Spekulatius

I think Muddy Waters Chose their target well. An opaque company held by weak hands (Woodford) that has a lot of people sucked in that don’t understand the Business. That’s why there was no floor underneath the stock price. The profits to trade these crap stocks can be eye popping - a 2x from a 400p low in one day isn’t bad. Heck even SHDL was a 10 Bagger after bankruptcy as it went from 25c to ~$2.5 for a brief spike.

FOX selling off 5% today after an earnings report that looks decent. I added a few shares, what is the reason for the selloff? I like their business focus on live entertainment (Fox news, Fox sports) and the valuation seems undemanding: https://investor.foxcorporation.com/static-files/fe618a7b-29e3-4ac7-8048-4cad987d7b45

A litigation finance company mired in pot. Misconduct and litigation of its own finances doesn’t sound like a good business environment for these guys. Soon we will get a real life example of reflexivity.

CHTR numbers weren’t that impressive compared to CMCSA cable business, despite CHTR being in a catch-up position. CHTR has shown lower revenue and EBITDA growth compared to CMCSA cable business. Granted VHTR buys back stock, while CMCSA delivers after the recent acquisition, but that’s a capital allocation decision.

Funny how they fail to mention in their press release and IR presentation that their share count is up 6% YoY, which makes the growth in cash flow of 8% much less impressive. I do acknowledge that they finally turned a bit FCF positive. It a crappy business that has become a bit less crappy.

I agree that it’s hard to tell if numbers are fraudulent, but it is possible tell companies that have an above average likelihood to do so: Examples : SAAS companies (pot. maskerading operating expenses and discounts as marketing expenses), manipulating not GAAP metrics like customer retention, customer acquisitions costs. TDG: fleecing customers (which can be an issue if the customer of Uncle Sam), pot. Aggressive accounting BA: see thread, aggressive Accounting, cutting corners on products, running the company for stock price, outsourcing core competencies TRUP: maskerading operating expenses as marketing expenses, pot. Misrepresenting non GASP KPI metrics. I can’t say for sure that the above companies massage their numbers, but I think I can tell for sure that these companies have a way above baseline risk of doing so. I have lately observed that the gap between the GAAP and the non GASP operating earnings seems to get larger and larger -isn’t that strange during a time when the economy is doing well 10 years into a cycle? While most of it is legit, as a whole it doesn’t make sense for the gap to increase, so I am sure their are some ugly things we will learn when the tide goes out in the recession.

I heard some interesting commentary regarding BA in Tobias Carlisle podcast (around the 30min mark) https://podcasts.apple.com/us/podcast/the-acquirers-podcast/id1454112457?i=1000445957238 It’s mentioned specifically as a company that is underinvesting and trying to manage the stock price, apparently to a magic $800 number. It’s interesting because I had the same feeling when I reviewed Boeing a while ago, and now the 737max disaster sort of may be indirectly caused by this. I wouldn’t touch the stock above $200 personally.

I had some Oct SPY $285 puts. Bought it with SPY at 3000 about 2 weeks ago. In sold them yesterday when the SPY his 2850 (too early). So far, I had good luck with SPY puts but then again, I am playing with a small sum (0.15% portfolio position). It was a 2.5 bagger. One thing I look out for when I buy puts is low volatility. When volatility goes up, the put prices quickly gets prohibitive. I regard these puts as partial portfolio insurance when I consider the chance of a drawdown to be high.

Looks like folks got in here right in time for the spanking.... Luckily for me, this went into the too hard pile.

Agreed on standalone cost. It is also quite higher for CTVA (the Ag chem sister company). i think you are correct about the amortization not been taken into account. They actually split the amortization into two parts apparently , the regular amortization (which isn’t backed out and runs at about $1B/ year) and a merger related amortization ( $199M last quarter), which is backed out /accounted for in the operating earnings bridge. So, that makes the valuation metrics way more appealing. These numbers are really a mess. They even published a pro forma balance sheet in the last 10-q, what we are still numbers that include Corteva (sincerity was spin off in the middle of he quarter)

Anybody else owns QFSOC (Fondo Socrates)? I bought a few shares recently. NAV is ~484€ (and slowly falling) with liquidation planned in 2020, I believe. No dividend this year and their assets don’t look that great. http://www.fondosocrate.it/ita/materiali/CS_semestrale300619.pdf The discount to NAV is huge with shares trading at 255€, but Management stinks.

Adds: BRK.B, BAESY REZI and WMB. New position: MOG A - aerospace component supplier with a reasonable valuation.

