Xmas Trimmings, etc.

Tags

ASFI, Asta Funding, BIW, CLNY, Colony Financial, Conwert, correlation, CWI, distressed assets, FIG, financial crisis, Fortress Investment Group, intrinsic value, Karl Ehlerding, KWG Kommunale Wohnen, Leverage, majority control, Merry Xmas, Price/Book, Stavros Efremidis, TRIB, Trinity Biotech

Asta Funding (ASFI:US) $9.37:   I’ve marginally trimmed my stake from 3.8% to 3.6% – consider this to be purely risk ‘house-keeping‘. This realizes a +22% gain vs. my write-up price on this small slice, and a +31% gain vs. my actual net entry price (which inc. the impact of dividends). I never got around to an Asta follow-up, as the share price (& NAV) just steadily chugged higher. Despite the rising share price, I’ve been bemused (even encouraged) by the general air of neglect still attached to this stock. Even ASFI shareholders have expressed a distinct lack of enthusiasm for the company’s progress in the past year! This is particularly in reaction to the company’s diversification into personal injury & divorce financing. Which puzzles me…

I’d counter this distaste in a number of ways: i) This new direction was prompted by Asta’s reluctance to pay up to acquire new distressed consumer receivable portfolios*. Personally, I’m delighted – how often do you see management take an absolute, rather than a relative, approach to value? [Picking up distressed debt at 9 cts on the dollar, while everybody else pays 10 cts, doesn’t mean you’ve bagged an actual bargain!] And to resist pissing away idle cash burning a hole in their pockets is quite admirable too. Of course, returning capital (via share buybacks) is a great alternative – Asta’s pursued this to a limited degree during the year. However, considering current metrics, I consider the short term return/attraction of a buyback is fairly even balanced against the potentially higher returns on offer from a (gradual) investment of their cash into distressed assets.

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Hitting The Century (IX – Property)

Tags

Asia, BIW, catalyst, China, commercial property, de-leveraging, emerging markets, Germany, Joel Greenblatt, KWG Kommunale Wohnen, NAV, Net LTV, Price/Book, residential property, Russia, Sirius Real Estate, special situations, SRE, Stockopedia, Ukraine

Continued from here.

Property (10%):

As with Agri, some of my recent posts will overlap. I should obviously point you to my series on German Residential Property, Post I to Post V – it offers an in-depth look at my allocation & stock selection approach to Property. This culminated in a recent stock-pick I’m v pleased with: KWG Kommunale Wohnen (BIW:GR), a 5.1% portfolio holding.

At EUR 5.475, it’s up +6% since my write-up a month ago (and +9% from my actual avg. entry price). It’s clearly left resistance at EUR 5.25-32 trailing in the dust, and the next EUR 5.60-80 resistance now beckons. A possible break of EUR 6.10-20 in due course may suggest the share’s ready to muscle its way far higher. It’s fascinating to note that price level corresponds to a KWG market cap of about EUR 100 mio: Which is precisely the level I highlighted as a possible sweet spot for the market to award KWG a significantly higher price/book valuation!

You know, I’m not much of a stock screener – I mean why ruin a day of reading annual reports instead?! 😉 But I do think property stocks lend themselves v nicely to a stock screening approach (Stockopedia, of course!) – there’s only a couple of key variables on which you really need to focus. In fact, let me suggest a stock selection strategy, a la Joel Greenblatt:

German Residential Property V – A Buy!

Tags

Barmer Wohnungsbau, catalyst, commercial property, convergence, correlation, Deutsche Wohnen, EPRA NAV, German bunds, German property, Germany, Karl Ehlerding, KWG Kommunale Wohnen, large cap stocks, marathon, NAV, NAV discount, NAV premium, Net LTV, North Rhine-Westphalia, Price/Book, REIT/MLP sector, rental yield, residential property, Sirius Real Estate, small cap stocks, Stavros Efremidis, Taliesin, value investing

Continued from here. A 5-part series might seem like overkill – hmm, I’ve done worse 😉 – hopefully, you found something useful in each post. And, of course, I wanted to illustrate the research (& contemplation) required for any real investment edge in your stock-picking & portfolio. Peer/sector analysis may perhaps be the most rewarding component – though it drives me to distraction occasionally…

Picture it: You come across a random gem – you suspect it’s best of breed & should be pounced upon asap! Instead you take a breath, step back & force yourself to research it (and its peers) from all conceivable angles. Meanwhile, your gem’s share price begins to ascend rapidly, and you’re totally missing out… I’m suffering that with one idea I want to exploit – the apparent gem of the sector’s jumped 20%+, gahhh!

But investing isn’t a sprint, it’s an (often painful) marathon. We all remember a satisfying quick-fire buy that worked out, but we’re really just trying to forget the pain of misguided duds… Disasters we might perhaps have avoided if we’d researched them a little more, or picked the better horse. Research & patience are ultimately far more profitable than grabbing the first nice stock you see. Also, peer/sector analysis is essential to my preferred approach to investment:

Great Story, Great Stock & Great Price

German Residential Property (Part III)

Tags

absolute return, Austria, dividend yield, financial crisis, financial derivatives, German bunds, German property, Germany, home ownership, income/dividend bubble, intrinsic value, land grab, Leverage, Margin of Safety, Mr. Market, NAV discount, Net LTV, Price/Book, REIT/MLP sector, relative value, rental yield, residential property, safe-havens, special situations

Continued from here.

OK, now we’ve looked at German residential property fundamentals. The current supply/demand & home ownership rate, rental yields, safe-haven status, and particularly the low valuations, certainly appear to offer a persuasive investment case. So, how do we exploit it?!

