Spekulatius

I would give them partial credit for the cash. Very likely FB will return cash via buybacks to shareholders p, because they just generate too much of it. Strategically, I like what FB is doing. Instagram is basically burying the FB killer Snapchat. they do forays into online dating. Marketplaces is now a credible alternative to Craigslist and some people prefer it, since the seller isn’t totally anonymous. Video may have upside, plus afformentioned properties like Whatsup. The fact that half the planet is already on FB is not a deterrent on growth, the growth will come from ARPU. Europe and Asia’s ARPU is only a fraction of what it is in the US, and even the US has room to grow, if they find additional avenues. They need to create synergies between their various platforms and new functionality to drive user engagement, the rest will come on its own. I do agree that short term the number suck, but I think they are doing the right things.

Which applies not just to cable, but anything that creates a growing cash stream (pipelines, real estate, infrastructure assets etc.).

GOOG, FDX and FB.

It’s pretty easy to come up with a bloated valuation, when using bloated comps for a valuation or numbers from 10 years out. Alternatively one could put the same multiple that Mr Market gives to GOOG or FB right now (roughly a 20x PE) and get a $400/ share fair value. Take your pick.

Based on my math, and the size of the takeover relative to ENB, the dilution can’t be substantial. I expect the $7.5B CAD in asset sales to have a larger impact, but then again, it reduces dilution too.

There is no dilution from simplification, because the cash yield from EEP and SEP is about equal than the cash yield from ENB Cash yield for SEP ($1.65B DCF) ~10% Cash yield for EEP ($1.35-1.4$/unit) ~13.5% Cash yield for ENF ( 7.5% yield /0.85 coverage ~8.8% DCF yield Currently ENB yields 11% on DCF, so if you add it up, it should be about DCF neutral, not counting any cos savings from the consolidation. the biggest advantage is that ENB after the merger will have access to all the DCF from the dormer subs, not just that from their partial ownership and the EBITDA/EV ratio should look better. Also, ENB retains ~40% of its DCF which is much more than the subs did, so with increasing retention, the ability to self finance will get better too.

SD is correct about employees / unions having representation in the supervisory board, but I don’t think it is a problem really. I think owners still have the swing vote and also unions (if they exist) in Germany are far more reasonable than they are in the US. In the past, union members have agreed to even drastic cuts, as they can look at the numbers and generally they make sure that the cuts are done in a for them agreeable fashion. It is correct that German companies are somtimes slower to make cuts than US companies, but thet difference to the US isn’t as large than it used to be 20-30 years ago. The bigger issue is not thet they can’t, it’s more a reluctance to do so. I would also argue that larger cuts may not be such a great idea in many cases anyways - I have seen many cases in my profession experience where employees had to be hired back shortly after cuts and considerable cost. Generally, you will find that German companies are more run on consensus (by managment teams, employees, input from bankers) than an almighty CEO as is somethings the case in the US, for the better or the worse. Just a different way to doing things. Also keep in mind that many German companies are multinationals and they will cut positions in the US just as quickly than an US company will do.

No issues on my end.

I don’t know the answer to this. In terms of the underlying economics, if I buy a factory “worth” $1.5 bn and get a $.5 bn “rebate” from the seller that’s economically no different than if I just bought the factory for $1 bn to begin with. So I would expect the accounting rules to reflect this and require a $1 bn addition to capex, a $1 bn addition to PP&E, and something like 1/20th of the $1 bn show up as depreciation in COGS on an annual basis. But I have never really asked an accounting expert this exact question. Yes, but when the rebate occurs retroactively, then the company would theoretically have to restate all their financial filings from the purchase date to the date the rebate was received, which seems onerous. I think in that cause a one time restatement would be more straightforward.

Disclaimer: German living in the US for ~20 years. In my opinion, the German sentiments for the most part just follows the US sentiment, except if there are specific issues in Europe (Italy for example). There isn’t as much of a shareholder culture in Germany than there is in the US. Many Germans don’t own stocks and those that do, own much less as a portion of their wealth. Most Germans don’t relay care if stocks are going down for that reason, also it may just be another thing to worry aboutt, which is something thet German are really good at. Owning stocks is considered by many a bit like gambling, or Spekulation (hence my screen name). German companies are run in a more clubby way, and for a strong consideration of all stakeholders (employees, community), so there is less pressure to perform for many family controlled companies. it’s a bit like Loews in that way. There are many mid/smaller companies in Germany that have top notch products and are world wide leaders in their respective fields - companies like Krones, Fuchs, Hella and many other which can be found in the MDAX. From time due to market volatility, there can be incredible bargains to be had in thr German market.

I would think that a Capex rebate would flow though the income statement as a one of Gain and as such it typically wouldn’t be added to the gross margin, also it would show up as cash flow for sure. TSLA next 10-q should be interesting material for sure.

