Archive for November, 2011

Weekend reading

November 25, 2011 Leave a comment

Two Moons: The political crisis in US

Interview with Guy Spier: Always insightful to hear from someone living in Europe and living through the crisis there

Indian business owners highly leveraged: How quickly forget lessons from 2009, recall Chesapeake

Categories: Reading

Weekend reading

November 18, 2011 8 comments

The Credit Card killer: Could this 28 year old kill the credit card business?

Profile of Cara Goldenberg: The letter, to Taro’s BOD, from Permian Investment got me interested in learning about Cara Goldenberg.

Take this Lollipop: The fastest growing Facebook app

Graham and Doddsville Newsletter: Always a good read

Categories: Reading

Taro Pharma update

November 14, 2011 2 comments

Taro Pharma has been a superb pickup. The company recently reported its Q3 results and the numbers were monster numbers. The company was averaging around $31M in Operating Inc in Q1 and Q2, although in Q3 it showed a sweet $61M. The company’s cash balance is up $50M since Q2. The stock is up almost 50% since I bought my stake and it is almost as cheap as it was when I started buying. (Although in Q3 there was some currency benefit that Taro Pharma was lucky to get, but the growth is superb).

Today another large holder of Taro Pharma came out with a letter to the BOD. Permian Investment Partners wrote to the BOD stating that the Sun Pharma offer price of $24.50 (the stock is currently trading at $29) grossly undervalues the company. Permian is the hedge fund founded by Cara Goldenberg. In 2010, Cara wrote a letter to Warren Buffett and sent Buffett a list of investment ideas. Buffett was so impressed, he asked Cara to come dine w/ the great one.

The Taro story keeps getting interesting.

Categories: Updates

Weekend reading

November 11, 2011 Leave a comment

The Tweaker: Great piece by Malcolm Gladwell on Steve Jobs

Tata’s Nano hits bumps: A revolutionary car that has failed to get market share

Longleaf Q3 report: Always a good read

Categories: Reading

Portfolio Update

November 10, 2011 Leave a comment

People tend to say that girls tends to be fickle and moody. Well, those people never lived through the 2011 market.

There have been a few changes to my holdings in the last few weeks. I have been spending all free time searching for ideas and reading 10K and Qs. Anyways, here are the updates.

I sold out of Hallmark Financial and Goldman Sachs. I like both of these companies and the price is cheap on both of them. Although given the opportunities available, it made sense to go elsewhere.

Harris Interactive

Two weeks ago we bought a stake in Harris Interactive. Harris Interactive is in the opinion poll business, think of the political polls. This is a turnaround play.

Al Angrisani the new CEO is a turnaround specialist. In 2002, Al was brought in as the CEO of Harris Interactive. The company had 100M of revenue and a loss of 14M in FY2002. In 2004, Al left Harris Interactive. In 2004, the company did 146M of revenue and 30M in net profit. The company stock jumped from the mid-$3s to $8 a share during Al’s turnaround. Basically taking a company w/ a 200M market cap to over 450M. Al then left Harris Interactive to work his magic at Greenfield Online. In 2005, Al became CEO of Greenfield. Greenfield had 65M of revenue and a loss of 66M (includes a 91M of restructuring charges). In 2004, Greenfield had 33M or revenue and a loss of 24M. In 2007, Greenfield did 120M of revenue and had a net income of 13M. In 2008, Microsoft acquired Greenfield for $480M. In Q4 2005, the share price was around $5.50. Microsoft bought the company for over $17 a share.

Since Al left Harris Interactive, the company has been going downhill. The share price has dropped from $8 to $1. The profitability has turned into loss. Even w/ the poor performance, the company’s brand the operations are still very good. Harris Interactive has a strong brand in opinion polls. The company still does around 130M of revenues. The company has 14M of cash, about 6M of debt, and is making around 1.5M of EBIDTA per quarter. The market has been pricing the company as if it is going to fail. The company currently has a market cap of 40M, only a month ago it had a lowly 16M market cap. The stock price has jumped over 150% in the last month, although there is huge upside if the turnaround is successful. The company has the right person heading the turnaround, has enough cash to not require dilution, and has a strong revenue base on which to start the turnaround.

Tecumseh Products

I also bought Tecumseh Products is an interesting play at current prices. There are multiple ways to win big. The market is pricing it as if it is going to be a complete failure, but even just simple liquidation will resultĀ in huge gains. Plus you have a company that is going to receive 50% of current market in cash tax refund in 12 month and 70% of current market in tax refund in 2-3 yrs. The company has a market cap of around 85M, cash of 45M, and debt of 68M. The company expects to receive 40M of cash in 12 month and another 18M in 2-3 yrs. The company has a new management team in place that is looking at all lines of business with an eye to either turn it around or sell it. I would think in 6-9 months you see the company selling some assets and focusing on running a smaller sized profitable company. The company has a book value of $20 a share, w/ large amounts of land ownership.

The company has plenty of cash on hand for management to turn this company around. You don’t need a huge success on the turnaround for this to be a successful investment.

Categories: Updates

Weekend reading

November 4, 2011 Leave a comment

Economics has met the enemy: The problem with economics

The Hubris Hypothesis of Corporate Takeovers: How corporate ego drives the M&A transactions even when the transaction is not in shareholder best interest

Shale Gas Boom: It could have a big impact on US Economy

Bank of America’s stock issuance: Media has made this too big a deal and not done a good job report on it

Categories: Reading