blainehodder

Reminder that the market cap is still 10B for essentially a powerpoint and some design mock-ups. They might have 900M in cash (which is being set on fire), but 900M falls far short of the market cap here and the business is worthless.

I imagine they are proceeding with extreme caution so that a) They don't need a to follow a cut with another cut in case the depth and duration of the economic crash are worse than they already think, and b) Buy some risk management credibility from the Fed for the asset cap.

If you are talking about the fake accounts scandal, Munger/Buffett made a comment that Wells didn't profit from it, and that it was individual branch employees just trying to tick off the boxes for number of accounts opened for their individual bonuses, but without an earnings boost to the bottom line for the bank. I don't know if this was an example of bias because they owned it, or if they are correct. It could have removed a drag too. Since bonuses (and unproductive time) was focused around the fake accounts. Even if they weren't making material money off the fake accounts specifically, clearly the overarching high pressure culture of cross selling to customers was a benefit. Fake accounts were a side effect of incentives and the culture. https://www.citizen.org/wp-content/uploads/wells-fargo-king-of-cross-sell.pdf Regardless, I don't see how Wells can't grind back to 10%+ returns on tangible equity over time. Every recession leads to an implosion, followed by naysayers speaking of crippled NIMs and low rates, only to watch all the major banks ROEs rebound materially as the economy improves. People like to use grandiose (and irrelevant demographic data) to somehow justify perpetually squashed NIMs. Naysayers said the same last time. It always comes back if the bank doesn't get wiped out on poor risk management in the interim. It is highly likely to follow that same path this time. Further, price matters. It seems bears in this thread come to the same conclusion regardless of capital levels. We are seeing the flip side in tech; yes the companies are great, but at some point high prices destroy forward returns.Bulls seem to think high flying tech stocks are a buy no matter the price because the companies are great and growing, with no attempt at actual valuation.

The straight answer is no. You can look at business practices, leverage, and earnings, but you can't really know what random gambles expose them to. They are certainly black boxes compared to "normal" businesses and you need to build a discount in for that, and trade them with that in mind. At least that is my opinion.

I'm not long, but every asset has a price. Just saying things are bad is not a DCF of their cash flows. At what price do you consider it a buy? At what price is a company like Shopify a sell? No one seems to bother even trying to value companies anymore. People seem more focused on trend and how things are going today. Not saying that is right or wrong as a method of trading, just observation. For long term investments like those that Berkshire makes, the long term is all that matters.

So there is no real China competitor but perhaps also perhaps no significant demand for coffee there?

15x what? Pre Virus guesses? I also think it is cheap but we should forecast a couple yrs out imo.

...said everyone for 10 years (not saying it's wrong, just that it seemed right before too) I do recognize that. Maybe I'll be the one to get it right.

I think this is it. I think it is finally the time to enter a Telsa short.

The problem with that argument is the C band can be cleared up if legislation dictates it so. Sat companies do not own the rights to C band. Senators can do whatever they want. What are the odds Sat companies are well compensated for clearing the space? I don't no, but it is absolutely clear it could be well below any assumption of market value. Once again, the sat companies have no ownership and therefore there is no guarantee for fair compensation. Every penny may go to the treasury.

The best reason for it to go down is it going down. Fundamentals just don't matter here. The best reason for why it is going up, is it is going up. If you are going to short it, pick a moving average eg 20 MA and pile on once it has rolled over some, don't jump in front of a train as it goes up 5%+/day. Momentum is a real phenomenon and it isn't illogical.

There is now a near 14% merger arb to be had on Google's all cash offer for Fitbit at $7.35 a share. Fitbit is likely to be a good fit into your portfolio if it is long only for diversification. This is non correlated to market returns. Trumps DOJ unlikely to block such a small scale deal as there is no legal argument on data sharing or antitrust as: 1)) On data privacy concerns: “Google was already storing data for Fitbit users since Fitbit started linking its devices and digital healthcare services to its Healthcare Cloud last May. That partnership would likely continue even if the deal was blocked.” [1] 2) On antitrust concerns: “Fitbit ranks fifth in the global wearables market with a 4.1% share, according to IDC's third-quarter numbers, putting it far behind Apple, Xiaomi, Samsung, and Huawei.” [1] [1] https://www.fool.com/investing/2019/12/19/will-regulators-derail-google-takeover-fitbit.aspx What are your thoughts on this arb? It is obviously really wide on skepticism the deal closes, but on what grounds can it really be blocked? If left to their own devices Fitbit is likely bleeds out a slow death against Apple, who has 50% marketshare. Hard to see regulators block a deal which is actually likely to increase long term competition with the market leader. If we look at the Looker deal as a guide, the DOJ will likely wrap up the investigation in under 3 months and the deal will go ahead. If there are data privacy concerns, the DOJ can simply mandate a consent decree limiting Google from using Fitbit data for ads. I see this closing in the first half of next year. No reasonable argument can be made against the deal on antitrust grounds, and no data privacy argument would require the deal to be busted.

