Spekulatius

“If I could have raised billions, He should've said: 'If i didn't waste $6.5B on buybacks'.... Even SYW was a misapplication of capital,IMO and would not have succeeded even when he had spent a couple more billions on it. In the mean time, he starved totally fine operations like the car centers, Craftmans tools (which dominated several categories like tools, garden ), Diehard and made them generic brands with little residual value.

The only thing I own in the oil patch is CVE, which I bought in the low $7 range. I like the way things are going, their refinery assets balancing out the large spreads and probably add to my position in the low $8 range. I also follow CNQ, which IMO is one of the best managed large caps, but they are not as cheap. The E&P sector in Canada looks like a giant value trap. I like ENB better, because it pays better to wait, but these names above for sure trade below their NAV. I think some trouble with Saudi Arabia could be a catalyst to get this sector rerated.

BX is more like a high yield version of BAM. The earnings can be quite volatile, because they depend on the returns. I would be somewhat concerned about higher interest rates stymifying growth in private equity, real estate and the like that Bx is involved in. BLK fornthr mot Wort jut takes a fee. If AUM go down due to market declines, so will BLK fee intake, but there is no inherent leverage in play like with BAM or BX. OAK is another one to look at, with some countercyclical aspects.

I am surprised there isn’t a thread already, but I could not find one. I recently got aware of this stock, after having it on my watchlist for a couple of years. BLK apparently sold of too about 13.5x earnings and 10x EV/EBITDA, which is and approximately 20% discount to its average valuation. BLK l Has traded at a similar valuation during the small time in 2016,2015 (spikes down during selloffs) and even cheaper during 2011-2013. Looks like a mediocre earnings report and some fund outflows are theroot cause of the last downleg. I like BLK as an asset manager, because I’d their great reputation and their focus on passive investing/ETF. The business itself is a great one with strong profit margins (40%) and very cash generative , as it needs little capital to run. they are #1 in their respective business, but keep in mind that the stock is certainly correlated with the equity markets and the beta is high. I bought an approx 1% position today and wouldn’t mind averaging down. It’s one of the more attractive high quality stocks right now, IMO.

Agreed. Seems you get Jarden for free and the rest at a discount compared to when they bought it (but Newells could have been overvalued on its own and performance is worse today) but it's a massive restructuring - led by a clown. 30 ERP systems sounds like a friggin nightmare. Look at how much a company like Coty is struggling (debtfueled buyout party gone bad). This is on steroids. Again, Spectrum Brands. Those Guys produce cash, CEO sounds smart, already did one massive deal to delever, really could use another but even if it isn't succesful I think they'll manage okay. Here it seems like you're betting a bit on dumb PE, and I actually think that's okay (1.1 trillion of dry powder) but you also have a massive restructuring and very little cash flow to show for it. I'm not smart enough here. I agree on SPB being a much better bet than NWL, since they are further along with restructuring and should have any issues with their balance sheet. NWL still is in the messy phase of restructuring and has the bulk of work ahead of them. With restructuring, my rule is that it’s alway worse than you think

These are old mature loans. Just remember how much they have expanded their loan book since then and how much prices and costs have risen. I am quite miffed , I didn’t keep my puts. I thought my thesis was wrong the shares went down due to NIM pressure and did not expect to show loan losses to show up yet.

The underperformance probably get worse, if the US market starts to trend down. There is a saying in the financial circles in Germany, that “if Walls Street get’s a cold, Frankfurt gets pneumonia”.

Is this really cheap? I get about $470M in operating cash flow for the first 2 quarters and an EV of $16B. Restructuring to reduce costs sounds good, but how much is this going to cost? Also going from 30 ERP systems to 2 us pretty much guaranteed to create problems. I feel this is still a bit early.

I somehow feel this thread has gone off track.?

I think the ECB finally concluding their quantitative easing enables the FED to raise interest rates without the USD shooting up. The latter wouldn’t be good for the US industry. I think we are leaving the Goldilocks zone where we could have economic growth , no inflation and low interest rates at the same time. Now it’s one vs the other. We all know that interest rates are gravity for asset valuations , so higher interest rates will prevent bubbles from occurring. To better to deal with bubbles early on than to firefight the issue after a huge bubble has popped. I think Greenspan was wrong when he stated that he does not care about asset bubbles as long as inflation is low.

