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Portfolio Updates

Some recent updates:

– Sold out of KVH Industries. The company recently reported poor quarterly report. The growth from the TracPhone is not coming as expected. The thing that made me sell was management’s tone in the conference call. The management keeps sticking to its 100% growth in TracPhone business in CY when Q1 grew 59% compared to prior year Q1. It is tough to see how management can hit its guidance. Also, the launch of the new mini-TracPhone model raises questions as to why launch the product when there wasn’t a huge need for it.

– Buying up YNG. I have been buying up shares in YNG since the Orifer news came out. There was a dramatic drop on May 4th. I put in a low ball bid to buy more shares but it didn’t go through. Even after the May 5th PR about YNG working with a bank the shares have been selling at a huge discount. I have been buying shares as the chances look very good that the company gets the financing done.

– Heckmann reported a very good quarter. In their previous quarterly call, Heckmann said the company could hit a run rate of around 120M EBIDTA before it ran out of cash. In today’s CC the company expects to run through all the cash in the current year. Also with the interest rates at absurdly low levels, HEK can lever up and get some amazing returns. Overall, I’m excited about HEK and think 2011 will be the setup year for strong numbers starting 2012.

– Hallmark reported poor quarterly numbers. I have been slowly adding to my position. I think it could take a few quarters for the management to fix the high loss ratio. You have a 7 year track record of a very capable management team producing extremely good numbers. I believe the last few quarters are an aberration and not a sign of long-term trend.

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Categories: Updates
  1. jb
    May 17, 2011 at 10:03 am

    What do you attribute the huge YNG drop? Mostly paranoia?

    • paras
      May 17, 2011 at 11:28 am

      It is never easy to know why a company’s shares keep trending down. The usual suspects are the gold prices heading down and company staying silent regarding financing. In the most recent PR the management mentioned they are working with a bank to get financing. I think it will be done. Management has to be quiet due to the black-out period. It is just a matter of time and structure of the deal. I do not expect equity to be issued in any financing deal.

      Paras

  2. jb
    May 17, 2011 at 1:47 pm

    Yes, that’s pretty much what I’ve heard/read as well. FWIW, they send out occasional tweets; if you’re on twitter, it might be worth following them. Regards.

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