Amit Chokshi

http://www.kinnaras.com
Total Rating:
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87 Comments

    • Thu Oct 11th 13:30 PM | Rating: 0 0
      Commented on:
      Downey Financial's Problems Run Deep
      Thanks for the comments but I don't think DSL institutional investors really do know what they own. It's very difficult to get under the hood of financials, just look at FMT for example, lot of lost money there for institutions and the Ford-led investor group walked away once doing their own due diligence.

      Same can be said for some of the sharpest guys around like Tom Brown and David Einhorn who ran into problems with some of their holdings in the financial sector. I'll give the benefit of the doubt to Brown and Einhorn because they are really elite investors based on their long-term records, but I've known plenty of analysts on the buyside for institutional funds that are just flat out weak, my opinion is the same for most sellside analysts as well.
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    • Tue Oct 9th 18:23 PM | Rating: 0 0
      Commented on:
      Shanghai's P/E Ratio Isn't High By Historic Measures
      Is the E for current year operating earnings or for net earnings which would include investment gains? Given that many firms in China are booking significant investment gains, the P/E may be understated if it includes investment gains along with operating earnings.
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    • Fri Oct 5th 09:59 AM | Rating: 0 0
      Commented on:
      G. Willi-Food: Da or Nyet?
      Just to clarify, I posted this on the author's website directly:

      I manage a fund that is long WILC but I’m pretty certain your analysis is wrong. Unless the news has changed since the past few hours you’re not identifying the buyer of the Russian poultry business accurately. Willi Food INVESTMENTS, which trades as WLFD on the TASE is buying the Russian business. AG, through WLFD owns 62% of Willi Food INTERNATIONAL, which is WILC and what US shareholders own.

      The acquisition will have no material benefit to WILC shareholders other than to show AG and Willi mgmt are working on the deal front. WLFD is the holding co, the Russian business will be held alongside WILC and the real estate and other WLFD holdings but don’t look to factor any of the egg business into WILC’s financials. Check the TASE, WLFD stock is rocking because WLFD shareholders receive the benefits of that deal, WILC shareholders do not.
      ----------

      I am in the author's camp obviously by having WILC in my fund (and a significant position in my fund) and believe this is a great investment but the news reports have been somewhat confusing as far as what the implications for WILC shareholders are. This deal by AG and Willi mgmt won't impact WILC shareholders like me but it portends hopefully good M&A deals down the road. Skeptical WILC longs should keep in mind Gil was hired as an M&A guy specifically for WILC so there will be deals done for the WILC operating co as well.
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    • Tue Sep 25th 22:41 PM | Rating: 0 0
      Commented on:
      Seitel/ValueAct Looking to Acquire Pulse Data on the Cheap
      Thanks for publishing this commentary. Just FYI the exhibits are all truncated and do not expand in a manner that makes them easy to see. How should I be submitting these exhibits in the future?
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    • Mon Sep 17th 08:42 AM | Rating: 0 0
      Commented on:
      Watching the Tape on Intertape
      I've looked at this co a bit, one issue i'm struggling with is why the hedge funds brought in the old CEO who looks to have tanked the co before. ITP would be one of the faster cos to rebound in a recession as most cyclicals trade way ahead of economic slowdowns and upswings, just not sure the hedge funds + new management will do it but i'm taking a close look.
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    • Sun Sep 16th 12:18 PM | Rating: 0 0
      Commented on:
      What Sort of Returns Can You Expect Shorting Naked Puts?
      I haven't looked at academic research in a while but while puts may be expensive, on a put-call parity basis aren't calls consistently even more expensive relative to puts? Right now, I expect puts to be very expensive due to market bearishness but selling naked options is a long-term losing strategy. A lifetime of 40% annualized returns gets erased from a 0 day like Black Monday, one of those 10 sigma events that seems to happen every 2-3 years.
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    • Thu Sep 13th 16:56 PM | Rating: 0 0
      Commented on:
      Some Core Themes for Portfolio Planning
      Rob Arnott is a genius, unfortunate that WisdomTree (Siegel/Steinhardt) gets credit for his fundamental indexing research.
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    • Tue Sep 11th 08:17 AM | Rating: 0 0
      Commented on:
      Take-Two Software: Risky But Worth It
      Is it possible it's overbought, it did get into the $12-$13 range just 1-2 months ago. TTWO also received an ESRB rating for Manhunt 2 as well which should do pretty well.
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    • Wed Aug 29th 11:11 AM | Rating: 0 0
      Commented on:
      Coach is the Real Retail 'Tell' Stock
      I agree with you, I also believe some former high fliers are going to phase into the long-period of valuation compression like WMT and HD did over the past decade. COH is a great company but I think like SBUX the market may re-assess whether these companies deserve premium valuation multiples. I also think DSW is a good candidate as well but I was scared out of shorting it unfortunately.
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    • Mon Aug 27th 19:44 PM | Rating: 0 0
      Commented on:
      Ecology and Environment: Microcap With Major Potential
      The minority interest is a deduction for the profit/loss that is not "owned" by the company. Since the subsidiaries are generating a larger portion of EEI's operating performance, the actual profit is larger and therefore the minority interest that must be deducted grows as an overall absolute number. Keep in mind that EEI holds many operating subs due to its global nature.

