LC

I read this and thought, wow, this guy is a hero! And then I thought, no I was wrong, this man is a LEGEND! ;D

Thank you for clarifying. I should clarify as well - my questioning relates to trying to understand how "sensitive" a 30B/40B/50B valuation is to growth rates. Toll rate increases are (I assume) part of the concession agreement and therefore quite certain. Traffic growth rates are less certain. What if traffic in the GTA begins to decrease permanently (more work from home etc.)? Particularly if as you say, the 407 has benefitted from all incremental traffic increases as the 401 has been "tapped out". Therefore if the reverse occurs, one would expect traffic on the 407 to decline just as precipitously. The link posted by Cigarbutt (merci) illustrates this: Comparing valuations under static discount rates, the difference between appropriate EBITDA multiples for a growth vs. no-growth is quite extreme, particularly as the length of time remaining under the concession agreement increases. All that said, I agree with Dazel's conclusion here: The point being at these prices I don't think we require 7+% growth assumptions for the investment to appear attractive. A couple of other notes: TY Dazel for the tax rate clarification. And also, I did not fall in love with the remainder of Ferrovial's projects. Particular their construction segment and other lingering one-offs.

This is the 2019 P&L modified to include your proposed IR of 2.14% EBITDA: 1,309 *2019 reported EBITDA Capex: (100) *Ferrovial estimated 100M of capex in 2019 Taxes: (275) *26.5% rate (from Ferrovial) and using 172M as the interest payment (e.g. 8B outstanding debt * 2.14%) Pre-Interest Income: 934M That looks reasonable to me but let me know if you disagree. It's been a while since I sat here modelling cash flows, but from a 934M figure, how do you want to get to the types of 40B, 50B+ valuations you are discussing?

Appreciate the response. Let's talk about the 407 valuation. Certainly the 407 is more valuable the lower the fixed debt. Basic finance and all. But doesn't the valuation of the equity seem rich? The 407 earned 575MM CAD in 2019. SNC's stake entitles them to 40.5MM of those earnings. Even using the proposed debt financing charge of 2.14%, that values SNC's stake at about 1.9B CAD. And one would think equity financing to be more expensive. Put another way, take the 32.5BB valuation from 2019. With 575MM of earnings, that's a hefty valuation if you ask me. 56x earnings! So really the question is, how confident are you in achieving your growth rates and for how long? The growth rates for the last 10 years are certainly impressive but how much longer can they continue? BTW I own SNC :D

Dazel, have you looked at ferrovial which owns the remaining public chunk of the 407 along with other heavy assets for which they maintain controlling ownership (50.1%) and the underlying service contracts?

all true enough. plus JPM can out with an analysis (cant find link) that we can all take our masks off in four months if vac rate continues as is Fauci seems to agree saying April is when vaccines will be regularly available. However I am hesitant to see how we get to 25% earnings growth in the S&P500 without inflation or continued consumer stimulus.

https://www.securitiesfinancetimes.com/securitieslendingnews/industryarticle.php?article_id=224548&navigationaction=home&page=1&newssection=industry

BTC quite possible. As 6 hour download of a BTC node replaces each banking function through out world. It may not be longer before Oracle of Omaha and venerated Charlie Munger change their mind on it. PS: Interesting one from today is BNY Mellon news. All old players on street joins; ultimately Oracle joins. This may be only start up investment where general public had open market ledger and cap table (fully visible) access for 12 years or so before Traditional finance make their mind about it. As WEB says: "If history is guide to riches ; librarians would be richest in the world." Digital Scarcity is the trail on which World embarks. World abundant with Central bank currencies; a new trail leading to Digital Scarcity has begun. Every banking function? How does BTC assess credit risk, market risk, IRR, etc? How does BTC perform collections and fraud functions? How does BTC perform hedging? Risk appetite assessments? I am not well versed in Bitcoin or block chains but I have not seen anything related to these functions discussed in conjunction with Bitcoin.

The health reason is not COVID related (not sure if that is better or worse) but yes, let's hope he recovers.

averaged down on Qualys. Small position but isn't it great seeing a stock drop 15% the day after you buy? ::) ::) ::)

Good point. Thanks for the feedback.

I don’t know when it will happen but I have a pretty large cash balance waiting to be invested. Maybe this year, maybe next year, I don’t know, but most valuations seem pretty rich.

https://www.horizonsetfs.com/etf/psyk Thoughts?

Similar story for a while now. Feels like a perpetual Berkshire discount and WB not too keen on repurchasing.

bought some akamai and qualys.

The opposite holds true as well, though. Good companies + time is a recipe for success. Of course, identifying good companies is difficult and needs to be consistently re-evaluated as ourkid8 mentioned.

Great article, thanks for finding &posting.

I sold Berkshire LEAPs I purchased a month ago. Long the stock and would gladly buy back into the LEAPs, but will lock 20% profits in a month.

Purchased some Berkshire.

I looked too a few months ago based on one of your posts, but the IV was too high at that time. Then I was planning on buying more recently but got lazy and distracted by GME YOLOs :D Point is: well done to you for sticking with the investment and sharing along the way!

Why TLT and not traditional protection such as GLD?

Robin hood will allow up to 500 share purchases tomorrow. “Lucky” timing.

One other thing to consider, if he liquidated now, who would be the counter party? WSB folks I presume. He’s already got enough to live on, why screw over an entire group of diamondhands?

Some interesting (perhaps conspiracy garbage) commentary:

Considering WSB's big win was Gamestop equity, wouldn't that mean both of the above? :D