Spekulatius

I don’t think he does, because his approach is based on mechanical screening. His approach is indeed related to Greenblatt‘s “Magic Formula”, which uses EV/EBIT and Return on capital, expect he only uses EV/EBIT. Tobias claims that his simpler formula actually works better than Greenblatts magic formula in backtests. Tobias Carlisle is active on Twitter and has a pretty good podcast You can ask him directly, if interested.

Well, he has a bunch of short positions, which I think were initiated at 1% each for modest has created a 0.25% portfolio drag, which is hardly earth shattering. Tobias ZIG fund more or less mechanically screen for the cheapest EV/ EBIT stocks, (He calls the ratio acquirers multiple) and the short are picked from the inverse high EV/EBIT multiple. It might be totally mechanical (I am not sure), but it certainly wasn’t a concentrated short big position. I guess his screening method totally ignores NAV too.

It is unlikely that WFC can distribute 100% of their earnings in this scenario. 1) in a revision, loan losses will shoot up, requiring reserve build. This will likely lead to GAAP losses. 2) after central banks lower rates to zero, it will take a long time for rates to come back. This also means at bank earnings won’t come back. lower ROE =lower multiples. We are looking at a ~$20 stock in this scenario. It’s will basically look like an European bank. Asset manager /brokers H SCHW, IBRK,AMTD) mostly live on NIM nowadays and will also get hit hard by lower interest rates. Companies will large pension funds like GE and IBM will see their liabilities growth (due to lower assumed returns) and will have to kick in a lot of cash to keep them funded. Better to buy something with moderate debt, which will be cheaper to fund going forward.

Coincidental, I was just looking at this stock, as a competitor of DOW. both are fairly similar in size and profitability, no surprise , since both produce the same product (PE, PP), except DOW also has a business in siloxanes. Size wise, both are fairly similar, but LYB has half the debt of DOW ($9B vs $18B for DOW) EV/ EBITDA multiples are similar (~7x, but LYB looks a bit cheaper in terms of PE, due lower tax rates ~15% vs ~20-23%. I would give a small edge to LYB in terms of valuation. LYB and DOW are pretty interesting as chemicals are very sensitive to changes in the economy. They tend to see a slowdown early, but also bounce back quickly in a recovery. This is because small changes in the demand/supply balance will also cause changes in margins (as those business tend to be price taker ), which compounds often changes in earnings. BASF earnings warning (30% reduction in EBIT this year) really spooked the whole sector. This is one of the sectors that provide an inside look into the economy per Druckenmiller’s paradigm, imo. Needless to say, this does not look great in the short or medium term.

It’s funny that a stock can be a poor long and a poor short at the same time. One would think it’s either one or the other, but with Tesla, I think it’s both. While I think risk skews quite a bit to the downside, the puts are just way too expensive and require very good timing to be successful. I don’t short, So I can’t comment but I think he borrow cost probably don’t make it particularly worthwhile either. Just sitting on the sidelines and watching the free show with a beer (I don’t like popcorn) is the way to go for me.

PACB - betting on a merger conclusion.

Is the “James Bond PPK” a special edition? If, not this is pretty mondane pistol , as it was the police service pistol in many states in Germany. Its not even that great of a pistol. No idea, but I don’t think it’s worth more than $500 equivalent in Germany (gun market is small there however, due to strict gun laws).

Looks to me, like you need to assume at least a 75% chance that the deal goes though in order to be positive, if you assume it’s a zero when the deal breaks. I think you would get some recovery if the deal break , at least as a small investor.

It’s interesting they several years into this, some vintages are still cash negative. A lot depends on the residuals being correctly market. As the balance sheet mushroomed, it may just be too convenient to cover bad vintages with new business. That’s what kept me from investing after I looked at it a while ago

I’m also surprised farmland has held up so well. Prices are still above $10,000 per acre in a lot of areas. At $10,000 per acre, even the most productive farmland is yielding less than a short-term government bond. I dealt with this problem a few years ago. We had farmland that had been in the family for over 150 years. It was immaterial in relation to overall resources and generated little cash (in relation to capital value), but my family had a strong emotional attachment to it. It was indeed tough to get past these non-economic factors during the sale. So it looks like at some point AGM is going to be in deep trouble. AGM is farming equivalent of FNM/FRE.

