Quote:
Originally Posted by petekoch
I also took another bite of USG recently. Insider buying, no matter how strong, has been dwarfed by the purchases of Nikolaus Knauf of Germany, who has raised his stake to 11% of the company. 
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Nikolaus is a countrymen of mine (I am a resident in the UK, just like my
great-uncle once was....). We also share the same first name. I just hope we don't share the same taste in women as well, it would be too close for comfort...
That 3 year time frame is very Monish, but it is the rational argument and agree therefore.
RDN? I don't really know them well enough to have an oppinion. But lets not confuse the issue here. When something becomes unpopular it doesn't necessarily mean that there is no reason for it. The hard part in investing is to sieve through these situations. If you are quite comfortable with RDN then by all means hang on . Other sources claim that there isn't much more that could have gone wrong. "A major subsidiary went belly-up, the merger with
MTG was called off, ratings teetered on the edge of a downgrade, mortgage delinquencies shot up, and financial guaranty reported a large unrealized mark-to-market loss." So far it looks 50/50 to me. I would be inclined to hang on and eventually top up if this is a company that is a darwinian survivor. Liquidation value is key in a situation like this. Ultimately, it is this value that will provide the comfort blanked.
You need to make a call as to whether you are in a line of business you are competent to eventually run if you have a majority of the shares out. To me that whole high finance stuff is a bit too heady and I prefer more mundane stuff. Nevertheless, current levels look extremely attractive to this one. My big problem is that I really don't know what to look for in a company like this, ie I don't understand it, so I don't have a model I can apply to.
If you substract the total liabilities from current equity and divide that by shares out, you don't get much left per share. 2$ or so. Thus, even at current levels you are paying quite a bit. But then again, I have no idea how relevant that figure really is. I don't even know how to work out the liquidation value for a company like that. Maybe you'd like to have a go and explain? Would be a great bit of intellectual gymnastics....