run on Autozone (AZO:US) – yes, they’ve had great execution, but much of its performance is down to aggressive/sustained stock buybacks]. It also permits management to be far smarter & more opportunistic in their distributions, and their response to share price volatility.

– Just as important, it frees management of the potentially absurd strait-jacket of maintaining an inappropriate dividend – which, in extremis, leads to management idiotically borrowing just to fund a (tax-inefficient) dividend. On occasion, this is exactly the point where management tips over from ‘gently deceiving‘ shareholders into downright criminal/accounting fraud…

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