It’s been a few months since I last posted an investment idea on the blog. With the market up pretty sharply this year, finding an idea worth deploying the fund’s capital in has been a bit of a challenge. However, last month I did build a position in Leapfrog (LF).
LeapFrog Enterprises, Inc. is the leader in educational entertainment for children. The company’s product portfolio consists of #1 learning tablet for children (LeapPad), #1 learning gaming system (Leapster), #1 learn to read system (Tag), along with a strong line of preschool learning toys and a valuable home entertainment catalog of educational videos and DVDs. Parents love and trust the brand and I believe LF has many avenues to grow further.
The idea has been written up on a few sites lately so I won’t repeat all the details here but readers should be aware that the company also has substantial short interest. According to Yahoo finance, 22% of the float is sold short. For those unfamiliar with the company – the bear thesis seems to be as follows: Continue reading
Posted in Investment Ideas
A few recent articles that might be of interest to readers:
- Chanos’ latest presentation on China (Business Insider). Also interesting is this debate with Stephen Roach from February (Chanos – Roach debate).
- Veris Gold which I mentioned in the quarterly update continued its tendency to issue warrants and dilute shareholders. The investment continues to be extremely frustrating as management seems to view issuance of stock / warrants as cost-free. 683 Capital Management reported owning 5% of the company (a large part of the stake is through warrants).
- An interesting discussion on operating margins by The Brooklyn Investor. The comments section is a pretty good read too (The Brooklyn Investor)
Posted in Updates
The fund’s latest quarterly letter has been updated on the ABV Fund page. The fund under performed the S&P 500 last quarter. See the letter for details.
Apologies for the lack of posts this past quarter. Frankly, I have found nothing compelling worth posting. Rather than just have link posts, I thought it better to wait till I find an opportunity worth digging into as a next post. I am currently working on a couple of ideas and am hopeful that one of them will result in a post this week.
Before we get to performance of The ABV Fund, a couple of housekeeping notes. Please click the link to the fund page to skip straight to the performance discussion.
Firstly, I would like thank you, the readers of this blog. A special thank you for those who of you who have emailed / left comments. Its nice to know someone is reading my irregular posts. When I started posting stock write-ups, I did it more to force myself to write out my thesis in a short and compelling way. It served as a final check in making an investment. I never expected to learn so much from the back and forth with readers. It has truly served to make me a better investor. Please feel free to post comments (or email me if you would rather not have a public discourse) if you disagree or agree with something I have written.
I started analyzing Westway Group Inc (WWAY) in early December and was still in the process of completing my analysis. This write-up is essentially a work-in-progress summary of my notes. The company announced a transaction last week. I have / had no position in the stock. Since I had the write-up about 75% completed, I decided to post-it here. (Link to announcement here)
Apologies for the lack of posts for the last few weeks. Been swamped with my ‘day’ job and life in general. Maybe I need to make a new year’s resolution to post once a week but realistically, I fear that won’t last more than a couple of weeks. Anyway, here are a few interesting articles / blogposts from the past few days:
- Ten investment quotes you may not have heard before (Motley Fool)
- 28 Year old activist investor Ryan Morris gets a nice Businessweek profile (Businessweek)
- Ackman’s herbal life website is now live - http://factsaboutherbalife.com/
- Whopper investments with a good post on ALJ Regional Holdings and its impending merger with Optima (Whopper Investments)
- A nice write-up on Nickolas Financial from a newer value blog. NICK has been a stock I have been watching for some time now but it just continues to march upwards (Well-Conceived Investments)
- An interesting paper on investing in companies that are ripe for a takeover (Greenbacd)
- Light-up crosswalks from IBM (IBM)
A few recent articles that might be of interest to readers:
- Thought I had read lots of articles on Buffett’s use of floats but this one is really good (link)
- Efficient markets – 30% drop thanks to an error on a 13D (Barel Karsan)
- A long write-up of a Mongolian investment with a CEO who says:
“The Company started with me asking friends to invest alongside me in Mongolia… Instead, I have decided to take no salary, stock options, performance allocation, bonus or anything else. I’m here in Mongolia because I’ve invested my own money in the company. My Co-Pilot in this venture, Jordan Calonego feels the same way. Besides, we’ve been investors for over a decade now and have been disgusted to learn that the CEO always seems to do better than the shareholders. Now that our roles are reversed and we are management, it would be wrong of us to do what we have always criticized. Investors need to think of this company as a business created by a bunch of very successful hedge fund guys who want to invest their own money in Mongolia. Minority shareholders can come along for the ride if they want without any of the onerous fees normally associated with hedge funds.” (Above Average Odds)
- Boom in Mongolia deflates after deal that started it is threatened (Dealbook)
- Roddy Boyd on MLM Schemes (SIRF)
- J.C. Penney continues to fascinate. Can the Ackman / Ron Johnson team succeed where so many have failed (turning a retailer around)? Vitaliy makes the case to buy JCP shares at these levels (Institutional Investor)