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CommonWealth REIT Message Board

foxhsmart 665 posts  |  Last Activity: 14 hours ago Member since: Oct 11, 2005
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  • Reply to

    NMB ACSF question

    by foxhsmart Apr 16, 2014 8:37 PM
    foxhsmart foxhsmart 14 hours ago Flag

    Sorry to anyone who was annoyed by my posting this topic here. There is little activity on the ACSF board and I wanted to direct NMB's attention to my questions over there.

    I can delete this here but don't know how to do that! Any direction on how to do this is appreciated.

    Fox

  • Reply to

    NMB ACSF question

    by foxhsmart Apr 16, 2014 8:37 PM
    foxhsmart foxhsmart 22 hours ago Flag

    Left you another message over at ACSF, NMB.

  • foxhsmart foxhsmart 23 hours ago Flag

    Now you've got me pegged! Who on earth is Padawan?!?

    With a low margin rate of under 2% I suspect that you have either Interactive Brokers as your broker or you have a sizeable portfolio, as do I, and have used that to negotiate a very low margin rate.

    That said, my use of margin tends to be conservative (30% max on the value of my portfolio) and then ONLY in the midst of a recession will I implement it. As we emerge from recession and the market recovers, I reduce and eliminate the margin.

    I hope you are careful with your margin borrowings/leverage this far into economic recovery and this far past the last recession. You don't want to be overleveraged if we incur a recessionary market downturn. ACAS learned a tough lesson about that, but it sure gave a great buying opportunity for those who had guts and the knowledge that ACAS would survive. It's a tough lesson to learn. Be careful. It may be wise to remember that from the 2000 market high the S&P 500 dropped 50% into the 2002-2003 recession bottom, and if you prefer the Dow, it dropped 56% in the 2008-2009 recession before hitting its bottom.

    I bought a slug of ACAS shares when it was ugly, but I really capitalized in the REIT space. I had not owned any REIT's going into the recession, as I was a lonely voice who felt strongly that real estate was overdone and was due for a serious decline (there are a lot of voices today that SAY they held that view, but I truly did!). The trouble was, of course, nobody would listen. Not even my close family members and closest friends who became entangled in the mess--having become enamored by all the glowing talk about how good real estate has been, etc. Anyway, as you can imagine, when real estate began its reversion to the mean--and beyond, most of the quality REIT's were down 90-95% from their highs, and I back up the wagon and piled them all on. They produce a nice pile of income and much of that income is return of capital, and thus, free of tax, which is very nice.

  • Reply to

    NMB ACSF question

    by foxhsmart Apr 16, 2014 8:37 PM
    foxhsmart foxhsmart Apr 17, 2014 5:39 PM Flag

    NMB, I left a follow up comment at the ACSF message board for you.

    Fox

  • foxhsmart foxhsmart Apr 17, 2014 5:02 PM Flag

    I am a very old "Grasshopper"!

    You have a far better working knowledge in the BDC space generally and ACAS in particular than I. Therefore, I appreciate the "shortcuts" you are willing to share that help me conserve time. In other sectors, I am pretty darned confident that you would be the Grasshopper, as there are very few around who have read as much as I have and have the depth of history I can share about the market generally, and other higher yielding sectors where I am quite on top of things.

    I hate for it to be a one-way street, so if I can ever be of assistance to you in any way on companies in other sectors I will be glad to do so and to shed as much light as you may want shed on any company in particular that I have knowledge of, or perhaps, on how you might factor market history and the market impact as a whole on your investment decisions.

    Unless you are a true blue bottom up value guy, you likely give some thought to how the market in general will effect your ACAS "and kids" investments.

    As mentioned, that is my primary concern in any additional stake I may take in ACAS or an initial stake in ACSF.

    Any additional money I put into ACAS or ACSF would be small relative to the very large allocation I put into the market in many sectors/companies during the last recession (2009 primarily).

    With the exception of a bit more cash raising to do to get my cash levels to where I am comfortable and ready for the next recessionary market downturn and the opportunities that will provide, my taking additional stakes in ACAS (at its present price) and ACSF will be more "fun money" short term holdings than serious long term holdings money.

    Nevertheless, I always like to make money!

    Best to you, and thanks again.

    Fox

  • Reply to

    NMB ACSF question

    by foxhsmart Apr 16, 2014 8:37 PM
    foxhsmart foxhsmart Apr 17, 2014 3:31 PM Flag

    NMB, see my reply on the message board at ACSF.