      Also, the analysis included more data but due to timing issues was not included.
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    • Thu Aug 23rd 09:29 AM | Rating: 0 0
      Commented on:
      Core Molding Technologies: 2Q Earnings Review
      I like CMT and its management team overall but even at the lower price it's tough to get too interested as far as investing in the company. Management has kept costs in line as you said and the company looks dirt cheap on a trailing basis, which as with most cyclicals may be a value trap/peak signal. My reservations with CMT is that it only has 3 customers and one - International T&E - is their owner for the most part. It's like a Ford/Visteon relationship and while the company's balance sheet is strong and their capex is now modest, I just feel that an investor in CMT is hoping that truck demand stabilizes. I am not sure its the rails that are killing the trucks as opposed to the 2007 EPA emissions standard change for diesel engines. Because of that I think going off 2006 and even 2005 results as a potential return to norm in 2008 may be misleading because a lot of truck manufacturers increased orders ahead of 2007 in 05-06. Caterpillar and Accuride have both cited weak truck demand as a reason for some operating performance issues and given the slowdown in construction which accounts for a good portion of truck demand, I'm not sure even 2008 could see a pick up.

      If you make some conservative estimates for 2007, these guys could top out at about $120MM in sales which would be below their ideal capacity for strong operating margins. I put their 2007 EPS around $0.41 a share or so (17x forward P/E valuation) and their forward EV/EBITDA around 5.2x (my est is ~$7.5MM for the year). That's a fair value for a company that is mostly US based (no material European truck exposure which is holding up well), has 3 customers that account for 80+% of sales, has a unionized workforce with I believe two sets of unions due for contract renegotiations this month and Jan 2008, and no material insider ownership (for microcaps I prefer to see a large chunk held my management).
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    • Tue Aug 21st 14:05 PM | Rating: 0 0
      Commented on:
      Metalico Hasn't Lost Its Luster
      correction volume dried up - volume slows, price follows, margins for MEA could fall because they are not really any different from the other cos mentioned in my previous reply
      View article »
    • Tue Aug 21st 14:04 PM | Rating: 0 0
      Commented on:
      Metalico Hasn't Lost Its Luster
      MEA is interesting at the right price, you do realize the stock sold off after its Q2 because volume has driven up? These guys are not pure recyclers, they play the metal pricing wave, they've got a few acquisitions that they need to integrate which should allow them to scale better but from a valuation perspective it's not the compelling. CMC, MM, SCHN are all down and all do the same thing in terms of scrap metal recycling. The best play in the sector is really IDSA.
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    • Fri Aug 10th 18:41 PM | Rating: 0 0
      Commented on:
      Selling Bank of America Puts Is As Safe As It Gets
      The title of the article is that selling BAC puts is as safe as it gets. Selling naked puts or naked calls is one of the riskiest plays you can make in markets. As far as the margin for the naked put, you're forgetting that you're marking to market too. The cash requirements will go up but now you're going from havign cash of $6k required to $18k, that's a huge increase in cash that's required. You're also marked to market on those options so that $1300 that you're short, if the stock goes down, that is going to show up as a huge negative value to your portfolio and will constrict your flexibility. Have you actually run the numbers in terms of how the greeks will impact that stock option for every BAC stock move?

      Your strategy is very very risky given how far dated the options you're short are. You have no hedge, if you're going to play the option and it seems you mean to imply you want some income as opposed to "playing it", set up a vertical or horizontal spread where you partially hedge your risk. Takign a quick look at the BAC options it seems you've gone to the Jan options because those are the only ones that have some "meat" to them which to me suggests there's even a bigger problem because you're short volatility. The option premiums for BAC look fairly low, so you're taking on more risk by going further out to get some fatter income but you're doing it at low volatility (relative to most options)

      Everything you say regarding the probability of BAC falling/dividend cut may be true but you're dealing with a skewed return profile. If BAC is down to even $37 or $36 per share and you're assigned, you're paying $38.70 for a stock that is worth $37. If they're down to $35 or $30, you get the picture. And if you look at some of these megabanks back in the early 90s, these stocks has dropped into the teens.
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    • Thu Aug 9th 19:28 PM | Rating: 0 0
      Commented on:
      Selling Bank of America Puts Is As Safe As It Gets
      Yeah but if you're long BAC as it is and the stock drops you're taking big losses on the short put position and the stock. Options are marked to market and you're taking a loss on BAC stock and the puts. I have no idea what the delta and gamma on those puts are but if BAC stock falls even to the low to mid 40s you're going to have to put more cash in to maintain margin. So your BAC stock value drops and you need more cash for collateral for the declining put value. Also, dont underestimate what can happen in 5 months, look at how stocks like C and JPM did in the early 90s, a 13% drop is nothing in terms of demonstrating any bottom or stability has been reached. With those puts you're on the hook for buying them at $40 no matter what, if BAC stock is at $30, you're really underwater on that purchase.

      So if that stock is at $30, you're down on your BAC stock holding and are now assigned a stock you have to pay $40 less that $1.30 premium for. Also, you've had to put who knows how much cash into that brokerage account as the short put value has gone the other way on you. Don't forget the opportunity cost of that collateral/margin cash you need too, that just sits there in your account when you could have been investing it elsewhere.

      I think selling puts is an ok at best idea using short dated options if you want a stock at a specific price. That way you have theta decay working for you at a more rapid pace. Most longer dated options under-price volatility and theta decay is nowhere near as pronounced which is why being a buyer as opposed to a writer is preferable for longer-dated options.
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