Monday, February 17, 2014

Natural Gas At A Crossroads: Heading For A Shortage Or is The Market Still Oversupplied?

Against The Backdrop Of An Extremely Cold Winter, The Natural Gas Market Wavers

Natural gas prices have been in the dumps for a couple of years as the drillers found lots and lots (and lots) of gas reserves onshore in the US that are extractable at a reasonable cost using modern production technology.  As producers went hog wild in drilling wells, inventories piled up, prices crashed ($2/MCF natural gas was not that long ago) and natural gas consumers (utilities, chemical companies, etc.) starting burning up as much of the stuff as they possibly could.  It seemed the glut of natural gas would never go away and prices would always be low.  However, the winter of 2013-2014 has proven to be one of the coldest in a couple of decades and demand has suddenly ballooned for natural gas as heating fuel.  The overhang of excess supply is about gone as everyone tried to stay warm and prices have risen to in excess of $5/MCF for the front month future and $4 and change for the rest of the futures curve. In times past when supplies have gotten short in the natural gas (and just about every other commodity) market, it has not been uncommon to see parabolic upward moves in the price of the commodity.  However, natural gas is nowhere near panicky shortage pricing that has been seen in the past (natural gas was $20/MCF after the 2005 hurricane season), perhaps due to the view that we are still standing on a sea of natural gas and any shortfall in supply will be temporary.  Which way will natural gas prices move in coming months and more importantly how can an investor most appropriately make money off whatever direction the market moves?

Wednesday, February 12, 2014

Stable Value Funds: 8th Wonder Of The World Or Smoke And Mirrors?

How Stable Value Funds Work And How Best To Use Them

Get it?  A stable.

Many 401k and 403b plans have a stable value fund (AKA interest income fund) as one of the investment options.  These funds don't have a ticker symbol, have sometimes rather vague and opaque disclosure documents available on them, and it is hard to get any research or informed opinion on them. Stable value funds are only offered in "qualified" retirement plans such as 401ks and 403bs.  All most plan participants know about them is that they are "stable" and sometimes what the current interest rate offered by the fund has been recently.  In this post I will discuss how these funds are constructed and the best way to use them in your 401k or 403b.

Friday, February 7, 2014

Published On Seeking Alpha: Navios Acquisition: A Quality Company At Close To Net Asset Value

With one of the strongest management teams in the industry and a preference for long term charters to mitigate the high risk inherent in the shipping industry, Navios Acquisition (NNA) has survived the global recession, a period of greatly restricted funding for ship owners, and the bankruptcy and financial distress of less well-positioned industry peers. After a recent sell-off from 52 week highs, the company appears to be a good value for investors desiring exposure to the crude and refined products tanker business as the company's shares trade at a small premium to net asset value.

To see the rest, go here:

As always, this is meant as entertainment rather than investing advice.  Consult your advisors, throw the yarrow sticks and get out the I Ching, do your own due diligence, take you own risks.

Wednesday, February 5, 2014

Update: My Seeking Alpha Article On PTRY Selected As A Top Idea Of The Day

Since this is only the second piece I have submitted to Seeking Alpha, I don't know how rare this is for a contributor, but I imagine that its not that common given how few I see in the list:

Now to find out if I get paid more for such great work...

Tuesday, February 4, 2014

Published On Seeking Alpha: The Pantry Is Empty: The Pantry Inc. Is Overvalued And Overleveraged

The Pantry, Inc. (PTRY) has made numerous changes to the company and its operations, hired a new CEO, remodeled stores, and even attracted a modicum of activist investor attention. Yet the company continues to see a steady slide in EBITDA, uses all of its cash flow to service debt and spruce up its stores, and has leveraged up its balance sheet in the process to the point where the firm has little room for error. The Pantry appears to be an obvious short based on declining operating performance, high leverage, and management's apparent inability to stem the deterioration of both the business and the balance sheet.

To see the rest of the article go here:

As always, this is for your entertainment only, not investment advice.  Consult your advisors, do your own research, take your own risks.  I am just some dude spouting off over the interwebs.

Monday, February 3, 2014

Insurer Nastygrams: When Long Term Care Insurance Premiums Rise

Why This Has Been Happening And What To Do If You Are Affected

If you are a long term care (LTC) insurance policyholder who has had a policy for five or more years, you are likely to get an unpleasant piece of mail if you have not already: a whopping increase in your LTC insurance premium.  Double digit percentage increases are the norm and 85% and higher increases have been levied on some policyholders.  Worse yet, just because you had your premium increased significantly does not mean that you will not see your policy cost rise even further in future years.  To add insult to injury, several significant players in the LTC insurance market have seen their credit profile degrade resulting in lower claims-paying ratings, raising the chance that they will have difficulty paying claims down the road.  In this post I will discuss the economics of LTC insurance, how insurers got themselves into trouble with this product (necessitating giant rate increases), and what to do if you have an LTC insurance policy and get slapped with one or more premium increases.

