Spekulatius

I recommend this one if you like crepes (The Billig): https://goo.gl/maps/TTAcH1vQF9tyHKNV8 We also enjoyed the Montmorency falls.

Hard work= more chances to be lucky Skill= Improving the odds to get lucky. Most people who get lucky do both of the above, but as always, exception confirm the rule.

There is a pretty good writeup in Valueinvestorclub from 2017 which initially pointed me to this stock. https://www.valueinvestorsclub.com/idea/Megacable/1349107714 It’s simply a cheap macrothesis stock, betting on broadband penetration in Mexico. I think Mexico is a country where a lot of money can be made in the communication sector. Megacable strong balance sheet with negligible debt somewhat insulated it’s from Mexico’s economic volatility. I also like that they are family controlled and are not part of the Carlos Dlim and America Movil complex.

If I had to condense what's happening with respect to interest rates I would say that the world is long central bank confidence and short common sense. I have no idea what is going to happen and how it ends, but I think it could be a trip to financial market hell like in 2008 and possibly worse. Going long real assets like real estate, gold, land etc. seems to be one way to escape. Even buying bitcoin seems to me a better bet than buying a 100 year bond yielding nothing. At least with bitcoin, you have a chance to make money (vs fiat currency ), while with a 10” year bond, you are almost guaranteed to be a loser.

Any opinions on how this might play out vis-a-vis LILA? Seems like LILA is the only realistic acquirer. Unlikely one of the other three mobile operators on the island would be allowed to buy this and LILA is the only other company who could get synergies. Potentially PE might be interested, but they would have to pay a really dumb price to outbid LILA. My guess is this dynamic allows LILA to pay an attractive price if they buy it. The AT&T team seems to have a mandate to "just sell something," so they may not be that price sensitive. The mention of private equity firms in the article suggests to me that LILA might be looking at financing this with a PE firm like Searchlight. Searchlight and LILA could form a JV to buy this since it would be a pretty big acquisition for LILA alone. I don’t think Lila is the likely acquirer here. The price for ATT’s assets imply a valuation of 10x EBITDA while LILA trades at ~7x EBITDA. Even with synergies, LILA can not compete. I think there will be plenty of acquirers for cash generating assets like ATT’s. Also, LILA may have trouble with Antitrust, because they own already cable assets in Puerto Rico. My bet would be on private equity or a infrastructure investor like Brookfield.

Bought a little GRIF (piggybacking on BG2008) and added to REZI.

Is there any plan to use more debt with the company? It looks cheap on an EV basis, but if they don't use any more debt, I don't see how that changes. Yes, it trades at around 7x trailing EBITDA. I like that they essentially use zero debt at this point. One thing to consider is that interest rates in Mexico are fairly high right now (be careful with MXN on margin , I paid more than 8% on a little of margin debt at Interactive brokers). Megacable is a pure play broadband bet for me. I think the economics are close to what they are in the US and much better than Europe, and the penetration is still low, so there should be a good LT growth potential.

This is an example of a badly produced podcast. The talk is monotonous (single person, no dialogue) and the podcast is way too long. Not recommended, unless one is a Singleton junkie. I put it away for good after 20 minutes.

Adding to MEGACPO.MX (Megacable)

^ Negative loans still have amortization as main cash expense for the borrower, so default is possible.

As an example, at DANSKE it took a long time, too. When the headhunter introduces a potential subject for the position to the chairman, and a meeting for conversation is set up, the potential subject has by far more questions for discussion to the chairman than the other way around. Such a setup can be highly annoying, and thereby counterproductive. Wells Fargo CEO seat is basically “radioactive”. Not many candidates wants to deal with Congress , politicians, regulators while running a business at the same time. This will whittle down the pool of candidates significantly.

I am waiting for the day when a couple of negative interest rate loans default. If indeed momentum and hope for capital gains (betting on negative interest rates becoming more negative) is the driving force, then everyone knows it’s a fools game and jut hopes they can sell before the rest does and once momentum turns, things could get rather strange when everyone runs for the exit.

Same here.

