Early last year I warmed up to the idea that housing was in the early stages of recovery and this single idea generated a number of successful investments for me (NCT, NSM, IMH, MTG, RDN, HOV…). With many of these housing investments having now played out I have been trying to think of what big idea might drive my strategy in the next 9-12 months.
What occurred to me rather suddenly this week was that perhaps I had already figured that out, had even been acting on the idea, though I had not articulated it consciously.
Companies with excessive leverage have been shunned for the past 5 years. Many have lagged as questions about their ability to continue as a going-concern have superseded any potential out-performance to the upside if things take off.
I think that this might be the year that changes. Read more
Short Lived Niko Experience
I wrote about a new position in Niko in a short summary 3 weeks ago. A couple weeks later I sold the stock. What can I say – its part of my process. A lot of times I only get clarity about a stock once I own it. I buy a position, sit on it for a few days or a week, and do some more background and some more thinking on the name. With that my opinion becomes more clear.
The discomfort I developed with Niko was partially the result of another batch of less than stellar drilling results, but mostly the result of my conclusion that this isn’t the right time yet. The driver of the share price will be the settlement of a new gas price contract in India. I don’t think this is likely to occur until the existing contract expires, which is not until next year. In the mean time Niko will continue to experience production declines in India, and they are open to negative news flow on drilling. Read more