Friday, January 31, 2014

Published on Seeking Alpha: Underperforming Olin Corporation Needs To Be Acquired

"Olin Corp. (OLN) reported fourth quarter 2013 earnings on Monday meeting analysts' estimates and tallying up record annual EBITDA of $424 million. While this is a notable achievement, management indicated first quarter EPS well below the consensus forecast and EBITDA for 2014 at best equal to 2013's performance. Meanwhile the company continues to laud itself for its increasing cash balance (up $143 million during 2013 to $308 million at the end of the year), continuing its 20 cent per share quarterly dividend (which has not been raised since 1999), and repurchasing 1.5 million shares during the course of 2013 (1.9% of shares outstanding for perhaps $40 million or 10% of EBITDA). Based on Monday's closing price, the company trades at EV/EBITDA of approximately 6 times and has done so for some time. Despite their multimillion dollar compensation, management together with the board owns a trivial amount of the company giving them little incentive to do much beside collect their pay and options grants. Olin is ripe for an activist to shake things up or a buyer to emerge to unlock the company's value."

The above is an excerpt from my recently published article on Seeking Alpha.  To read the whole thing, go here:

Author's note: Now that I am no longer subject to the numerous restrictions related to my prior employment, I have started trying new things professionally.  I submitted an article to Seeking Alpha which they selected for publishing as a "Small-Cap Insight."  I intend to split content in the future between this blog and Seeking Alpha, assuming they like my stuff enough to publish it.

As always, the linked article is for your entertainment only rather than investment advice.  Consult your advisors, do your own due diligence, take your own risks, and be careful with your money.  I am just some over-educated boob on the inter-tubes: what do I know?

Monday, January 27, 2014

The Not So Tender Offer: What To Do When Your Bond Is Called Early

And Why You Should Almost Always Accept The Offer

As I mentioned in a recent post about the high yield bond market (, junk bond issuers have been taking advantage of the lower rates and easy terms available to them in the new issue market.  When existing junk bonds are refinanced, sometimes the issuer will simply exercise the call option embedded in the bonds (usually at a fixed price that starts at par plus 6 months of coupons and declining as the bond nears maturity).  However, often junk issuers wish to refinance their bonds before the call date has arrived or their lawyers are worried about the possibility of a technicality in the existing bond covenants that may prevent them from issuing new bonds to refinance the old ones.  When this happens junk issuers will initiate what is known as a "tender offer" to get the owners of the existing bonds to go along with their intended refinancing.  Unfortunately, there appears to be some confusion on the part of retail bond owners about the best course of action when confronted by a tender offer.  This post is about what to do if you own a bond that is the subject of such an offer.

Wednesday, January 22, 2014

High Yield Market Looking Overvalued And Underprotected

The high yield (AKA junk) bond market is a funny thing.  Everyone who invests in this asset class knows they are buying IOUs from higher risk issuers who offer extra interest and extra restrictions on what the issuer can do in order to compensate the investors for the higher risk.  Sometimes investors are more concerned with the extra risk involved and sometimes they are more interested in the extra interest offered.  But relatively few junk investors seem to look beyond the rating and the yield, and almost all seem to have very short memories.  The junk market appears to me to be approaching an extreme and I would caution anyone tempted to chase yield in this market to be very careful.

Thursday, January 16, 2014

A New Chapter

A couple years ago I started this blog partly as an experiment and partly as a way to formalize and expand on my investing notions by putting them into print.  A few of you were good enough to read my ramblings and even comment on them, for which I am grateful (spammers aside).  However, I was greatly hampered by a need to maintain anonymity and I felt the need to avoid a number of topics due to the nature of my employer.  As of today, I am no longer subject to those constraints.  I can come out of the shadows and comment on whatever I like.  I will also have the time to cover some new topics, perhaps surface some new investment ideas, and revisit some old post topics that are worthy of further discussion.  I intend to submit some work to Seeking Alpha as well and plan to experiment with both exclusive and non-exclusive listings on that venue.

First, a bit about me.  I have been an active investor since 1998.  I am a CFA charterholder and hold an MBA from NYU-Stern.  Over the last 20 years I have been a bank and insurance company regulator, a hedge fund securities analyst, a ratings agency analyst and a consultant.  Going forward I intend to pursue such business and investment opportunities as may present themselves while amusing myself and hopefully my readers.

I look forward to digging up new opportunities to share with my readers and offer up whatever meager knowledge I have accumulated for your education and amusement.