Spekulatius

Shhughes1116 - thanks for the color on MAC’s managment changes. I agree it makes a change of control more likely for MAC vs family controlled TCO. There is an interesting article from Brad Thomas (prolific writer about Reits on SA) about TCO, which also mentions MAC as a comp. The point he is making is that TCO has way less (7 stores) exposure to ailing department store retailers (Sears, JCPenney) compared to MAC (49 stores). While I think MAC can fill these cavancies when the time comes (some of it is in JV and would be a shared expense), it still means that they have a lot of work to do and capital to spent until the properties are fully productive again. It’s an opportunity, but also a risk, imo. https://seekingalpha.com/article/4236590-taubman-centers-get-rolex-price-timex

I believe the decision of a dividend vs buyback is driven by Exor. Exor wants to diversify or buy back stock and that’s easier when they get cash from FCAU rather than an increased share in FCAU, which would force than to either tender or outright sell FCAU stock to do so. A tender/ sale by Exor would also lead to fairness issues and be perceived negative for FCAU, imo.

Great write up. The pension issue with UPS is significant and one reason why I believe to be FDX a better investment. You can see UPS struggle just looking at the book value, which is about zero, mostly due to drain from pensions and also from buybacks. FDX has pension issues too and they do MM acounting for it on their income statement. They have put $1.5 B / $2B in it the last two years to boost the pension funding level. The pension issue is much smaller with FDX than with UPS.

Besides the bravado around macro, Druckenmiller basically pitched cloud plays and specifically mentioned NOW. I put it on my watch list around. $165 and it now trades at ~$220. Not bad at all. It would have been better if I had bought it myself. ::)

I guess they don’t like the fact that as long as the preferred (or debt) is publicity trading, they need to file the financials for their now “private” firm. The simple solution would be to tender the preferred? I wonder why this want the plan to begin with? Stinginess or lack of cash?

Any comment why you choose MAC vs TCO? Both seem to trade at similar valuations (7-7.5% cap rate) and TCO has even higher quality malls and a better balance sheet and way better long term track record. I think they are equally likely to be acquired. What I noticed with Nc (and TCO) that both have shown shrinking FFO/share due to dispositions from property where the proceeds were invested in their higher quality properties. This is dilutive, because apparently these investment have only initial returns of about 7%, while the deposed properties have cap rates that are higher than that. Then adding the lag when the rents are kicking in from the projects and it’s clear they are dilutive to FFO , albeit hopefully accretive to NAV. The low initial returns on investment bug me a bit on project that are upgrades (low ROI’s for green fields would be understandable, but most of these projects are just updating existing properties) and make me think they these operators have no choice but to keep their properties updates, or they quickly may become dreaded B-malls, trading for 8.5-10% cap rate and quickly losing value. So a lot of the Capex may just be maintenance Capex in the end, even if it’s capitalized. Anyways, I am basically questioning if recycling the capital in higher quality properties created value.

Can't tell if you're serious or not, but it's Daniel Ek the co-founder and CEO of Spotify Ouch, thanks I missed that. Thought EK is a shorthand for something, but of course it’s a Swedish name.

You can still read endless comments to the tune of “ We will never forgive the dividend cut” from investors back then in Seeking Alpha. The valuation is still fairly low, even after a ~15% run up from the lows. I do wonder if sooner or later they will dispose of the fairly commodity price sensitive CO2 segment they imo doesn’t fit quite in KMI any more. It might be dilutive to DCF/share to do so, it I think it would help to get KMI valued higher. I am still hanging on all my shares, but have whittled down my WMB and ENB holdings a bit, since they recovered. .

WHO is EK? I get the idea that SPOT could become a nice business some day, but ~$25B is a lot to pay for ”could”. I get the idea to buy FB and GOOG for 20 x earnings. I’d rather deal with crappy headlines than crappy financials. SPOT is parked on my watch list right now.

Is this is a major source of revenues for Wells and other banks? I was under the impression that most migrants used something like Western Union or Moneygram. I will note, due to weird circumstances, I've been having to send myself money - I'm currently in South America and can't mail myself a new debit card yet - and I can send myself cash through a service like Worldremit for ~1% of my remittance (including both fee and FX charge) and pick up directly at a local bank five minutes later. That is going to put a lot of people out of business over time. Remittance is most likely a very small part of larger banks revenues. The larger banks now promote Zelle, which I think is a bank sponsored payment system and is free or very cheap (I haven’t tried it yet).

Weather apparently doesn’t count. Now, I'm in a weak position for my argument that it's nice living here (Calgary) because I had to get my furnace serviced today to keep up with the -30 C weather. But, the weather here isn't as bad as people think. We have a significant portion of relatively warm days in the winter because of a weather pattern known as chinooks. Plus, it is one of the sunniest major cities, which I think is relatively more important to people's well-being (and livability) than temperature. But on the other hand its pretty freakin' cold right now. I will still never move. Yep, that's what everyone in Alberta says... Well we have sunny days... or .... But it's a dry cold (yea, right). All you need to know is -30 C. That's COLD! I got a buddy in Edmonton who always fantasizes about moving to Toronto where it's warm lol. He'd do that in a second too if over here we didn't loose our minds with the houses. Those of us in Calgary can always cling to the fact that at least we don't live in Edmonton... There are probably not many jobs there, but we once were travelling through the Lake Okanagan and Kootenay area, which is absolutely beautiful and appears to Canada’s banana belt. It’s probably costly though.