I owned this in the past but I feel like other distributors like MSM are better values. WCC seems to rent out their balance sheet to customers - their cash flow they stable and they have a fair amount of leverage.

Looks like competition will be heating up in the UK: https://uk.finance.yahoo.com/news/macquarie-invest-30-million-british-105156891.html

BRK‘s result were pretty mediocre. Industrial/other business earnings were flat, Railroads were up a little and insurance underwriting was down quite a bit. KHC earnings are missing from their last earnings, but that’s only $185M. Not, that one should buy BRK for one quarterly earnings, but still - it seems that the slowing economy leaves a mark on the income statement.

The Q2 results are out for the remainco DD and they are a bit ho hum. While they are doing a great job on the margin end, the demand side looks not so great. Earning estimate is $3.8 so for a $69 stock, this isn’t exactly cheap. They do own some great high margin business (EBITDA margins >25%) and Capex needs are moderate , so it’d is clearly worth following. DD‘s closest pest is MMM and I think it still trades at a modest discount to MMM. I sold my DD and also CTVA stock a while ago. Made some bucks on each. The numbers for both companies came in below my expectations, probably diente stand-alone costs (which weren’t clear based on their early investor presentations. https://s23.q4cdn.com/116192123/files/doc_financials/2019/2019/q2/2019-08-01-2Q19-Earnings-Final.pdf

Bought some LYB on Friday. I might be a bit early, but it’s interesting they the stock has been more or less flat since 2014, as have been operating earnings. However, sharecount has 575M shares in 2013 to ~340M shares, while they have been paying a nice dividend. ROA has been north of 15% during this time. While margins and earnings could come under pressure in a slowdown, I believe it is likely that they would bounce back very quickly in a recovery. I actually think that this is a business that would fit nicely into BRK. For one it is cheap and then in generates a lot of cash and can’t really get disrupted. BRK owns already Lubrizol (which has been a so so acquisition for them), so they might go with a special chemical company instead, but I think it’s quite likely that they strike out in this field.

Glad some politicians are pushing on this - the ACH system with a 3 day lag is a disgrace and should be replaced by a faster almost instant payment system. Might have implications for Fintech, banks and payment companies like Visa and MC? A faster payment system will cost the banks float. https://finance.yahoo.com/news/sen-van-hollen-to-powell-get-moving-on-faster-payments-195229023.html

Bought some LYB ( I felt the earnings report was way better than the stock response to it) and a little more WMB. $$$Dividends.

Is that safe to do? - Wouldn't it be more safe buying some 30 years negative yielding German Bund? [<- J/K] Is it safe?

Happy BRK.B <$200 Friday.

Almost $6B in debt at the Holding Company, up from $4.8B. This is a pretty substantial leverage.

That’s my take take too. I have no idea what the plan is, but can’t image that a hard Brexit is going to be good for stocks, much less banks. And Cameron had a good point an these AT1 bonds. I found a prospectus for one and it looks like it yields close to 7% and would convert at 63p (above the current price). So dilution from these is definitely something to consider.I don’t fully understand what forces a conversion and how the conversion price adjusts (common dividends). Makes me wonder why the mess with this AT1 capital at all, instead of just accumulating more common capital, given the high cost. The bigger question is probably why one want to bother with all these issues at all when you can buy WFC for a not much higher valuation. With WFC, I have a much healthier economy (growth rates, consumer debt levels, real estate valuation) as a backdrop and the PE is almost the same and the owners yield higher. No Brexit or AT1 capital to worry about. https://www.sec.gov/Archives/edgar/data/1160106/000095010319008051/dp108453_fwp.htm

Agree, I didn’t buy it. Too risk averse. Great call. I hope I get on board with the next one Microcap turnaround investing is hard - my guess is that 3/4 flame out. Those that make it can make a lot pf money.

Leverage is 5x EBITDA pro forma RPV which is high. I also agree that an acquisition the size of RPV carries some risk. On the other hand, packaging is a business with a very good track record for rollups. I have seen way less blowups in packaging rollups than in other fields. I think there are several reasons from my layman point of view. 1) business is very cash generative even in a slower economy. From my casual observation there can be some volume pressure in a slow economy, but there isn’t much margin pressure, compared to other business like chemicals (where margin pressure can be severe) 2) little risk of disruption 3) economies of scale are relatively easy to achieve 4 in a downturn working capital releases (due to lower commodity cost) tends to supplement cash flow when its most needed So I bought a little today (riding on BG2008 coattail ), but I need to do more work to become comfortable to make this in a major position. Yes, spray and pray I know..