Author Topic: SEC - Senvest Capital  (Read 47648 times)

giofranchi

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SEC - Senvest Capital
« on: October 24, 2013, 12:34:34 AM »
What do people on the board think about the idea in attachment?

Thank you! :)

giofranchi
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matts

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Re: SEC - Senvest Capital
« Reply #1 on: October 24, 2013, 05:20:49 AM »
oddball also had a good write up

http://www.oddballstocks.com/2013/04/anyone-can-invest-in-this-above-average.html

I own it, but the managers pay themselves very richly, hence the discount to NAV. Their performance has been extremely good lately but who knows if it will continue.

serendibz

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Re: SEC - Senvest Capital
« Reply #2 on: October 24, 2013, 05:39:09 AM »
I think you should ignore the discount to NAV as a form of "margin of safety". This big discount will likely persist unless management does something to close the gap such as repurchase stocks or dividends, which they have not done any so far.

You are really buying into management's ability to grow NAV and should expect to earn a similar return as the growth in NAV if you buy this stock, unless you have some strong reason to think that the gap will narrow. This stock is also extremely illiquid which could explain part of the large discount and also since it is majority owned by insiders you may be taken advantage of as a minority shareholder and may not be able to do anything.

oddballstocks

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Re: SEC - Senvest Capital
« Reply #3 on: October 24, 2013, 06:13:50 AM »
matts, thanks for the shout-out.

I own it as well, I think the seeking alpha author is extremely bullish, possibly overly so.  That said I think this is still a good opportunity. 

In terms of cons, the exec comp as mats mentioned, as well as the lack of buybacks.  The company is cheap, and management knows it, so why the lack of buybacks?
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Laxputs

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Re: SEC - Senvest Capital
« Reply #4 on: March 20, 2014, 09:18:48 AM »
Anyone still following Senvest or have updates on AUM or NAV/BV? Do the fund fees cover all expenses?

Thanks

writser

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Re: SEC - Senvest Capital
« Reply #5 on: June 15, 2014, 03:47:06 AM »
I spent a little time on this name yesterday. One thing I'm not sure about and I wanted to share it with you guys.

RIMA mgmt LLC (Richard Mashaal) manages the hedge funds for the company, charging 1.5% + 20%. Senvest receives 60% of the fees earned by RIMA, Richard Mashaal keeps the other 40%. Also, Senvest itself awards 3.5% of pre-tax income to their employees, plus another 3.5% if they beat the benchmark. Now I'm not quite sure if RIMA also charges Senvest itself 1.5% + 20% for the money it invests in its own funds. If that were true, Richard Mashaal would effectively skim the equity holders twice, first earning 0.6% + 8% through RIMA and then earning a salary +7% of pre-tax income through Senvest. That would be a bit over the top for me.

My own guesswork: according to the annual Richard Mashaal earned ~$12m in fees through RIMA in 2013, so total fees earned by RIMA for the year were $30m. Liabilities for redeemable units (AFAIK these are AUM under the new accounting rules) were $190m at the start of the year and the fund returned 70%. So fees earned from outside investors would at least be roughly $190 * 1.5% + 190 * 70% * 20% = ~$36m. Thus, it looks like they don't charge fees to the company itself. Agreed?

All I could find in the AR was this:
Quote
Certain employees and related parties that have invested in the Funds do not pay management fees that are charged to outside investors. The invested amount by these participants total $38,000

which probably explains why my estimate of $36m is slightly off.
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writser

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Re: SEC - Senvest Capital
« Reply #6 on: June 15, 2014, 04:19:33 AM »
Stuff I like so far (if my analysis is correct):

- They charge outside investors 1.5% + 20%, 60% of that flows back to equity holders and that covers a lot of expenses. So you can basically invest in a hedge fund without paying the usual fees.
- Upside in management fees if they attract more outside investors.
- Trades at a ~30% discount.
- Buying back shares (although at a very slow pace).

Stuff I don't like so far:

- Portfolio doesn't look very special. Highly diversified, $7m transaction costs in 2013.
- Related party constructions (insiders pay no fees, zero interest loans to insiders, Richard Mashaal receiving 40% of management fees).
- $6m operating expenses for what basically is a four person shop.
- Some black box investments on the balance sheet:

Quote
This REIT investment is an investment in an entity in which the Company has significant influence and is accounted for using the equity method.The carrying value of this investment was $11.3 million as at December 31, 2013. The Company made an additional investment in the property of over $9 million in the current year. However the value of the investment experienced a decline based on a valuation as at the end of 2013 and as a result the Company booked a loss of roughly $10 million in the fourth quarter.

I'm wondering though why anybody would invest in the fund when they can also buy the common stock. Ok - the latter is not very liquid.
« Last Edit: June 15, 2014, 04:24:29 AM by writser »
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oddballstocks

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Re: SEC - Senvest Capital
« Reply #7 on: June 15, 2014, 07:45:27 PM »
Stuff I like so far (if my analysis is correct):

- They charge outside investors 1.5% + 20%, 60% of that flows back to equity holders and that covers a lot of expenses. So you can basically invest in a hedge fund without paying the usual fees.
- Upside in management fees if they attract more outside investors.
- Trades at a ~30% discount.
- Buying back shares (although at a very slow pace).

Stuff I don't like so far:

- Portfolio doesn't look very special. Highly diversified, $7m transaction costs in 2013.
- Related party constructions (insiders pay no fees, zero interest loans to insiders, Richard Mashaal receiving 40% of management fees).
- $6m operating expenses for what basically is a four person shop.
- Some black box investments on the balance sheet:

Quote
This REIT investment is an investment in an entity in which the Company has significant influence and is accounted for using the equity method.The carrying value of this investment was $11.3 million as at December 31, 2013. The Company made an additional investment in the property of over $9 million in the current year. However the value of the investment experienced a decline based on a valuation as at the end of 2013 and as a result the Company booked a loss of roughly $10 million in the fourth quarter.

I'm wondering though why anybody would invest in the fund when they can also buy the common stock. Ok - the latter is not very liquid.

If you talk to management they have a belief that the stock is so illiquid that only crazy investors would own a stake.

They owned a bug stake in Talmer which recently went public. I believe they have a few other private investments that are similar. For such a vanilla portfolio these guys are absolutely hitting it out of the ballpark.

My thesis is simply this. I get to invest in a great hedge fund for almost nothing at a discount.  I'm still long.
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Laxputs

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Re: SEC - Senvest Capital
« Reply #8 on: August 22, 2014, 10:40:45 AM »
I have a couple questions when calculating NAV of Senvest:

1. Should "equities sold short and derivative liabilities" of 296mm be subtracted from assets given that the company could just close out those positions and not take a loss? They aren't really money owed in a traditional sense are they? Or once they sell that position short, do they add a corresponding amount to "equity investments and other holdings" under assets?

2. In addition to NAV, does it make sense to value the company based on a multiple of its earnings from its managed funds (like GP Investments)?

TIA

Laxputs

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Re: SEC - Senvest Capital
« Reply #9 on: October 15, 2014, 04:13:33 PM »
Take Net Assets on the right column and divide by shares of 2.8mm.  https://www.senvest.com/pages/otherfinancial

50% Discount to liquid BV, not taking into account what happens to their NAV in Oct.

Anyone interested?