MMA Capital Management: Balance Sheet to Income Statement Investing

Steven Kiel presented his in-depth investment thesis on MMA Capital Management (Nasdaq: MMAC) at Best Ideas 2017.

MMA Capital Management is a good example of “balance sheet to income statement” investing. This concept is when a company with a strong balance sheet attracts investors focused on capital preservation and downside protection, but the company also has the potential to generate significant earnings and cash flow. If these earnings come to fruition, a new type of investor finds the company and judges it on its income statement characteristics. MMA has a strong balance sheet and sizable off-balance sheet assets, is buying back a significant amount of stock (9% of outstanding shares in 2017) below book value, has more than $430 million of federal net operating loss (NOL) carryforwards, and has several partnerships and co-investment vehicles that have a good chance of generating significant earnings in the future. The company has four business lines: historical leveraged bonds, low-income housing tax credits, energy capital and other investments, and international housing solutions. The shares trade at less than 90% of stated book value and there is significant insider buying.

About the instructor:

Steven Kiel is the president and chief investment officer of Arquitos Capital Management. He is the portfolio manager of Arquitos Capital Partners, a private investment partnership focused on value-oriented holdings. Steven is a judge advocate in the Army Reserves. He is a veteran of Operation Iraqi Freedom and currently holds the rank of major. Prior to launching Arquitos Capital Management, he was a lawyer in private practice. He has been quoted in The Wall Street Journal, Bloomberg, MarketWatch, Deal Journal, The Atlantic, USA Today, and other publications. Steven is also the CEO of Sitestar (OTCQB:SYTE), where he sits on the board, and an advisor to Santa Monica Partners, a New York-based investment partnership. Steven is a graduate of George Mason School of Law and Illinois State University, and is a member of the bar in Illinois (inactive) and Washington, D.C.

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