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Special Situation Investing News - 8/12/2012



August 12, 2012 – Comments (4) | RELATED TICKERS: GEO , DOLE.DL , ABT

1) I'm personally not all that comfortable with investing real money in a private prison operator from a moral perspective, but I think that a conversion into a REIT would be a great move for Geo Group (GEO). This situation hasn't gotten nearly as much publicity as Corrections Corp.' of America's (CXW) efforts to convert, probably because of Bill Ackman's involvement in CXW, so that may be why it appears slightly cheaper. CXW is up over 17% versus only 2% for the S&P 500 since I added it in CAPS on news of its potential REIT-conversion back in April. I'm adding as many REIT-conversions as possible in CAPS to track their performance.  

The GEO Group Provides an Update on a Potential REIT Conversion 


2)   I posted a while ago that Dole is in the process of splitting up into two companies. Apparently the Chairman of its Board thinks this is a good move. He has acquired over a million new shares of Dole stock totaling nearly $15 million in August. While I would never buy a stock solely on the basis of insider purchases or sales, it's interesting background information.  

Insider Transactions for DOLE FOOD CO INC


3)   Shares of truck-maker Oshkosh (not the kids's clothing retailer OshKosh Bgosh :), though that is fun to say) have performed fairly poorly since I added them in CAPS a year ago on word of Carl Ichan's involvement in the company as an activist investor. OSK is down over 25% versus a 6% increase in the S&P 500.  

Well, apparently Mr. Ichan hasn't given up on the company. He's still urging Oshkosh to spin off its JLG Industries division, a business that sells construction access equipment like lifts and booms. It certainly sounds like OSK management wants nothing to do with Ichan, so I'm not holding my breath that anything is going to happen, but I am keeping an eye on the situation.  

Carl Icahn Isn’t Giving Up the Oshkosh Fight


4)   Here's yet another article about how Sears (SHLD) is cheap on a sum-of-the-parts basis. I posted this one for two reasons, one of course for some reason I'm always a sucker for sum-of-the-parts analysis and two this one was written by Barron's Michael Santoli, who's usually pretty good.  It's definitely an interesting read for snyone who's into this stuff like I am.

There's Much More to Sears Than Meets the Eye 


5)  Here's an interesting overview of one of my current CAPS and real-life holdings, Abbott Labs (ABT).  While I'm no lover of big pharma by any strech of the imagination, this is the sort of company that I like to that pays me a solid dividend (3.1% and it has increased ever year since 1990) to wait for a potential value-unlocking catalyst to occur.  In this case the catalyst is the company's splitting into two.  ABT is up over 25% versus an increase of 15% for the S&P 500 since I added it to my CAPS portfolio in November of last year.

Abbott Labs Shows Slow Growth, Solid Dividends 


4 Comments – Post Your Own

#1) On August 12, 2012 at 1:50 PM, TMFDeej (97.76) wrote:

Here's a new article about a stock that has been on my radar for quite some time.  I went long Reading Internetional (RDI) in CAPS on the premise that value of its real estate assets was understated on its books back in October 2010.  That's a long time to squeeze a 6% gain out of a stock...versus a 19.5% gain in the S&P 500.

This week's Barron's contains an interesting article about the company.  The following quote should be enough to pique a special situation investor's interest: 

Capstone Equities, a New York real-estate concern, pegged Reading's value at between $12 and $14 a share in a May 15 letter to Reading's board of directors. That's more than double Reading's stated book value of $5.44 a share, and Friday's closing stock price of $5.07.

Popcorn and Property


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#2) On August 12, 2012 at 7:46 PM, constructive (99.97) wrote:

Steve Eisman, an activist hedge fund management attacked GNW management in 2010.

Legions of unhappy investors helped persuade underperfoming CEO Mike Fraizer to resign.

New CEO Martin Klein has a plan to unlock value, possibly by selling or spinning off part of the mortgage insurance unit.

At 0.16x tangible book value, slight improvements in financial structure and operating performance could produce a large improvement in market price.

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#3) On August 12, 2012 at 8:02 PM, constructive (99.97) wrote:

"There's Much More to Sears Than Meets the Eye" reminds me of Seinfeld.

Elaine: Maybe there's more to Newman than meets the eye.
Jerry: No. There's not. There's less.

If you look up Barron's track record on long recommendations since 2007, it certainly doesn't look like they have any advantage over the market. They do a bit better on short recommendations, which are easier in my opinion.

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#4) On August 13, 2012 at 1:50 PM, TMFDeej (97.76) wrote:

Hi Mega.  I have to say, you've been most generous with your comments and in sharing ideas.  I really appreciate that.  Hopefully in time we'll get others chipping ideas as well.

I agree with your comments about Barron's for the most part.  The featured idea articles there don't seem to have a great track record, through as I mentioned I do like Michael Santoli.  What I find useful with Barron's is its inverviews with smart investors and fund managers.  I have gotten a number of exceptional investment ideas by running some of their Annual Round Table picks through my own filters.  I usually find the best, most special situationl-like ideas from Mario Gabelli and Meryl Witmer.

Good stuff with GNW.  I've never been able to get my hands the situation, but it does look cheap.  Looks like I have some reading to do :).


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