Interesting discussion here, especially BG2008 posts. I definitely recommend walking around in Manhattan to get a feel for the locations. Just a few blocks can make a large difference. I was surprised by the many store vacancies in Manhattan when I walked there and some areas loved pretty run down, most likely caused by retail malaise. I am guessing that New Yorkers really like Amazon nowadays. My only RE investment is NYC centered MNPP, which trades at a ~50% discount to NAV and a close to 10% cap rate. Sure, a lot of their building arnt top not notch and even premium malls aren’t the rage right now, but it is leverage is low and it seem that they have done Ok the past few years, yet the stock is down. I like about RE that it’s sort of like watching grass grow. You can look at this about once a year and that’s basically enough to make an economic assessment. Stock prices can do all kind of crazy things in between, but if the leverage is low, and you buy cheap enough and high enough in quality, you should be doing OK over a long enough time frame.

But why sell the German index specifically? This is my personal anti-home bias. According to https://papers.ssrn.com/sol3/papers.cfm?abstract_id=76248 Italy would work best, but i don`t think there is an active option market for that index. But when you look at the DAX holdings there are a lot of awful, overleveraged and cyclical businesses in it. The best is that no professional investor will ever use this effect, most investors i know laugh about it or dismiss it as a statistical fluke. (Should this change, i will probably reduce my position size) The DAX has been traditionally much more volatile than the US stock market. I think some future traders like trading the German Dax futures because of the high volatility, the time difference and the relatively high liquidity. The old saying still goes that when wall streets gets a cold, Frankfurt gets a pneumonia.

Hazelnuts aside, the country is actually improving in terms of foreign sentiment. While Erdogan is Crazy, he actually has released the Priest that was the reason for the US sanctions and the issues there seem to be at least talks about a similar issue with Germany. I also think they the recent issue with Khashoggi in the Saudi embassy in Turkey is clearly helping (and is exploited by Erdogan ). Like it or not, Turkey is a NATO country and is strategically very important and the NATO needs to think twice about the relations, as I am sure Russia (which has been historically an adversary) would appreciate getting closer and dominate the Black Sea. The EU Ned’s to cooperate with Turkey because they are a gatekeeperfor the refuge stream from Syria and because a couple million Turkish people live in Germany and there are close ties economically. So maybe this is not a total basket case. Not a big factor, I travelled to Turkey on business last year and was quite impressed by the people, there is a budding industry and some high tech there. The country reminds me a bit of California as well, as far as climate and landscape are concerned.

Yes they are fantastic operators and allocators and will do at least reasonably well with the acquisition. I dont understand exactly what you said in ur first sentence, please clarify. Spelling correction got me. My numbers were wrong. I think I mixed up CHTR debt ratio with LBTYA’s.

Bought some MHK (falling knife) and added to FDX.

My main issues is they they have been terrible operators historically and many of their acquisitions have not performed. Direct TV is a dead man walking in the media landscape. While the TWC assets are pretty high quality, I am no sure they won’t manage to screw them up. I’d rather own something in the media business where management is proven to be strong, even if the stock is a bit more expensive. CMCSA is my main pick with CHTR a distant second.

Vince, you numbers are correct and mine were wrong. I don’t really particularly like the SKY acquisition, but CMCSA have proven to be good operators and there were plenty of sceptics too when they bought NBC. They clearly want one a content/ cable hybrid, while CHTR remains a pure delivery play. I have scaled back my CHTR position a bit about a week ago for risk management purposes, but if it stays around $290/ share, I probably buy back what I sold.

I like CMCSA and their results better. Lower leverage also means higher financial flexibility, although their SKY deal will increase leverage to close to 3x EBITDA, which is still much lower than CHTR ~5x. CHTR EBITDA growth of 3-4% isn’t that great when the fairly substantial interest expenses grow ~12% YOY

Brexit shouldn’t really have a major impact on its operations, since its run country by country. I think the main risk is they the GBP goes down when Britain tumbled into a recession and as someone noted, there is political risk with the Labor party veering left.

Tom should give these Liberty cable guys in Europe a call too.

Lower income people probably rent rather than own.

Stocks I find cheap: Automobile suppliers LEA, MGA, DLPH, HLE.DE Cars: FCAU, GM, BMW3.DE Insurance: FFH.TO, RE, AIG(?) Utilities/pipes : ENB Semi : NXPI, possibly many others Banks : GS, UBS (?), LYG, BCS Europe: KRN.DE, SIEGY and many others... Chemicals: EMN, BASFY The selloff reminds me more of 2015/16 than 2010-12. A lot of European stock are back to 2016 selloff levels and some back to 2013/14. My biggest concern is political/ trade issues Russia, Saudi Arabia, China, Brexit, Italy and perhaps even more so that we have seen peak profit margins due to inflationary pressure from labor costs, material costs, energy costs, trade tariffs etc.

The law suite is bogus (IMO), but the effects are real. Even without the lawsuits, Bayer vastly overpayed for Monsanto, IMO. German managers like to take over US companies, because US managers get paid much more, so that’s a way to initiate a rise in compensation. I would rather own BASF which bought some AG assets that Bayer had to despose of because the merger. Those assets weren’t thet cheap either, it at least the price was fair (13x EBITDA ?).

I wouldn’t call the last few weeks a big downdraft. Downdrafts as I define it would be 20% downdrafts in broad indices. I personally embrace downdrafts as I mostly keep cash round to average down at lower prices. Other than that it’s best to escape the news cycle and look at the market in broader terms, but also watch out for risks in your portfolio haven’t been fully assessed.