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Apr 15

Some Conclusions on the Natural Gas Market

I have spent much of my weekend researching the state of the Natural Gas market. In this post I am going to outline what I’ve learned and draw some tentative conclusions.

My interest in natural gas was piqued after the abnormally cold March that we’ve had and the coinciding decline in natural gas storage to below the 5 year average.

Subsequently, after reading an article posted by @Dedwardssays on his blog and a couple of articles on Seeking Alpha, I took a position in Gastar Exploration (GST). At the same time I added a call position in Exco Resources (XCO). Since then I have added a small position in WPX Energy (WPX), which appears to have had a large Niobrara discovery in the Piceance Basin. I also, of course, have held a position in Equal Energy (EQU) for the last number of weeks. I am actively looking for undervalued natural gas biased companies producing the in the lower 48. Read more

Apr 7

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Getting Comfortable with Walker and Dunlop

I was originally put on to the idea of Walker & Dunlop (WD) by a reader of the blog back in September (while I will leave the name of that tipster anonymous, many thanks for the idea). The call was prescient and I can only wish I had made my purchases sooner.

As it was, I initiated a position in Walker & Dunlop about 4 weeks ago, doing so after the stock had fallen 10% from its 52 week high of $21.76. Unfortunately that turned out to be at least $2 too soon.

The stock has subsequently fallen further. As usual being wrong has compelled me to re-evaluate my thesis, which I did this week. After some waffling I have decided not only to hold on to the position but add to it, which I did on Thursday and again on Friday.

What they do

Walker & Dunlop is the commercial lending equivalent of Nationstar Mortgage. Their business is the origination and servicing of commercial mortgage loans. The vast majority of those loans are multi-family and are passed along to Fannie Mae, Freddie Mac or into HUD insured Ginnie Mae securities. The company generates revenue from origination fees and on the servicing of its loans. They are the eighth largest originator of commercial mortgage loans in the United States, and the second largest originator of multi-family loans.

Extending the analogy to Nationstar, Walker & Dunlop recently acquired its fellow commercial originator CWCapital from Fortress Investment Group, who became a large shareholder after acquiring 11.6 million shares as part of the sale. Read more

Apr 1

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Week 91: Consolidating

Portfolio Performance

Consolidation

Patience is a difficult virtue. I’ve had 3 weeks of pretty so-so performance, some stocks going up and some stocks going down and overall not much of anything happening. With the market going up seemingly every day its hard to not let that play on your mind.

But you have to have a balance of patience and impatience to do well in stocks. You need to have a healthy level of impatience so that you don’t hold onto positions for too long, but tempered with an equal dose of patience because, as I read some time ago from a cagey market veteran, you will make 80% of your gains for a year in 2-3 weeks, and figuring out which weeks those are is nearly impossible.

In the last few weeks I think I demonstrated a little bit both; witness impatience in my selling of gold stocks and of my position in Tricon Capital and patience as I held on to falling positions in MBIA, Impac Mortgage and watched YRC Worldwide and Yellow Media correct substantially from their highs. Read more