Yes, it seems kind of crazy in Germany to not do some infrastructure investments (housing, rail etc), because in a lot of cities, the supply hasn’t kept up with demand. Fast rising housing is not popular in Germany because the percentage of homeowners is much lower than in US. Germany had a budget surplus, record low interest rates and demand that can’t be met. I instead of bitching over the negative effect of the immigration , there should be much more focus on making use of it and do what needs to be done. Seem like a no brained to build housing for a million people in cities with job growth, rail infrastructure to meet increased demand and get some of new inhabitants to work at He same time, instead of playing financial stimulus that doesn’t seem to do much. But then again, I am not an economist.

The rising rents in Germany were at least partly caused by immigration. All of a sudden, Germany has 1 Million more people they need housing adding in a short period of time. With full employment and starting with a shortage in larger cities to begin with, and little new construction, it’s easy to see why demand outruns supply. The stop gap measure of rent control certainly will not solve the problem, but make it worse. Adding to the supply is what is needed.

My bet is that if you screen for companies that file before holidays, you come up with a population of companies that underperforms the market.

July 3 AH filings become ever more popular these days: https://www.sec.gov/Archives/edgar/data/91668/000165495419007938/sodi_8k.htm

It s easy to bash the European bankers and the ECB, but what will happen to US banks and US insurance companies when interest rates go the way they did Europe? US bank8ng has structurally less competition so it might be a bit better, but overall, I would expect NIM to compress to near European levels, which probably means ROE<10% and compressing P/tangible book <1. The US still has a profitable credit card busInes and other niches that don’t exist in Europe, but banks have non-bank competitors in those. Insurers like BHF or LNC with long tail business or even FFH and BRK will be affected as well. Then we have issues with pension fund’s (Hello IBM, GE and many others). The winners are probably utilities (unless their guaranteed returns gets revised down, as happened in Switzerland ), real estate, infrastructure and probably solid growth business with or without capital needs that will command higher multiples.

Interesting perspective from sculpin, yet we also have this: https://www.forbes.com/sites/jeffmcmahon/2019/07/01/new-solar--battery-price-crushes-fossil-fuels-buries-nuclear/

http://www.kkr.com/sites/default/files/KKR_White_Paper_53_1906.pdf Covers pretty much everything :)

Yes, owning a vineyard is similar to owning a sportsteam, horses etc. in this sense - they are status symbol he super Rich and give them something to do. Scheid vineyards may not be good enough in terms of quality to be bought as a celebrity toy though.

Yeah, the market in 2007 was even cheaper... Of course interest rates were higher back then as well as other issues.

Added 3 more units to my stash right at the open for $2200.

A $9/ share GAAP loss for a $65 stock is something to sneeze at.

LOL , my brother has stake in one of those with I think anA380 with Singapore airlines. The problem is not with the lease, the problem is that this airplane is a dog and once the lease is over, the residual value may be close to zero. Investors get a return of capital in the high single digits (7-8%) for 10 year or thereabouts term, but the total return very much depends on the residual value of the plane. The airplane leading companies run the same risk, but are hopefully smarter about what to buy and have more options to salvage value at least in theory.

It’s pretty expansive at 15x EBITDA and 3.3% cash flow yield. Oh the allure of cheap money. They must be seeing something in it though, perhaps a platform for more acquisitions in this space.

Race to the bottom continues academically: https://nypost.com/2019/06/30/laffer-federal-reserve-shouldnt-be-independent-from-white-house/

They talk about a platform value, what is the justification for it? The barriers to entry are very low.