I believe the increased valuation in some stocks is due to the rush into compounders. I believe after one of the longest economic expansion in modern history, a lot of companies look like compounders, but are more cyclical than they seem. We will see after the next recession. Since many of them are roll ups (albeit well run roll ups), there is also reflexivity at work, such that a high valuation enables faster growth through acquisitions, due to lower cost of capital. Example are Heiko, ROP, DHR, TDG, ROK. They are well managed companies well worth keeping an eye on, but the valuation is a couple of bridges too far, since investors now discount many years of current growth rates into their stock prices. I'd agree with that. As an example, ROP has spent $11 bn on acquisitions in the last ~9 years to grow FCF from $471 mm in 2010 to $1.3 bn today. Meanwhile, EV/rev has more than doubled (~8.5 now from ~3.5x in 2010) and EV/FCF has nearly doubled (upper teens in 2010 to low 30s today). ROP acquisition targets aren’t cheap - the last one was done at around 17x EBITDA, so that keeps ROIC down. However, their return on tangible capital is very high due to the asset light business model. They can pay the high prices, because their cost of capital is very low, due to their high valuation and because debt is very cheap. Nevertheless, the comparison with Valeant doesn't hold water - ROP leverage isn’t high and they don’t buy cigar butts (at least they haven’t so far) to milk cash. my concern is simply with the valuation and the suspicion that some of their business lines may be more cyclical than thought. The one company they I am a bit suspect of is AVGO, especially after their pivot into acquiring software companies (and low quality one at that - CA Technologies).

The results are stronger than I thought . I had recently reduced my position because I expected so so results and also some concern regarding NIM, but after reading these results, I bought most of my shares back. Looks like they are doing quite fine without an CEO, especially with respect to costs.

I believe the increased valuation in some stocks is due to the rush into compounders. I believe after one of the longest economic expansion in modern history, a lot of companies look like compounders, but are more cyclical than they seem. We will see after the next recession. Since many of them are roll ups (albeit well run roll ups), there is also reflexivity at work, such that a high valuation enables faster growth through acquisitions, due to lower cost of capital. Example are Heiko, ROP, DHR, TDG, ROK. They are well managed companies well worth keeping an eye on, but the valuation is a couple of bridges too far, since investors now discount many years of current growth rates into their stock prices.

They just need to get hold of his blackmail material ( tapes?). I agree it could be interesting. Also, do all scumbags bank with Deutsche Bank?

Much if the US power grid is 2nd world standard at best. Wooden poles leaning over until they fall down, transformers that look they are from the 60’s and high voltage lines strung and cobbled together are the norm. I list power last winter in an apartment I rented for a week. However on the plus side, electricity is fairly cheap compared to Europe when you get it. Most larger industrial facilities have multiple power connections for redundancy.

I think the risk is not Amazon, which really caters mostly to above average people , but more discounters like Aldi and Lidl going in. Even if they get like a 10% market share, they would destroy margins for the remainder, especially the low and mid end of the market. In our bifurcated world, the low and high end tends to strive , and the mid gets squeezed.

The freakonomics episode about abortion and crime, where they revisited the thesis formed in 2001 with updated data is outstanding, imo. Freakonomics is one of the best podcast series I am aware of: http://freakonomics.com/podcast/abortion/

In Germany: IKB (Industriekreditbank) and Hypo Real Estate AG were nationalized. https://en.m.wikipedia.org/wiki/Hypo_Real_Estate Yes, that IKB was very strange. The IKB was designed to be a lender to smaller to mid size industrials, but starting in 2005 or so, it couldn’t make a spread any more and started this special investment vehicle in the US, for which it had no mandate to do so and it want disclosed either, as far as I know. I was invested in IKB a long time ago (it was a very sold stock and dividend payer), bit not at the time of the collapse. Same with Depfa, which became part of the Hypo Real empire which later collapsed. It is quite likely in my opinion that European banks looking for ways to generate yield in thenUS bond market right now.

In Germany: IKB (Industriekreditbank) and Hypo Real Estate AG were nationalized. https://en.m.wikipedia.org/wiki/Hypo_Real_Estate

Based on my research the amex partnership has very high margins (north of 50%). Revenue of 3+ billion currently growing to 6-7 billion in 5 years time. I bought Delta at 30 billion confidently thinking that their loyalty program alone is worth the price I paid. Maybe I see this incorrectly, but the airline points business economics are already reflected in the financial statements we see for the airlines, so why does it matter that such a high margin business exists? It can’t be parceled out as I understand it.. I could understand that the Airline Card business could get a higher multiple, if it could be parceled out, but I don’t think it can, which makes the whole point moot. It’s just means that there a high margin business and an offsetting low margin business summing up to the economics that we gather from their earnings reports.

I am not an expert of gaming, but it seem to me that the industry has a lot of tailwinds. The move to digital distribution and having the game essentially in the cloud saves costs, makes them more platform independent and probably over the long haul cheaper to develop. It also increases the game longevity by keeping users engaged with small updates etc. The ubiquity of smartphones allows for more gaming time. EA for example looks like a decent value. They have the FIFA franchise, which has been a money maker forever and probably will continue to be. I am also curious how GOOG stadia platform works out. This could become a nice subscription based business and also be beneficial to game producers.

MLR - looks cheap, but you tangible book is off and is around $20/ share (not that it matters). I agree it looks like a decent company. One issue I see with this company is that the gross margin is very slim - only about 12%. This means that the income statement easily can get wrecked by cost inflation or capacity utilization issues.