Reminiscences of a Stockblogger

Mar 3

Never Afraid to Change My Mind and Change Again (MGIC)

Over the last couple of weeks I have been reading “Ideas have Consequences” by Richard Weaver, a somewhat well known and from what I understand quite well respected philosopher of conservative thought. The book, in which Weaver critiques the ills of our age and conveys the forgotten values of conservatism that have led to them, was written in 1948, and thus in retrospect it can be seen to have been quite prescient, having anticipated the spirit, if not an eerie amount of the details, that have come to characterize our culture. I would recommend it to any one interested in the subject of how we (as a society) have come to do as we do.

What I wanted to touch on here was a particular passage that I found striking, and also quite right.

In addition, the disappearance of the heroic ideal is always accompanied by the growth of commercialism. There is a cause-and-effect relation here, for the man of commerce is by the nature of things a relativist; his mind is constantly on the fluctuating values of the market place, and there is no surer way for him to fail than to dogmatize and moralize about things. Read more

Feb 23

32 Comments

Doing more work on MGIC and Radian Group

Over the last couple of days I lightened up on my position in Radian Group and added to my position in MGIC. While I am nervous that this runs contrary to the claims of analysts (which have been getting on board the Radian train lately) I can’t find a hole in my work and cannot ignore the value I see at MGIC.

A few weeks ago I worked through a “blue sky” estimate for both Radian and MGIC. I was pretty surprised by the results. The following is not intended to be 2013 estimate or really an any-particular-time-period estimate. It is simply a look at what earnings might be once defaults “normalize” and each company’s reserve additions revert back to being those on new delinquencies only.

Feb 19

5 Comments

Week 85: Some Short Thoughts on Nam Tai, Yellow Media, Radian Group and Atna Resources

Portfolio Performance

Update

I finished a post over the weekend giving some thoughts about the macro-environment and how it pertains to my portfolio. As a consequence of the conclusions drawn, my portfolio has been growing and my cash level decreasing, to the point where I have now been on margin for the last month and a half. Right now I have about 11% margin. While I am typically wary of using margin, when I look at what I own there are no stocks that I feel compelled to reduce. We’ll see if this turns out to be folly. This is, however, about as much risk as I’m comfortable with, so any stocks added hereon will have to be balanced by equivalent removals. And as per the strategy I profess, I will sell without remorse if the market turns abruptly.

On to some of the moves I made over the past 3 weeks. Read more

Feb 17

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What does the Macro mean for my Portfolio right now?

My investment strategy is to invest in small and often illiquid companies. This is where I have the greatest advantage. I am willing to spend time investigating names that very few others have even heard of. I have my doubts that there are more than a few handfuls of investors in the world that have spent the number of hours I have on Community Bankers Trust (BTC) or Rurban Financial (RBNF).

Investing in micro/nano/nonexistent cap companies gives me the opportunity to take advantage of what can sometimes be large price discrepancies. But it also has its drawbacks. In particular, because the companies are illiquid, I often cannot get out quickly once the tide has turned.

While I try to hedge this risk with due diligence, there is another aspect that cannot be mitigated with company specific research. In particular, when the macro becomes trump, these little stocks can become very difficult to unload.

I am not very good at holding tight through thick and thin. Perhaps I am a child of 2008 where I learned the rather significant lesson that buying and holding because the business is sound is not always a preferable strategy. In addition to the money and time lost by holding on, there is the mental toll that it takes. I hate to use cliches, but the one that fits well here is that it is better to live to fight another day.

I went back and reviewed some of my past posts on the macro-scene. I haven’t written very much about the macro-environment since my post “It’s a bull market“. In that post I outlined that while I remained wary of the long-term conditions in Europe and was concerned that the LTRO was only short-term panacea that would eventually be overcome by a tide of falling economic data, that the bottom-line was liquidity, which was abundant, and as far as stocks go that tends to trump all:

The underlying condition right now is one of liquidity. It is not the intent of this blog to philosophize (too much) on the eventual consequences of such liquidity. There are plenty of folks, like the wonderful Ms. Park, who are already describing those consequences eloquently. The intent here is to try to evaluate those conditions clearly, and to describe how I am acting to capitalize on those conditions.

For the moment anyways, that means that I own stocks. Read more