Occasionally, I find myself shorting long ideas that are written up on VIC (ValueInvestorsClub.com). VIC is an exclusive website where a mix of professional money managers and non-Wall Streeters post investment ideas. Non-members like myself can sign up for a guest account and see ideas with a 45-day delay.
Here are situations where I have taken the opposite side of their trades.
It looks like the company’s efforts to sell the Titanic artifacts are going poorly. However, given the drop in share price and $96M market cap I think that it is prudent to cover.
No news on the Titanic sale adds some validation to my thesis that the Titanic auction failed and that the assets aren’t going to sell for anywhere near $190M (see all my posts about PRXI). As the valuation of Premier depends almost entirely on the value of the Titanic artifacts, this stock may plummet when investors realize that the Titanic artifacts can’t be sold for much.
KB Home (KBH): The stock ran up (around $19.57). Originally I said that they should sell stock… now they are doing exactly that. This is somewhat bad for the shorts (~34% of the float is short) as intrinsic value will move closer to the secondary offering price. I plan on waiting to see if the short thesis plays out.
Premier Exhibitions closed up 18% after earnings. (I have a very small short position so I have a very small loss.) I believe that the two most important factors for the gain are as follows:
On closer examination of these two points, I am not worried. (But again, I may be a little biased.)
I haven’t been having a good year so far. Going into the year, I was basically long QXM/XING, long natural gas, long junior explorers, short long-term US treasuries, and short some US stocks (AGNC and JOE mainly). These were all the wrong trades to make. My stock picking has not been good since I would have lost less money if I was only allowed to index asset classes. I would have went long commodity futures (RJI is up 4.3% YTD). I would have lost money shorting treasuries (up ~3% YTD) and also on US stocks (SPY up 17% excluding dividends).
Here’s what my portfolio looks like currently… (long junior explorers, long commodity stocks, short treasuries, short some US stocks)
Currently, Premier Exhibitions is losing some money in its exhibition business and is in the process of trying to sell its Titanic assets. Premier paid Guernsey’s to auction its Titanic assets but it looks like this auction has failed to meet Premier’s reserve price. The failed auction suggests that the market price of the Titanic assets is not that high. In the future, it may be more difficult for Premier to fetch a good price for its assets as the Titanic story is getting played out, it will no no longer be Titanic’s 100th anniversary, and excitement over James Cameron’s film re-release fades away.
Premier’s operating business is likely worth no more than $30M ($30M is likely far too generous). Premier has a market cap of $117M. The difference between the market cap and the value of the operating business can be attributed to the implied value of the Titanic assets. Valuing Premier basically comes down to how much these assets are worth.