Doesn't this suggest that we are more likely to find 10-baggers in energy over the next decade? WTI is above $60, bad hedges is gone. OBE can make plenty FCF (relative to its current market cap) and deleverage if WTI stabilize at $60. Oil does not even have to go to $70 to make OBE a 10-bagger from current price level. Is there any reason not to get in now, other than this is a hated stock? What kind of logic is this? 10 baggers have mostly occured in tech and will continue to mostly occur in tech. 10 baggers are almost NEVER a result of multiple expansion and almost always a result of real economic growth (rev, eps, fcf). So no, OBE is not likely to be a 10 bagger. Nor is any other company that doesn't have massive reinvestment opportunities in high margin, high ROIC projects at scale. Energy does not offer massive reinvestment opportunities at near infinite returns on capital over long periods of time and never will. It can offer high jackpot wins in a short period of time, but when that happens the market attracts drilling and margins and prices get smoked. This is a commodity business. You think OBE will ramp revs by a factor of 5-10? You think any energy company will be a 10 bagger given the ease of entry, and ease of locking in economics over frack well life-cycles? If so, you need a damn good reason why that would be true. If you want 10 baggers focus on things that scale up with high ROE, high margins, and high marginal ROIC. Multiples rarely go up by a factor of 10. They can add juice to returns, but to get a 10 bagger you need more than a 50% uptick in a multiple. You need growth. If we’re long-term investors, the ultimate source of our return will be the growth that the company generates in its business over a long period of time. Multiple expansion is just gravy on top. I think the path to a 10 bagger in energy probably involves buying subscale competitors at low prices (plenty of those around now) and cutting costs. CNQ is an example of a company that has used accretive acquisitions and capital discipline to generate great returns for many years. CNQ may generate decent returns by drilling for oil on the exchange and cutting costs in the coming 5-10 yrs, but a 10 bagger in a decade? CNQ hasn't generated ANY returns outside of the div for a decade and there is no reason to believe the next decade will be easier.

Doesn't this suggest that we are more likely to find 10-baggers in energy over the next decade? WTI is above $60, bad hedges is gone. OBE can make plenty FCF (relative to its current market cap) and deleverage if WTI stabilize at $60. Oil does not even have to go to $70 to make OBE a 10-bagger from current price level. Is there any reason not to get in now, other than this is a hated stock? What kind of logic is this? 10 baggers have mostly occured in tech and will continue to mostly occur in tech. 10 baggers are almost NEVER a result of multiple expansion and almost always a result of real economic growth (rev, eps, fcf). So no, OBE is not likely to be a 10 bagger. Nor is any other company that doesn't have massive reinvestment opportunities in high margin, high ROIC projects at scale. Energy does not offer massive reinvestment opportunities at near infinite returns on capital over long periods of time and never will. It can offer high jackpot wins in a short period of time, but when that happens the market attracts drilling and margins and prices get smoked. This is a commodity business. You think OBE will ramp revs by a factor of 5-10? You think any energy company will be a 10 bagger given the ease of entry, and ease of locking in economics over frack well life-cycles? If so, you need a damn good reason why that would be true. If you want 10 baggers focus on things that scale up with high ROE, high margins, and high marginal ROIC. Multiples rarely go up by a factor of 10. They can add juice to returns, but to get a 10 bagger you need more than a 50% uptick in a multiple. You need growth. If we’re long-term investors, the ultimate source of our return will be the growth that the company generates in its business over a long period of time. Multiple expansion is just gravy on top.

GME has $290M of cash onhand (before the holiday season started) and their only debt is $419M of the March 2021 notes. Their revolver matures in late 2022, is undrawn, and has capacity of $400M. What are the odds that the business collapses so much in 2020 that they can't repay that debt between revolver capacity and cash onhand? Seems like an opportunistic buy in the low 90's... Edit: I just read the call transcript from last night and they expect after Q4 to have >$1B of liquidity (cash plus revolver capacity), which implies Q4 free cash flow of >$300M. How on earth could they default on the 2021's? https://www.sec.gov/Archives/edgar/data/104599/000010459908000056/ccs063008_10q.txt this is Circuit City's 10Q in the quarter before they filed for BK, they filed in November 2008. As of June 2008, they had virtually no long term financial debt, significant net current assets (cash & inventory less payables and stuff), stockholder equity of $1.3 billion, they filed 5 months later, because their trade credit was pulled before the holiday season and they faced a liquidity crisis. I think stranger things could happen then a retailer that's shedding sales at a 20% rate files for bankruptcy and or has trouble refinancing its unsecured bonds, regardless of the current state of the balance sheet. I wouldn't want to be a lender to GME at any price that doesn't allow for huge upside. At $94/11%, I'd happily lose the 14% cumulate or whatever on a short position in the base case they are able to pay off the bond as a general hedge against things in far better fundamental shape. Of course at $100 / 5.7% (yesterday's price) it was even more assymetric so if it trades back to par, maybe i'll consider shorting $100K. Even with fixed upside thought, that's just a big notional position for something that probably has some borrow cost built on top if it. Are we really comparing Circuit City which had only $90m in cash and $110m in debt to Gamestop which has $290m in cash and $420m in debt after spending $180m on buybacks? Gee, wonder which one would struggle of there was a credit crisis. Would you rather a Blockbuster comparison which is probably more apt? This is 2019. The internet exists. It is in game creators' best interest to cut out GME. What could possibly turn the revenue trend around? What melting retail company has managed to close down expediently to return cash to shareholders in the face of complete technical obsolescence regardless of balance sheet strength?