    Fox

  • foxhsmart foxhsmart Apr 17, 2014 3:25 PM Flag

    NMB,

    It appears to me that ACSF is trading at about a 9.5% discount to NAV if the numbers that I have read are current. NAV would be about $14.95 which would equate to a 9.5% discount to the stock price of $13.52 (about where it trades today). I'll give it a dividend range of $1.18 to $1.24 annualized once all the portfolio money is fully invested, which at today's price gives a dividend yield range of 8.72% to 9.17%. That leaves one question--how long do you think it will take ACSF to fully implement their portfolio cash and ramp up to being able to pay the full dividend?

    It will take a fully invested portfolio and more clarity in the presently murky waters to cause ACSF to trade at NAV.

    The risk with ACSF in my opinion, is the same as the risk with buying ACAS at this point , and that is that we are 4 3/4 years from the last recession, recessions are very hard to predict (especially since the inverted yield curve is no long available to observe as it is manipulated by the Fed), and we have a history of having recessions in our country about every 4-5 years.

    While the discount to NAV is far greater in ACAS than ACSF, providing more comfort, I suspect that a return to NAV will happen sooner at ACSF than at ACAS. But I can't get a good idea of how long it may take ACSF to fully invest its portfolio and pay out a maximum level of dividend.

    Both ACAS and ACSF will suffer in an economic downturn. So I am thinking shorter term on both ACSF and ACAS and hoping we can avert recession for 18 months or so. I think ACAS will need that much time. ACSF will take a much shorter time, and I would exit the stock, capturing a dividend and a narrowing of the discount to NAV.

    What is your take on the timing it will take ACSF to trade at NAV?

    Fox

  • foxhsmart by foxhsmart Apr 16, 2014 8:37 PM Flag

    Hi NMB, I left a question for you on the ACSF message board. Can you take a look at my question when you get a moment. I'm interested in it.

    Thanks,

    Fox

  • foxhsmart foxhsmart Apr 16, 2014 8:34 PM Flag

    Hi NMB,

    It's Fox from the ACAS board and I've read your post here. I have a few questions if you don't mind sharing your thoughts. Your estimate of .32 cents/qtr. at today's stock price amounts to about a 9.5% dividend yield. 1) When do you feel the dividend will be at .32 ish cents per quarter? 2) How much of a discount to NAV is the ACSF share price currently trading at given today's closing price of $13.43? I suppose the NAV has been established in a filing that you are referring to? I haven't looked at the balance sheet yet to divide shareholder equity by shares outstanding and thought you likely have this current NAV per share info and the current discount to today's price at hand.

    Thanks!

    Fox

  • Reply to

    april 28

    by sandy.criscione Apr 9, 2014 10:31 AM
    foxhsmart foxhsmart Apr 9, 2014 1:31 PM Flag

    NMB,

    What is your best guess as to when ACAS will get the full restructuring news out this year?

    Fox

  • foxhsmart foxhsmart Apr 9, 2014 1:28 PM Flag

    You are mixing up your Foxy and your Fox, NMB! I have a feeling Foxy is much younger and prettier than this old Fox! At least I hope so!

    Fox

  • 3,000 options contracts traded in each of those today. That activity makes up a big percentage of all of the outstanding options contracts in those two contracts/expiration dates. I think the Jan 2015 $20 activity is very interesting. Somebody thinks there will be a big move toward or above $20 by Jan 2015.

    Did you see that, NMB?

    Fox

  • Reply to

    NMB and others

    by foxhsmart Apr 7, 2014 2:05 PM
    foxhsmart foxhsmart Apr 7, 2014 3:13 PM Flag

    So to clarify, there WERE significant buybacks in the 1st quarter that will positively impact NAV when ACAS reports 1st quarter earnings later this month?

    Sorry NMB, I was still unclear from your wording. And can you hazard a guess as to what the upcoming NAV will be when they release that number at this quarter's earnings release?

    Thanks,
    Fox

  • foxhsmart by foxhsmart Apr 7, 2014 2:05 PM Flag

    I assume at the upcoming earnings release that ACAS will update us on NAV. Will this reflect any additional buybacks or was the buyback period endedat the end of the 4th quarter?

  • foxhsmart foxhsmart Apr 3, 2014 4:53 PM Flag

    NMB,

    With all the pieces to be spun out, I can certainly understand ACAS management choosing to dribble out the good news piecemeal over time. After the first piece is out, there will likely be questions a plenty peppering management at earnings conference calls and any public presentations they give which are followed by Q & A sessions. It will be interesting to see just how efficient a discounting mechanism the market will prove to be on this as it attempts to peer cogently into the future. Of course, it would be much more fun if they unwrapped the whole ball of wax all at once! Man alive, that would result in one fine display of stock price fireworks!

