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Zillow, Inc. Message Board

donedoodit 264 posts  |  Last Activity: 13 hours ago Member since: Feb 2, 2004
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  • Reply to

    Revised Agreement

    by donedoodit May 8, 2014 4:58 PM
    donedoodit donedoodit May 8, 2014 7:56 PM Flag

    I cannot believe Berkshire was ever seriously in any discussions. Buffett has always said that he buys good companies, even when they are in lousy industries (hence his interest in insurance). Nobody ever accused the SinkHole of actually being a good company.

  • Reply to

    Revised Agreement

    by donedoodit May 8, 2014 4:58 PM
    donedoodit donedoodit May 8, 2014 7:54 PM Flag

    As Guy-freebie said, the ACP/AFSI crowd only said they were confident about the deal going through, without saying any specific price. Merkle said he heard "clap-clap" after the comment and someone else suggested the speaker was hitting the table ("knock on wood"). I say it was both -- he was slapping his forehead.

  • donedoodit by donedoodit May 8, 2014 4:58 PM Flag

    On the one hand it appears that the two parties are telling us that we can expect to see continued deterioration in SinkHole's balance sheet through the end of November, but that it does not matter, that ACP will pay $2.50 regardless. But wait: there is a clause in the new agreement that requires SinkHole to maintain some level of consolidated capital that, assuming reallocation, makes its individual subs solvent in the eyes of the regulators. But we also see that several of the subs are already below the minimum capital level and that the regulators have only been stalled off by SinkHole management discussing with them the sale of the company AND providing action plans and forecasts that get the subs back up to snuff. We know from the past how accurate SinkHole management has been in its projections.

    ACP has an out. Actually, it has two doors that allow it to walk away. One is that it can walk if there is an insolvency event. Such an event would include a regulatory seizure of any of the insurance subsidiaries. Then there is the matter of the $150 million convertible senior notes due on 9/15/14. Who pays them, and how? Will the SinkHole be able to sell enough assets to cover the cost? The amended agreement precludes SinkHole from acquiring capitalization from a third party who might otherwise refinance this debt. And if the debt repayment fails and or a regulatory takeover occurs, isn;t this an insolvency event that could trigger the requirement to pay off the $235 million subordinated debentures that otherwise are due in 2033.

  • Reply to

    NEW SHARE PRICE

    by tonygin May 8, 2014 11:11 AM
    donedoodit donedoodit May 8, 2014 1:58 PM Flag

    Isn't math wonderful? It took a 31% gain today to offset the 24% drop the share price took yesterday! It's a miracle!

  • Reply to

    I just sold

    by t.east44 May 8, 2014 11:33 AM
    donedoodit donedoodit May 8, 2014 1:57 PM Flag

    Well teast, if indeed the deal goes through, it will trend higher over the next six months until the deal closes. But, as another holder who bailed today explained it, if there is something else out there that will earn more than 10% in that time frame, you will be ahead of the game. GL

  • Reply to

    The deal is likely going through

    by david_merkel May 8, 2014 11:43 AM
    donedoodit donedoodit May 8, 2014 1:54 PM Flag

    In teresting view on the bonds, Dave, and I've made some plays like that myself over time. But suppose the deal is structured so that the SinkHole becomes a subsidiary of ACP that ACP subsequently tosses into bankruptcy? I have not read the latest iteration of the deal yet, but is there a guarantee that ACP will make good on the debt?

  • Reply to

    SA Article

    by donedoodit May 8, 2014 9:23 AM
    donedoodit donedoodit May 8, 2014 1:50 PM Flag

    You blew a grand what?

  • Reply to

    I just sold

    by t.east44 May 8, 2014 11:33 AM
    donedoodit donedoodit May 8, 2014 1:49 PM Flag

    If the deal was indeed "pretty much guaranteed...at[$]2.50" then the discount that the market has imposed would be much closer to the risk-free rate (US Treasuries) and not 10-11%. But your thinking is spot on and I think you made a good decision.

  • Reply to

    2.30 broken, resistance at 2.65 next

    by ppknight May 8, 2014 9:51 AM
    donedoodit donedoodit May 8, 2014 10:16 AM Flag

    Sorry mop -- my comment was directed at ppknight who apparently turned the lights off before he posted. Your question "why would it go over $2.50" is well placed and in rteality, as I posted earlier, it will take time to reach the $2.50 figure, and in the meantime you can figure the valuation by discounting the $2.50 at a to-be-determined discount rate to the anticipated closing date of the deal.

  • Reply to

    2.30 broken, resistance at 2.65 next

    by ppknight May 8, 2014 9:51 AM
    donedoodit donedoodit May 8, 2014 10:12 AM Flag

    Well, one does hope that maturity is in my future...

