Spekulatius

There lies a problem with me. You have a CEO now that is a non-O&G operator. Not sure you want him sticking around for six months.. Management teams almost always have the incentive to put a company into bankruptcy. They often come out on the other side owning a significant chunk of the new equity, at zero out of pocket cost; equity mind you, that is in much better shape than the equity they wiped out. Everyone else is just going to let this comment go? "Management teams almost always have the incentive to put a company into bankruptcy". This is simply mind-boggling to read. I'm not sure where this poster works or what companies he follows but I hopefully have nothing to do with the same companies he follows. “Almost always “ seems like a hyperbole, but it is true that bankruptcy is a negotiated process. If a debt holder for example wants a company to go into bankruptcy, they can negotiate a package with management and give them enough stock in Newco to align their incentives and get it done often enough. In any case, I would not expect management to fight for common shareholders too hard, when management can build their own escape hatch and screw the common shareholders and regular employees instead.

Bought some more DD (swapping some of my my CTVA sales proceeds I to this). One of my better ideas for 2020. Feels like tax loss selling is causing the weakness.

It is surprising that PFH shareholders can afford dinner :o

It’s hard to beat free access to Morningstar via your Public library.

I have bought (and sold) cars as well as a motorcycle on Craigslist, but you really have to be careful there. There are a lot of crooks and tire kickers there. I almost look at the person who is going to buy or sell more so than at the vehicle before ai buy. If the person looks shady, I would walk away no matter what the deal with the vehicle is.

Since we moved to the NE, I bought a basic model Subaru Forester new. We paid $25k. It has been a great ride. Used cars arn’t as good as a deal relative to new cars as they used to be before the GFC. For Subaru’s, you can do better buying new, imo.

I still think that even if the absolute odds or probability is not knows, the Kelly formula is reasonably to determine A) Maximum bet size B) sizing bets relative to each other Apparently, the input size are based on estimating the odds, probabilities for each investment and each investor cannot have a precise estimate of each, but they should have an estimate of odds and probabilities nonetheless, as it it better than following the guts so to speak. At least in my opinion it is.

I think it’s just a brand name thing. There are some competing products out there (Blueskin etc.), but Tyvek seems to have by far the largest name recognition and seems to have the largest market share in an industry that doesn’t really embrace change (home building). As for what it does, it’s moisture barrier and keeps moisture out, while at the same time allowing water vapor to get out, thus avoiding condensation in the walls.

I also was surprised by the high leverage employed 7x+ as mentioned in the book. It looks to me that perhaps where they really shined is risk management, as they apparently survived for 30 years now without blowing up. A few times , it was mentioned in the book that they started to lose money because of bugs in their computerized trading system and it took them time to find out the issue l because the code is so complex. Thats a real risk, Imo. FWIW, what these guys do is not value investing. They have no clue about value and the system doesn’t care. There is this funny passage in the book where Mercer explains how they trade Chrysler stock for example, not knowing that Chrysler has been taking out years ago by Daimler. What they figured out however is how the stock market voting machine likely is going to work in the near term based on statistical signals. Fascinating stuff.

Great decision buying AMD. It continues to surprise me how some (only a few) companies can re-invent themselves. My son (who is in grade 12) alerted me about 2 years ago to what was going on at AMD; he and his buddies are into technology and he explained to me that AMD was a company on the rise. Alas, i was too busy thumb sucking to do anything about it. I use it as an example with him to how small investors can do well if they do what Peter Lynch advises: take advantage of what you see in your circle of competence. I was quite torn about selling it since my cost basis was so low. I like the management team and what they’re doing. I think they have been executing very well. Solid products, good growth in multiple segments and a really solid pipeline. But the valuation has gone bananas. 200+x earnings is too rich for me. But I’m definitely looking for another entry point. It’s hard to say whether this will trade at a fair value anytime soon. Thanks So, if you are concerned about taxes, why didn’t you wait a couple more days until next year and then sell? This would push out paying taxes another year.

Few responses often means that an idea just takes off. A long thread often means that an idea becomes controversial. and a battleground of longs vs skeptics. The performance in a lot of cases isn’ that great for those ideas.

Yes, GGP was bought by BAM without any premium. A lot of investors were rightfully upset. BAM could do thwt be sure they owned a considerable amount of GGP (~35%?) to essentially discourage any other potential bidder. Anyways, I think this deal might come back to bite BAM because they still overpaid as it turns out.

You mentioned TCO and MAC. The Stamford Town Center Mall I mentioned in my post that is now for sale is in fact owned by TCO. MAC also owned a nearby mall, called Danbury Mall. It still has a lot of traffic but it’s pretty old mall. Sears/SRG and Macy’s are there. Both TCO and MAC own mostly A malls and in aggregate have positive SSS still. It is true that within The A mall class, some are struggling too and may need to be in a need for a refreshment. The problem they I am seeing is that both MAC and TCO are trading at close to 8% cap rate a and the incremental cap rate they are getting on their mall re-investment projects are less than that - let. Call it 6-6.5% range. This means that metrics like FFO/ share are going down. NAV May be stable, because refreshed malls may command a higher cap rate, but still - we are looking at Reits that might show no growth in operating metrics (FFO, dividend/ share) and stable NAV, what’s the point of owning this, unless they liquidate? Same for GGP, although the look into their numbers isnt that clear. GGP was bought for a 5.x% cap rate, which right now means it’s 30-50% higher valued than peers SPG, TCO and MAC. Where can returns come from. Maybe they can kick the ball down the road forever, if interest rates stay low for a long time, but I don’t see a potential for high return there.

