Archive for

Dec 29

A very leveraged bet on trucking: YRC Worldwide

YRC Worldwide is a small position for me and, barring a significant move up, it is going to remain a small position. Nevertheless, its such an interesting idea that I want to go into some detail to explain my thinking here.

YRC Worldwide is the amalgam of two nationwide trucking companies, Yellow Transportation and Roadway, and three regional companies, New Penn, Holland, and USF Reddaway.

The business combination of the Yellow and Roadway nationwide was completed in July of 2003. It was followed by the acquisitions of regional truckers New Penn, Holland and USF Reddaway between 2003 and 2005. Along with the acquisitions came a heavy debt load, of which about $300 million unfortunately came due at perhaps the worst time possible, during the economic collapse of 2008.

Since that time the company has been in a battle to dig itself out of the debt hole; it has gone through a couple of workforce restructurings, a restructuring of its labor contracts and pension contributions, and a restructuring of its debt (which diluted existing equity to almost nothing). Read more

Dec 16

6 Comments

Week 76: A Few New Directions

Portfolio Performance

Update: New Positions and My Method

I added starter positions in a few new names in the last three weeks. A couple of these (RPX Corp and Mitek) I have already written about. The other four positions that I started were in YRC Worldwide, AIG, Alon Energy Partner and Nexen.

Apart from Nexen, which was a special situation, the other stock positions are small, and were initiated because I thought the stocks warranted further review. This is my process. I like to add stocks that look promising, which incentivizes me to look at them closer. This technique might not be for everyone, but it works for me.

It’s difficult to explain why the process works for me. When I have some money on the line I tend to churn the idea in the back of my mind, and over time my opinion on the position becomes clarified. I begin to like it more or not at all. If I don’t take a position, I tend to forget about the stock altogether, and my analysis ends without any real conclusion.

Of course in the mean time I do have money on the line, so there is the chance for real gains or losses. But usually these aren’t significant, and anyways, I only do this with names that I have done some initial digging on and have deemed have som promise. I may lose a few dollar or make a few dollars on these positions over time, but any losses I would chalk up to the cost of doing business.

I have since taken a closer look at three of the six. Read more

Dec 12

3 Comments

Stocks I’m looking at: RPX Corp

I came across this idea from the Joel Greenblatt’s Magic Formula investing website. The website is a take off of the book he wrote, “The Little Book that beats the Market”. The website basically allows you to sign up for free and access a stock screen of the top 50 stocks based on the formula described in the book.

I’ve had some luck finding stocks from this screen in the past. Argan Inc (AGX) and Furiex Pharmaceuticals (FURX) are two stocks that I have done well on. The screen tends to dig up companies in obscure businesses that I would otherwise ignore. RPX Corp is no different.

RPX is in a business that I didn’t even know existed. In fact, I’m not even sure it did exist before RPX.

RPX buys patents. Then it sells memberships to companies that allow them to use the patents that RPX has in their portfolio. Read more

Dec 7

Stocks I’m Looking at Part I: Mitek

Over the last two weeks I’ve been focusing on finding new opportunities. I’ve been posting thoughts about the stocks that I have been looking at through my twitter account (@LSigurd) but I have yet to write about any of them here. This post is the first in a series I want to do over the next week of brief summaries of my findings. These posts are not intended to be in-depth analysis as much as they are a broad overview of why I think these companies deserve a closer look. I am writing them as much for myself as anyone else, before I forget I ever had the ideas at all.

MITEK (MITK)

I rather painfully bought this one at $2.40, sold it on some concerns I had with their revenue model after reviewing the conference calls, and then bought some of them back on the news Wednesday that they had found a partner in US Bank for their new bill paying product. Below are the transactions in my practice account. Read more