David Einhorn: Value Investing Congress
http://blogs.reuters.com/rolfe-winkler/files/2009/10/einhorn-vic-2009-speech.pdf Their main role, again, appears to be to tell everyone that things are fine, until a real crisis emerges at which point they will pile-on credit downgrades at the least opportune moment, making a difficult situation even more difficult for the authorities to manage
CIT Group Put Options (VVFMI / CITMI): Bear Put Spread Opportunity
The premium on January 2011 $1 put options (VVFMI) is $0.75. This leaves the buyer with a maximum gain of $0.25, which he will realize if CIT Group files for bankruptcy, and a total loss if the equity remains intact. Meanwhile, January 2010 $1 put options (CITMI) are trading at $0.55. The simultaneous purchase of … Read more
Pershing Square Q2 Investor Letter
http://dealbreaker.com/images/thumbs/Pershing%20Square%20Q2%202009%20Investor%20Letter.pdf The short position mentioned on page 7 is, I suspect, Alexandria Real Estate Equities.
Las Vegas Sands (LVS / ZAUAB): Covered Call Opportunity
The premium on Las Vegas Sands $10 January 2011 call options is $9.40, with an intrinsic value of only $6.70. It seems likely that the writer of covered calls will earn the $2.70 balance upon expiration, which would work out to a 37% return ($2.70 / $7.30 debit). Las Vegas Sands can raise low cost … Read more
Do the Six Flags senior unsecured notes present good value?
The general commercial gloom has sent many companies into insolvency, reorganization or liquidation. Where the main issue is poor capital structure instead of operating weakness, there appear to be opportunities for the enterprising investor. One example of this type is furnished by Six Flags Inc., the affairs of which are now undergoing Chapter 11 reorganization. … Read more
South Korea: ADR Pairs Trade
Hedging involves the simultaneous purchase of one security and sale of another, because the first is relatively cheaper than the second. Where the security bought sells at a lower price than the one sold, there must be good reason for believing that the price of the two will come closer together,—and conversely for the opposite … Read more
South Korea: De-listing Opportunities
The Korea Exchange enforces strict listing requirements for all member companies, namely: Shareholders’ equity at least KRW 10 billion; or market capitalization at least KRW 20 billion Sales at least KRW 30 billion (USD 30 million) for the latest fiscal year Average annual sales for last three years at least KRW 20 billion (USD 20 … Read more
South Korea: Economic Considerations
Before we review individual Korean securities, it may be well to consider briefly the economic factors involved. I will not attempt a comprehensive survey of a subject that has been investigated at such length, but I will confine myself to certain elements that are relevant to our goal. The four problems which concern the investor most … Read more
CIT Group Equity Units (CIT-PZ): Generally Undervalued Opportunity
In order to avoid a bankruptcy filing CIT Group must (1) pay the full amount of principal and interest on its floating rate notes maturing August 17 or (2) receive 90% participation in a tender offer of the notes at 82.5 cents on the dollar. The most likely outcome is either out-of-court restructuring or Chapter … Read more
Jim Simons: Method of Operation
An excerpt from the testimony of Jim Simons before the House Committee on Oversight and Government Reform: Renaissance, an SEC-registered Investment Adviser since 1998, manages what are termed quantitative funds – funds whose trading is determined by mathematical formulas designed to predict market behavior. Individual trades are generated by computers, based on work continually developed … Read more
Section 382 Rights Offerings
Tax law provisions and the operating losses at several corporations have set forth a peculiar round of rights offering. According to Section 382 of the Internal Revenue Code, a company cannot realize the full amount of its deferred tax asset if there is a “change of control” of the business, defined as ownership of more … Read more
Citigroup Preferred & Citigroup Common (C-PP / C): Recapitalization Covered Call
U P D A T E On July 31, tender offer participants received Citigroup common shares in exchange for their preferred shares. T H E S I S The public has been well informed by various media channels about Citigroup’s upcoming recapitalization. Naturally it seems that everyone and his brother-in-law is participating, as the spread … Read more
Vigorish Forum Now Accessible
By October of last year it was apparent that the securities market had become dislocated. In addition to redemption-related selling by hedge funds and mutual funds, prime brokers had begun to liquidate client accounts that held insufficient margin. The EMH premise that market participants buy and sell assets solely on the basis of economic value … Read more
Investment Opportunities in South Korea
In connection with my securities work I have begun to study the South Korean economy in some detail. I have also applied myself diligently to reading the financial reports of various local issuers. (By far the most valuable resource is a manual I received after graduating last year—that for some reason I neglected until recently.) … Read more
George Soros: Method of Operation
Source: Michael T. Kaufman “Technically his position was that of an arbitragist, albeit junior grade. In those days, arbitrage meant buying in one market and selling in another, seeking to take advantage of generally small variations in price. As Soros explains it, the idea was to spot a trend and position yourself. “Let’s say you … Read more