^ Surviving doesn’t mean prospering. It is expensive to reconfigure a mall into multi use and it isn’t clear to me they more rents can be charged for multi use property than for the single use purpose the mall was originally build for. Also, if the WSJ is correct and the valuation implies a 5.2% cap rate, why would I want to own this, when I can buy mall assets at 8% cap rates (MAC, TCO) or DPG close to 7%. At some point this 5.2% cap rate valuation may not be defendable any more and then it’s game over for BPY.

GOOG is a whole lot closer to FV than where I bought it ((~$1050 blended). I sort of try to reduce positions when they approach fair value, although with GOOG, it’s a tough call. CTVA is my 3rd round trip this far.

+1. I agree that Sokol was a great manager, but I think that WEB way was the right decision. Berkshire runs on personal trust, not internal controls. This will become an issue when Buffett is not going to be around any more. Then Berkshire will have to be run with a much larger headquarter staff, more internal controls etc. Some of the guys currently in charge of the operating business may not like this and retire or quit. At least that is a pot. bear case scenario.

I was looking at this stock for some year end dislocations, but there isn’t much volume. I don’t think their last acquisition indicates that management is selective about where to put their money either. Shopping malls in Jacksonville ? http://ir.ctlc.com/file/Index?KeyFile=401493134

With these stocks, you just put them on your watchlist and wait...and wait. If you have a watchlist large and diverse enough, there will almost always be something on sale or at least available at a reasonable price. Thanks for the discussion. I was not aware of this being a great business beforehand.

Yes, I believe it is correct to be concerned about this. Once the gears of bureaucracy start to move, it can be hard to stop them. I would also think that the OTC probably is biased as they would benefit even if just some compansies chose to disclose financials on their system, regardless of collateral damage to investors into those companies that don’t. Then on the other hand, there might be unique bargains available to individual investors who are willing to play a long term game regardless of liquidity issues. Any fund that might own these stocks now may be forced to sell these stocks, if the rule indeed gets implemented.

Reduced positions in GOOG, FOX and CTVA today.

Shows I am liking right now: Daybreakers : witty version of Mad Max and Walking Dead Expanse 3rd season (Amazon Prime) The Boys : Cynical Superhero series (Amazon Prime) The Boys Season I is great, but Season 2 is a big let down. I am two Episodes in and I think I give up.

Regarding 1) CNA had a moderate hit to earnings for LTC lines this year, but nothing existential. regarding 2) It is correct that some of BWP assets weren’t well positioned, especially those that were driven by supply. BWP bought these assets back at a distressed price, way below replacement value and at ~8x EBITDA. They have been reconfiguring the assets for more demand driven customers and it looks like operating earning started to rise, which seems to mean that they bought this out at the business trough and at a trough valuation. I think they transferred quite a bit of value from the LP’s to the cop erste entity. I was holding BWP units at the time of the takeout and certainly wasn’t thrilled about getting bought out at the prevailing price back then.

I bought the door myself and had a handyman install it. I also had the issue that the price most contractors charge wasn’t transparent as they both had a margin on the door and Charge for labor. That’s why I bought the door myself. This also was cheaper than going with Home Depot doing the whole thing. I think contractors are afraid that customer size the door wrong and want to take some margin on the hardware itself. We did this with our last kitchen renovation, the same way. We bought all the hardware cabinets, stove, tiles vents ourself and had a handyman install it. Cost us ~10k back in 2010. Now people pay 5x as much to get similar work done. Crazy! (My wife had awesome connections to Asian hardware stores in the Bay Area back then). Cabinets cost half what we would have paid at Home Depot.

My door was a Home Depot Fiberglass door back then. I was pretty satisfied with the quality. The door looked similar to this: https://www.pella.com/doors/half-light-entry-doors/pella/ I also recall I got a bit money back from the utility back then for buying an energy star product. There was a little bit of extra work required to get the door to fit, because my house back then was build in the 70’s so shoddily that all the frame dimensions were off a bit.

Not much going on here, maybe time for a review? They invested ~$1.5B to purchase the remaining ~49% in Boardwalk. They got these units for a very cheap price, invoking a buyout clause ($12/unit) Invested ~$1.2B in CC , a packaging company. There is a presentation available , if you sign up. CCC generated ~$1.88B in EBITDA run rate and ~120M in run rate FCF, so I think they bought it at a low price. I like this business. Hotels are having lumpy results, but the results seem good. They plan on investing another $2B here in the next few years. DO went from bad to terrible. CNA plugs along. It went from being a lousy to a mediocre insurer. They distribute a lot of cash upstream via special dividends. L owns almost 90% of it trades it trades around book value. Might be a good value, but if we ever get a decline in share price, L will probably just buy out the remaining shares. They bought back a lot of stock over the years. looks like they are on track to retire > 5% of their shares this year. balance sheet is still rock sold it with $1.7B in net cash. https://loews.com/FileStore/2019-Q3---Company-Overview.pdf I don’t own it (never did, except maybe a short trade) but I think it looks more and more interesting. The Hotel and the packaging business are good places to put capital in. They did a terrible deal when they entered Highmount (E&P), but to their credit, they exited in 2014 and took their losses, but got ~$800M out and this would probably be a zero at this point. My review was spurred by a Motley Fool podcast I listened too, which is a good primer into this stock: https://podcasts.apple.com/us/podcast/industry-focus/id717428711?i=1000460215671