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Two new interesting ideas

Recs

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July 02, 2014 – Comments (0) | RELATED TICKERS: BBX , WPG

I came across two interesting articles on Seeking Alpha today. The first was about an idea that I have seen in the past, on BBX Capital: 

Strong Catalysts And Sum Of The Parts Shows Potential For BBX Capital 

http://seekingalpha.com/article/2293135-strong-catalysts-and-sum-of-the-parts-shows-potential-for-bbx-capital?ifp=0 

Many people believe that BBX has 100% to 200% upside because it holds undervalued Florida real estate on the books, has a ton of net operating loss carryforwards and an undervalued timeshare business.

I first heard about this idea as a pitch for BFCF back in March. BFCF is down 10% versus a gain of 5% for the S&P since then. I closed out that position and opened one in BBX instead because the two are merging and BBX is cheaper than BFCF.

My problem with the idea is it strikes me as being more of a cigar butt than anything. It supposedly has undervalued Florida real estate. That's fine, but I am taking someone's word for it without doing a lot of research.

At the time when I initially looked at the website for the timeshare business it looked pretty crummy. Either it has since been improved or I'm in a better mood today because it doesn't look too bad right now: http://www.bluegreenvacations.com/home .

The Net Operating Losses do have value, but it's not like they're some amazing competitive advantage going forward. They will eventually run out.

This idea has tremendous upside and is very tempting, but I have not pulled the trigger yet. I'd love to hear others' thoughts.

The other was about Washington Prime (WPG).  I was also fairly familiar with this thesis before reading the article.  Washington Prime (WPG), the strip-mall spinoff of Simon Property Group, is a holding in Jim Royal's special situations portfolio. 

What I really like about it is WPG pays a larger dividend than its competitors on average (5.3% vs. 4.1%), it is cheaper than most of its competitors (with a enterprise value/NOI of 11.53x vs. 15.29x), it has less debt that its average competitor and it has a CEO who is supposedly very well regarded in the industry.

I don't expect Washington Prime to knock the cover off the ball, but I could easily see buying it and holding onto it until its valuation is more in-line with its peers, which will likely happen once it begins paying a dividend and employing the dry power it has.

Washington Prime: Prime Dividend, Prime Balance Sheet And Prime Upside Potential  

http://seekingalpha.com/article/2294565-washington-prime-prime-dividend-prime-balance-sheet-and-prime-upside-potential

Jason

P.S. it sure is not easy to post on CAPS using an iPad. I just purchased my son a Microsoft Surface for his birthday. If we like it I may end up buying one for myself.  

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