    Fox

  • foxhsmart foxhsmart Apr 3, 2014 4:09 PM Flag

    NMB,

    $25 in 2016 was my back of the envelope value estimate for a fully implemented and appropriately leveraged ACAS. THAT much upside from $15 would be enough upside to cause management to go through the headaches and cost of a reorg.

    That leaves general market risk as the primary risk to consider which could be a potential fly in the ointment to a successful Jan 2015 $15 OR Jan 2016 $15 call purchase, in my opinion.

    How soon do you think ACAS will announce the spins?

    And how soon do you think ACAS will FULLY explain their FULL reorg plan and timeframe reaching into the formation of ACAM in 2016?

    Do you think ALL the news will come at one time--perhaps to be fully discussed as part of this coming earnings conference call in about a month or do you think they will piecemeal dribble out the news, spin by spin, and ultimate ACAM news over the course of this year and extending into realeasing news in 2016 as well?

    Fox

  • foxhsmart foxhsmart Apr 3, 2014 3:09 PM Flag

    NMB,

    So, back to my question, do you think there is meaningful additional value creation for ACAS that will occur in 2016 that will NOT be reflected in the timeframe you are thinking about holding your Jan 2015 $15 calls?

    This is primarily a question about ACAM being established in 2016 and earning the maximum near term amount of income they can in 2016 due to the fact that by 2016 the new funds will be spun out (in 2015) and by 2016 any additional leverage in those funds and additional leverage in any preexisting funds will be implemented?

    Behind my thinking is that in my experience, I don't think companies engage in the difficulty and short term expense of a reorg to move their stock from, let's say, $15 to $18 (a 20% move). No, that percentage upside in value creation would likely not be sufficient to enact a reorg. In that regard, I am looking at ACAM as being the master stroke which causes an eventual much larger than 20% upside move for ACAS shares. THAT is why I am asking you about your thoughts on 2016 (and, in turn, about your Jan 2015 $15 calls not being Jan 2016 $15 calls).

    Can you share your thoughts on this? Particularly, how much ADDITIONAL value ACAS can create relative to the current share price of a bit over $15 today given fully implemented and levered funds (old and new) that will be in place and earning AUM management fees for ACAM?

    Thanks!

    Fox

  • Reply to

    Price v Value

    by donedealer Apr 3, 2014 12:01 PM
    foxhsmart foxhsmart Apr 3, 2014 2:10 PM Flag

    Well said, Foxyxi! You are a true, pizza/special situations analogy genius!

    This is a case where the parts are worth more than the whole--as long as ACAS management follows through and executes the pizza slicing in such a manner as to create maximum value for shareholders.

    How much for a slice of your best veggie pizza?

    Fox

  • foxhsmart foxhsmart Apr 3, 2014 1:13 PM Flag

    NMB,

    Why did you go with the Jan 2015 $15 calls instead of the January 2016 $15 calls?

    It seems from your posts you feel that the funds will be spun in 2015, but the final separation into ACAM will not occur until 2016? If ACAM is the most important part of the whole spin process, why have you decided to buy the Jan 2015 calls instead of the Jan 2016 calls?

    On another note, I think the growth in income at ACAM will be extraordinary. Once all the spinouts are completed, the corresponding management fee earning AUM goes up meaningfully, and the annual income from management fees will surge upward. Besides the spinouts of the funds and the resulting dividend payments from those funds post-spin causing a narrowing or elimination of the CURRENT discount to NAV in the current ACAS share price, I think that ACAM will be experiencing rapid income growth as the funds lever up assets within the newly created spin funds.

    So perhaps the real gem here in creating the most value will likely be ACAM, once established as its own entity and earning the full management fees they will earn on all the funds they manage once all the funds are levered. Do you agree?

    This brings me full circle back to the first question-

    If ACAM is a big part of the future value creating story for ACAS, and if ACAM is a 2016 story
    , then why would you not buy the Jan 2016 $15 calls? And further, what will you do with your Jan 2015 $15 calls if you find that much of the value creating moves ACAS will make will occur in 2016?

    Fox

  • NMB,
    You have certainly looked at this closer and for longer than I. Can you share your thoughts on how ACAS management may be thinking about--pros and cons--and what you think they will ultimately decide to do--in regard to making a final decision as to whether to spin out the upcoming different funds directly to current shareholders or to spin them but not to current shareholders?

    Which method would create the greatest overall value for shareholders from ACAS management's position?
    And why?
    It seems you are hoping for spins directly to current shareowners, but you are uncertain if ACAS management wants to go that route. Why might management be hesitating to spin directly to shareholders?
    It would seem that ACAM would get the management fees either way.
    What are your thoughts on this?

    Fox

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