Real estate and highly leveraged companies might have trouble, if interest rates rise with inflation. I would imagine that this means that cap rate would go up and real estate might get cheaper. The best business will be those they don’t need to reinvest much, but have pricing power. Food /consumer staples used to be they way, but I am not sure any more - they have lost a lot of pricing power in three last few years. It also depends on where the inflation pressure comes from - commodities, energy, wages? I would think they tech/growth companies would do Ok, or perhaps something like Dunkin Donuts, Starbucks etc.

750k covers the burn rate for a bit more than a year. They have got to keep the lights on.

I guess there is the question about industries vs companies. While some companies may be misunderstood, it is quite rare that an industry is completely misunderstood. I think one is more likely to find misunderstood industries where there is very little coverage from the investment community, which could be an overlooked sector, or a sector where the industry changes/transforms and those few analysts/investors that cover it, don’t quite grasp the change. I think some recent changes that I am aware of are the subscription model for software (Adobe, Microsoft; and separation of franchising/branding from property management and ownership in the hotel sector (HLT, MAR benefited from that).

Weather apparently doesn’t count.

^ That was discovery channels content 10 years ago. Discovery channel content now are scripted shows like “Deadliest catch”, “Bootleggers” etc. There aren’t really many documentaries to be found in Discovery channels lineup.

^ Either of the dates look good to me. I agree it was a great meetup and I like the location, as it is easily accessible for us suburbanites as well.

I added a bit during the last downdraft in December. At a roughly $50/ year run rate, it trades at 22x earnings (neglecting the cash) and in-line with the revenue growth rate.

I was pretty shocked at the capex growth. 2x last year and about 3x depr/amort. That's on top of 50% growth in R&D. I get investing for the future (and 22% revenue growth is nothing to sneeze at for a company this size) but would love to get more color in exactly what that spend is going toward and what their capital hurdle rates are for the spend. Also, the number of employee’s is up 23%’ a bit more than revenues. Same problem than FB, where costs are rising faster than revenues. I get the increased losses at Google ventures, but the margin and cost trends in the core business are a bit worrisome.

Stock is near lows after a disappointing Q4 and Y2019. My thoughts on this is that the “Material” ( polymers) business could be rated downwards, and the other business ( specialty, agrochemical/ seeds) and Electronics/ imaging could be rated upwards. Their plastics/material business has done cost advantages from feedstocks ( cheap NG), but it’s probably overearning right now. The valuation premium for the overall company relative to BASF is mostly gone. I think if getting in, but the most interesting time may be after the spins occurred.

This article on mobility is fantastic, imo. I am surprised that Germany does so badly. it is also obvious that the Scandinavian countries Sweden and Denmark are doing something right. Think about this - the top 0.1% own as much than the bottom 90%. A lot of folks in the bottom have no chance to move up. Why would they not eventually get the idea to just take what they can’t earn, but electing a someone which is willing to do what it takes. These trends are decades in the making and there isn’t a quick fix, imo.

But that's in theory. In practice, I've experienced countless times when I bought a low P/E stock, and stock kept declining, and a few months later the company reports shit earning and suddenly, my P/E is much higher. Company blames it for some one timer events, so I held on, and then another quarter later, the earning is even worse--- It was negative now! So there isn't event a P/E that I could value on, and now management continues to blame some one timer events. Now I am down 50%, with no margin of safety with me. ::) Well then it wasn’t a “good” stock. It was a stock that looked better than the fundamentals actually were when bought. You are correct, that this happens and Mr Market should not be underestimated. Not every contrarian buy is a good one. However, often Mr Market knows nothing and stocks go down for no reason or the decline is in no relation to the fundamental issue causing it.

Theoretically, if you bought a stock cheaply, it should not matter if the market agrees with you or not. A good stock should work even without rerating.

Didn't this also happen with LILA/CWC? Most people on CoBF claim that Malone screwed LILA shareholders by selling CWC at inflated price. But he took LILA shares in the merger and those are down hugely since then (possibly at least partially because of inflated CWC price). Yes, that is correct, but he would have lost a bit more when he just held on CWC. Malone has a way to keep the gain when a purchase works out and share the pain, when it does not. I think this is part of reason why he outperforms.

The US' much lower population density than South Korea/Japan/UK/Germany/France/etc almost certainly plays a role. http://statisticstimes.com/demographics/countries-by-population-density.php IMO it's more useful to talk about local monopolies (ala regulated utilities) than "giant duopolies" when discussing US cable industry. Cable companies aren't generally directly competing with each other like Coke and Pepsi are. The anecdotal evidence seems to suggest that the lack of competition is in major population centers like NYC. Again, I lived in 3 location during the last few years and in each suburban location there were 2-3 competitors for high speed Internet connection. I can also attest that there are rural locations in Germany for ample that are still underserved. I believe the reason for the divergence in the US vs Europe is that each European country had a former state Telecom covering 100% of the country and pretty much any service (fixed phone, wireless, internet) for a fairly low price and its difficult to compete against those. The US had a patchwork of local telecoms after the ATT breakup. Regarding your first point about no competition in major pop centers, do you know why that is? Or is that just an observation? It’s an observation based on BG2008’s ancetode and others. I have no clue why this is, but the numbers don’t lie. Cable/internet in other countries is just not as good of a business than in the US. I was a dope too investing in LILA until I finally saw the light and realized that CMCSA and CHTR are just better business. The best I can figure that some business are more competitive in some countries than in others. For example, retail is fiercely competitive in the US, groceries is fiercely competitive in Germany. Banking is another one that is very competitive in Germany for private customers, but much less so in Britain and the US from my experience and based on the interest rate margins.. I just take it for what it is and invest accordingly, as I think these inefficiencies will persist for a long time.