  • donedoodit donedoodit May 8, 2014 9:57 AM Flag

    Proven incorrect even before your ink dries. I admit, however, that the reduction is less than I expected, although I don't think the story has yet played out.

  • Reply to

    A lot of buying here

    by t.east44 May 8, 2014 9:50 AM
    donedoodit donedoodit May 8, 2014 9:55 AM Flag

    You're an idiot!

  • Reply to

    2.30 broken, resistance at 2.65 next

    by ppknight May 8, 2014 9:51 AM
    donedoodit donedoodit May 8, 2014 9:55 AM Flag

    Read today's PR, fool!

  • donedoodit by donedoodit May 8, 2014 9:54 AM Flag

    Given the pushback of the shareholder meeting date and the reduced price to $2.50, the valuation question is "what is the present value of $2.50 discounted at (pick a discount rate) to be received in six months? Don't forget to factor in other uncertainties in the discount rate that you pick.

  • donedoodit by donedoodit May 8, 2014 9:50 AM Flag

    Can't deny that the amendment is more favorable to SinkHole's shareholders than I would have expected. Will be interesting to see how this plays out.

  • Reply to

    $2.50+

    by adamschastein May 8, 2014 9:44 AM
    donedoodit donedoodit May 8, 2014 9:45 AM Flag

    The only thing coming is you...

  • donedoodit by donedoodit May 8, 2014 9:23 AM Flag

    So Blue-Bird-Boo-Fay-Proc-Tologist has taken to SA to make his case! He should re-read his work and he may change his mind. Otherwise it sounds like whistling past the graveyard.

    He did bring up a point that I missed, that the K had in it a disclosure that was not contained in the previous Q that there is no guarantee that the deal will go through as originally structured. I thought, and would have thought, that this disclosure would have been rather standard and would have been part of all disclosures from the get-go. I am either too busy or too lazy to go back to the Q to see if I can find it. But it is rather silly of Boo-Fay to suggest that a cut of 50 cents would not save ACP enough to make it worthwhile, while a cut of say $1.50 would invite lawsuits and would also invite more than 15% of the shares to nix the deal. The lawsuits are coming anyway, and, as in most cases, they will be settled for a much smaller amount. As for the 15%+, this might be so, but given the current economics, their quest for appraisal rights at a higher price will fall flat. Plus, dissent by more than 15% does not automatically kill the deal, it just gives ACP the right to walk.

    Keep in mind that ACP put the 15%+ clause in the deal at a time when the published book value was $10 per share, when real money could have been involved.

    This deal is getting repriced downward, by a lot.

  • donedoodit by donedoodit May 7, 2014 4:56 PM Flag

    "Mr. Richard Howe, CEO, stated, “During the first quarter we had almost 9 million unique visitors to the ALOT sites."

    Yes, the word has gotten around the Internet that there is this really laughable collection of websites, notable for their mediocrity, and nine million people checked in to have a chuckle....

  • donedoodit donedoodit May 7, 2014 4:51 PM Flag

    Looking at the world realistically, it takes more than one investor, even a large one, to drive a stock price in one direction or another. The good investors, including the hedge funds, know how to take a position without moving the stock -- until they want to. Somebody like an Ackman will take his position and then announce it, knowing that others will then follow. If he wants to go short, he is not going to sell willy-nilly into the market, allowing the falling price to reduce his average price. Prices rise sharply when everyone wants in all at once and they fall sharply when everyone wants out at the same time. That is what happened today.

    Having said that, understand that, as the saying goes (and has been used here yesterday), "where there is smoke there is fire." Oftentimes, short sellers are correct in their speculation that something is fundamentally out of whack with reality or reason. This is especially true with insurance underwriters, most particularly when the speculation is that a company might be light on its reserves. Go back and look at Reliance, SCPIE, Superior National, Chartwell, Trenwick, Phoenix Re. If you need others, I can supply them -- this list is long.

    When I was young, I was warned by an older gentleman that I did not want to "go parking" with my girlfriend on the road running through the cornfield -- too many ears. That is the market -- lots and lots of ears that hear things and pass the information around. So when a stock begins to take a run or, in this case, tanks, there is a reason. That reason may not emerge for a period of time, but there is an old adage on Wall Street about dealing with these situations: "Don't fight the tape."

  • Reply to

    Trading at book value!

    by guy.freecycle May 7, 2014 2:57 PM
    donedoodit donedoodit May 7, 2014 3:53 PM Flag

    You remind me of Lamar, in the movie "Joe Kidd." Lamar was getting the snot beaten out of him by Joe Kidd (Clint Eastwood) when Mingo observe "That boy just don't learn."

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