hi guys,
Assumption 1: California state needs money.
Assumption 2: It will be able to repay it's debt.
assumption 3: Some attractive returns are out there for those who have a 5+ year investment horizon.
Any ideas on the best way to play this?
Assumption 1: California state needs money.
Assumption 2: It will be able to repay it's debt.
assumption 3: Some attractive returns are out there for those who have a 5+ year investment horizon.
Any ideas on the best way to play this?
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7 Comments
Top 1%
beancounter
Jul 01 2009 at 1:58PM (EST)
See two posts down on the front page - California Munis
Top 1%
guliamo
Jul 01 2009 at 2:18PM (EST)
I recall.. you got me started on the whole business :)
I was wondering if you have any more insights on this?
I guess I'm looking for a safe play where I can "park" some money for 5 years and see a 7-12%, low volatility annual return.
Alternately I could entertain a broader range of ideas. My basic thinking is 'California is good for it' - how do i capitalize on it?
Top 1%
beancounter
Jul 02 2009 at 7:14AM (EST)
Here's one that popped into my head last night - TRC. Tejon Ranch Co. Basically, they're an grower/landbank that owns a boatload of land 50 miles outside of Lost Angeles. (yeah, I put the t in on purpose.)
Like all other stocks, it's gotten walloped, BUT it did a deal a few years ago to sell or lease a big portion of its land to either California or to a nonprofit that would "conserve" the land - you'll have to do some homework on it, but the deal was interesting b/c TRC's basis in the land is EXTREMELY low, and the price /acre was pretty good. It may dip down again as Cali implodes, which would create a very interesting entry point.
I would also look at any publicly traded infrastructure companies that have significant contracts with the state, i.e. an outsourced IT company, maybe MMS (outsourced welfare benefits processing) that will be getting IOUs instead of cash for the next few quarters.
Top 1%
beancounter
Jul 02 2009 at 7:17AM (EST)
One more thought - would it be possible to find a public real estate brokerage that specialized in serving foreign buyers? I remember reading about an official "proclamation" from China that encouraged investors to buy US land, etc. sort of a repeat of the Japanese in the 80s.
Top 1%
beancounter
Jul 06 2009 at 8:51AM (EST)
HERE'S YOUR PLAY:
CA IOUs - Buy 'em low, redeem 'em high.
http://ftalphaville.ft.com/blog/2009/07/06/60486/wall-street-gears-up-to-trade-california-ious/
Top 1%
guliamo
Jul 06 2009 at 11:07AM (EST)
Beanny,
Can I buy these on the market? How will these warrants be traded?
Usually, by the time all the sharks get their taste, we're left with a net annual yield of 2.5%.. :)
Top 1%
beancounter
Jul 06 2009 at 11:59AM (EST)
Nothing that sophisticated by what I'm reading - Post it on craigslist - I'll buy your IOUs 50 cents on the dollar. :-)