As I’ve said, I’m perplexed by the general investor obsession over direct property investment. What a hassle! And let’s correct a key misconception: People say they prefer direct investment as they can leverage it up – something you can’t, or shouldn’t, do with an equity investment! Yeah, sounds logical…but it’s complete rubbish! That coveted (?!) leverage is already embedded in listed companies (and far more efficiently/cheaply than you could obtain).

Let’s say you’ve a spare 300 K knockin’ around. You could buy a 1 mio property, with the help of a 70% mortgage (and years/decades of property/tenant headaches to come!). Or you could invest in the equity of a listed property company that owns 1 mio of property (with the same 70% leverage). All at the click of a button & an occasional read of their financial reports. What an easy choice… OK, but who knows where the hell the share price might trade?!

Hitting The Century (V – Ireland)

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% 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!

Hitting The Century (III)

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Argo Group, Avangardco, dividend coverage, dividend yield, EIIB, Ex-Cash Ratios, FBD Holdings, Net LTV, P/E ratio, Petroneft Resources, portfolio allocation, portfolio performance, Price/Book, Price/Sales, TGISVP, Total Produce, Trinity Biotech, Wordpress

Damn WordPress! If you viewed/received a similar Century (Part III) post (since deleted), please ignore it – it was just a draft & I’ve updated/revised figures across the board since. Not quite sure how WordPress managed to publish it for me..!

Right, continued from here. In my last post I promised: ‘OK, next I’ll take you through each of my investment allocations – and try to give a flavour of my thinking, and some underlying stocks/funds, in each instance‘. However, I’ve just completed a detailed quarter-end portfolio update/review, so let’s flip things ’round – perhaps you’d be interested in a timely look at some portfolio metrics¹, and we’ll return to investment allocations in my next post?

Yes, really? So you like the pretty panties, but you still want to know the damn cost..?! Sigh, value investors..! OK:

Duh, Duh, Dhir…

Tags

Adjusted NAV, Aurora Russia, Dhir India, distressed assets, market-makers, message boards, Price/Book, Price/Cash, wind-down

Dhir India Investments (DHIR:LN)

• Mkt Price:  GBP 16p
• Mkt Cap:  GBP 2.67 mio
• P/C:  0.36  (adjusted)
• P/B:  0.12

Just because I’m a value investor, doesn’t mean I won’t make speculative bets, it just means I like to use value investing to determine that bet..! Here’s one I’ve finally jumped into:

Dhir India’s the only UK-listed investment vehicle offering fund managers/investors exposure to distressed assets and companies in India. The fund invests in 4 types of transactions: Turnaround of companies, re-sale of companies/assets, break-up and sale of assets and bridge financing. Charlie Hambro is the Chairman, while the Investment Manager Shiva is headed by Alok Dhir. Dhir’s been practicing insolvency law for over 20 years, and is a successful investor in Indian non-performing assets. The company was launched in mid-2007, and promptly completed 6 investment projects (1 listed) by year-end.

EIIB (EIIB:LN) – The Strongest Bank in the World?

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DiamondCorp, EIIB, Equity/Total Assets, Goldman Sachs, Margin of Safety, Price/Book, Price/Cash, Sharia'a, sukuk, Tier 1 Capital, value investing

European Islamic Investment Bank (EIIB:LN)

Mkt Price:  GBP 3.75p

Mkt Cap:  GBP 66.2 mio

Equity/Total Assets Ratio:  69.2%

P/B Ratio:  0.46  (adjusted)

Price/Cash Ratio:  0.61  (adjusted) 

Congrats if you guessed I was referring to the European Islamic Investment Bank in my last post! EIIB’s the first independent Sharia’a compliant  Islamic bank authorized by the FSA. Headquartered in London, EIIB offers Sharia’a compliant treasury, investment, private equity and investment banking services. Established in early 2005, their FSA authorization process took a little over a year to complete. The bank then immediately opened up for business, following up with an IPO a month later. Fortunately, these were the boom times (aah, remember those days..?!) and they raised an impressive  GBP 183 mio of Equity from a private placing and their IPO.

Cresud (CRESY:US), Part II

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Argentina, BrasilAgro, Cresud, Debt/Assets Ratio, Elsztain, farmland, IRSA, Margin of Safety, Owner-Operator, Price/Book, value investing

Cresud (CRESY:US)

Mkt Price:  USD 11.30

Mkt Cap:  USD 561.1 mio

Debt/Assets %:  12.7%

P/B:  0.35  (adjusted)

Fair Value:  USD 32.66

Upside Potential:  189%

Continuing from my previous Cresud post:  CRESY has a tough B/S to tackle. First, it’s denominated in Argentinean Peso (4.2620 ARS per USD), a fairly stable…but potentially very unstable currency, second, it wildly understates many assets which are carried at cost, and third, it consolidates listed entities (IRSA (IRSA:AR), and also BrasilAgro (AGRO3:BZ) going forward) in which Cresud has a controlling and/or majority stake. My approach to dealing with this is to construct a B/S and Fair Value on a ‘look-through’ basis. There are a number of components to work through:

Sirius Real Estate (SRE:LN)

Tags

activist investors, commercial property, Deutsche Wohnen, German property, Net LTV, Price/Book, residential property, Sirius Real Estate, value investing

OK folks, I was pondering an introductory blog post as I wrestled with the WordPress setup, and finally thought why not just jump in and get on with it! Maybe I’ll dispense with some of the formalities later, meanwhile here are some thoughts on:

Sirius Real Estate (SRE:LN)

Price:  EUR 0.22

Market Capitalization:  EUR 66.5 mio

Net Loan-To-Value (LTV)%:  57.6%

Price/Book (P/B):  0.31

 Fair Value:  EUR 0.71

Upside Potential:  223%