The article looks at the relative discount between Europe and the US stocks and suggests that it is as large as it has ever been. So, that’s a relative valuation call. The sticks that I brought up seem cheap in absolute terms especially the finacials. There are reasons why finacials in Europe are cheap , but both LYG and UBS are real franchises too.

All I see is a lot of money vanishing without a trace. I think we soon have a new expression- getting “blockchained”.

Lots of people have made this thesis before, saying the assets aren't maintained well because MCX is too low, but I think they forget there are maintenance expenses that are expensed on the income statement. If you look at what is expensed and capitalized, they clearly spend a lot caring for and maintaining the assets. I don't know how things work in Canada, but in the U.S. some states allow certain expenses incurred in order to comply with 49 CFR 192 and/or 195 to be passed onto the rate payer. This constitutes the largest expense for maintaining a transmission pipeline. If the Direct Assessments determine that a section of the pipeline isn't fit for operation, then in most cases the section of pipeline can be replaced under the capital budget. Many of these pipelines were built in the 1960's or earlier and have been completely depreciated. The above was something they the author of the short thesis in VIC was totally missing and it was clear from that point thet he didn’t understand the financials of the pipeline business. As was pointed out by UCCMAL, the Achims heel of ENB is the cst of debt. ENB needs to stay investment grade and that is why they have done sales of noncore assets for $7.5B CAD, which IMO go their leverage in control. In addition, the restructuring of the MLP subs is credit positve as well, as indicated in Moody’s rating notes.

Sounds great, where can you spend them? You can’t spent them, but you can fondle them on your touchscreen.

Some European value stocks I am looking at: BASFY: chemical company at a 11x PE. solid balance sheet. largest chemical manufacturer in the world. UBS: Swiss wealth management bank, has trimmed their investment banking business. PE ~9x, P/ tangible book 1.15x LYG: largest British bank with 30% market share. NIM almost 3%. Held back by PPI provisions ( which will be gone next year) and Brexit cinders. PE ~ 9x, 1.1x tangible book SIEGY : diversified industrial, relatively clean balance sheet. PE~13x

In principles this is correct that electrical motors are reliable, but practically, I am not so sure. i have not had a car breakdown since about 13 years ago and that failure was due to an old defective battery. Most cars now break down, because the electrical or electronic system fail. FWIW, I do agree that restricting car sales due to lobbying from car dealers is nonsense.

lol is that a bull case? their products are shit? haha In a roundabout way, the answer is yes. ?

Impossible to prove a negative of course, but if these motherboards with Trojan horse hardware existed in any quantity, they would have shown up already, now that people look more closely. Plus there are reports that state that the Super Micro boards are so crappy, that they could easily be hacked with laced software and there isn’t even a need for a hardware Trojan horse.

Feels like we have a little bit of a problem with the largest oil supplier: https://www.newyorker.com/news/news-desk/in-the-wake-of-khashoggis-disappearance-saudi-arabias-crown-prince-is-pushed-to-the-brink

Pretty well thought out post. It certainly feels like there is a bubble in tech/ venture capital where it’s not even clear to me that the business model will allow profitability in thrnforrseeable future. Companies like Wework, Uber, Lyft, Tesla, Cannabis stocks, cloud and payment companies but also the self driving ventures come to my mind. most of this is equity, so a collapse should not lead to a debt crisis. I can see collateral damage in bubble area real estate (Bay area). Maybe just a other indication that we are late in the cycle.

So buying the Sears bonds now is a bet that Fast Eddy doesn’t screw the debtholders? That’s not a bet I would be willing to make, given his history.

I was hoping they would make it to 1000 pages. I think the thesis was totally broken around page 300 at latest.

These are silverfish. Pretty common in Europe and the US. Expensive buggers for Protector apparently.

The latest drop is probably due to the recent hurricanes, other re-insurance companies are down too. I own quite a bit of AXS and RE in addition to Fairfax and BRK. I sold AIG after they announced an acquisition at a multiple above book (1.3x ? I don’t remember) while trading below tangible book. At that point, I new my thesis was broken. That was around $60/ share. Below $50, this gets interesting again, but I think I rather stick with adding to my existing holdings in the same sector.

It’s mildly interesting, but also note that GS trades at 1.1x book and is a far better business. also note that GS has a huge wealth management business that would be worth a much higher multiple stand alone. JEF does not have a wealth management business, it’s a second grade investment bank.