Spekulatius

A value buy it seems as you got in before the spike to $100/ bro that’s some doomsters predict. I think it will be more like $2-5$/brl and quickly reverse. I doubt there much supply impact from the drone attack. FWIW, so many oil heated homes on the East coast. It would be a great green energy plan to have them all connected to natural gas.

For the macro folks out there, anybody noticed that the inflation numbers are pointing up and pretty fast apparently. YoY change is ~2.7% now and the monthly annualized change ~3.6% and high 3 month in a row. Of course there is a signal and the noise issue, but this seems worrisome. The inflation target is 2% and we are way above that. I wonder what the Fed officials are thinking about this. https://www.frbatlanta.org/research/inflationproject/stickyprice/

Anybody else thinks that the Apple streaming TV offering is very underwhelming? $5/ month for a couple of unproven shows and no existing film library (if I see this correctly )? how is this attractive when I can get Netflix for $13/ month with a huge LIBRARY and to a if shows, or Amazon Video as a perk with Prime? Maybe they get some traction offering this for free with a device, it who would buy this for full price? It funny that the low monthly cost seems to have pressured Netflix stock, but ai can’t think that this is really competitive.

Sold NUVR ( concerns over negative comps next quarter ) and GRIF ( quick trade, bought at ~$34 a couple of days ago ). This is my second round trip with GRIF. Edit: Also sold MSG (fear the Sphere)

I believe that WeWork may well work out to the Enron or Lehman of the next downturn. If that’s the case, it won’t just be WeWork either, there will be a host of similar cases. I also think that SoftBank will be pulled into this, they own crap like WeWork, UBER and seem to have wildly overpaid for ARM semi as well and who knows what else. Mr. Son has been there before, he lost the vast majority of his wealth during the first dot.com bubble but a few smart investment (Alibaba) bailed him out. Luck or skill , this remains to be determined . I don’t think his Vision Fund co- investors have the stomach for 85% drawdowns.

Sold NUVR ( concerns over negative comps next quarter ) and GRIF ( quick trade, bought at ~$34 a couple of days ago ). This is my second round trip with GRIF.

The trade worked, Cashing. Great for those that did it. Equally, going short now or buying puts may work just as well. I personally don’t think DDS reale state is worth that much and it would be quite difficult and expensive to unlock the value. Some investment are LT bets, some trades are short term bets and both can work.

I believe the B- mall comparison if WMB vs AM is a very good one. No doubt money can be made from these junk yield plays, I just decided for myself to never go there again, because the baseline success rate is not good and errors will be severely punished. I don’t have numbers on WMB contract adjustments , it was a bit of a give and take as CHK extended the gathering contract length and the guaranteed area for G&P services in exchange for lower fees, if I remember correctly.

BNTGY, RYCEY, MOG-A, trimmed some FOX and CMCSA

I believe that AM’s contracts with AR ( which fee indeed very favorable to AM) will be revised, even without an AR bankruptcy. Same happened with the gathering assets WMB acquired from CHK a while ago.

Odd lots / Bloomberg has a great episode with John Hempton about banks (mostly) https://www.bloomberg.com/news/audio/2019-08-16/john-hempton-on-what-s-ailing-bank-stocks-podcast

I am avoiding gathering midstream companies like a plague. My largest position is WMB, which I recently build up. They have gathering exposure too, but it’s only~30% if EBITDA. I bought it for the Transco assets mainly, one of the best perhaps the best regulated pipeline assets in N.A.

The fact that coal plants are being build in development countries (probably true, but even China deemphasizes coal power nowadays) is irrelevant, because coal will be sourced locally, since it is simply not worth transporting far (too little value for the tonnage). Metallurgical als coal used for steel production is roughly 5x+ more expensive per ton and henc is worthwhile to transport where it is needed.

I don’t think he raises Yen denominated debt because he has a deal in mind for a Japanese business. I think it is just one way for him to raise very cheap debt. He could even hedge out the currency risk, if he wanted to, but he doesn’t care about Market to market fluctuations, so he probably won’t. I don’t think the Yen is currently very undervalued relative to the USD either. Companies like PG have some business in Japan somit makes sense for them to raise some Yen denominated debt as a Natural currency hedge, somit speak. I don’t think this is the case with BRK though.

Belated answer - the $4.3B in net debt with a $12.5B equity base is still higher than many other insurance cos that are typically 20-25% levered. Most other insurance cos don’t have the equity exposure that FFH has though FF India, Africa and various other holdings. It clearly is a more levered insurer than many others. FWIW, I sold my FF holding when it went to $480+ and essentially put the proceeds into BRKB, which consider a better bet. I would consider buying back FFH below $430, but that would probably be for a trade.

I agree with above bear case. When the credit environment gets tough, I could see that Arena could be worth less than book value, it has happened before with asset managers. For now, the marks seem conservative. I added to my smallish position a couple of days ago.

Just looking at this. The latest operating results have been pretty poor. Also, it seems that over the years, their Capex has been below depreciation for quite some time, which means that their stores are aging. Most stores are in flyover country where and old department store building may not be worth all that much. They sell buildings, but I haven’t seen a large profit. They do own some stores in Florida (39) and Texas (44) which may be worth far above book. Accelerated decay in operating results may be the main issue there. The shrinking float is interesting and makes it a very unappealing short, imo.

The problem is now that so much hybrid capital (catastrophe bonds etc.) is on standby to take advantage of any hard market, should it occur. Unless we have an unfavorable credit market at the same time than a hard insurance market, I don’t see hard markets lasting.

Sold me last batch of FB shares ( yesterday )

I think the bigger risk for ESPN ( and other sports content) is to get squeezed in the middle between consumer or the team (content provider) because they provide little value add, especially when streaming becomes the prevalent method of distribution.

I don’t see how MNK, TEVA and others involved in this can avoid bankruptcy. When you look at the verdict against JNJ, which didn’t even have a meaningful market share, it is clear that the weakly capitalized companies which have orders of magnitude larger exposure are probably getting restructured : https://finance.yahoo.com/news/johnson-johnson-apos-opioid-case-222826349.html FWIW, I owned a good sized position in MCK but sold it recently because I can’t handicap the exposure.

Are you buying puts with the VIX around 16? No, I have not yet done any put buying. I’d like to see premiums coming down more and look for a VIX around 13. I haven’t made a decision if I follow through at all this time, I have been trimming positions , especially in anything that is cyclical.

Interesting read . It looks like Applied Underwriters was competing for business with Berkshire subs. BRK generally doesn’t integrate their subs and this one had minority interest outstanding, so even if they wanted to, they couldn’t without buying out minority interests. That’s one of the limitations with Berkshire’s modus operandi and a sale is the better option at this point. Also on a side note, workers comp claim stats tend to get far worse when the labor market goes cold in a recession,

The semi downturn may last a while. on the business, I agree, it looks like quite high margin. And. decent ROE. I put this on my watchlist.

Meeting didn't get traction, damit’s postponed. :(