Spekulatius

UniCredit has a history of cross country mergers - in 2005, they bought thr mostly Bavarian Hypovereinsbank (once a blue chip bank) in Germany. I don’t think this merger can be advertised as a success though.

Car lending in Louisiana. Ouch. One can only hope that they know what they are doing.

Foreign Trüffel, you are correct. DXC or PRCP didn’t issue 7.45% notes. I misinterpreted and exchange offer for 7.45% notes. It still looks like there is quite a bit of leverage with this stock,but I have not been able to gather the pro formafinancials in detail yet.

I think one must distinguish between the impact of the Great Recession and reforms on banks vs individuals. It is now clear that the ECB didn’t get the banking system reformed correctly, causing a dwelling crisis. Depending on location and country, the impact was quite felt different. In Germany, the global financial crisis was felt as a swift decline followed by a quick recovery. As early as 2009, the Recession was over, wealth effect was negligible, because most Germans don’t own stock and real estate didn’t go down much at all. That is why so many Germans have difficulty to understand why other have a problem. There is very little symphaty for people, institutions or countries who borrow and then get into problems. Whether than is a correct viewpoint is an entirely different matter. It also doesn’t matter to the average German , if Deutsche Bank goes to the crapper - deposits are insured and the banking systems backbone Sparkassen and Volksbanken (owned by local government or mutual organization). This is very different from individuals who love in Ireland, Spain, Italy or worst of all Greece, who live now through a decade of economic stagnation (Spain is actually recovering nicely). I feel the ECB with their politic keeps the banking System afloat, but also keeps it from mending itself, which makes it a difficult sector to invest in. I do think that a selloff because of Italy will probably be a buying opportunity (except for Italian banks), since I think foreign banks have abstained from buying Italian treasuries after the first crisis a couple of years ago. So, maybe there is an opportunity to Maske a nice trade in the near term future.

The low interest rates in the EU are one , if not the most significant reason why European banks are lagging. I am no t sure if the EU can afford to raise interest rates either, with Italy having problems again and the EU central bank being run by and Italian. Then there is the issue with capitalization, if you just take tangible capital / total assets (and ignore RWA/models J entirely, the big US banks tend to have rations around 9%, while the European banks are around 5% (~6% for ING, ,4.7% (?) for DB), which is a pretty significant difference. Then European banks can maybe at best generate 10% ROE, while US banks can do 15% ROE -;so this pretty much explains the valuation differential. I think British banks may have a better chance to recover their profitability due to Brexit as NIM are already better than in the EU, but they still have to work through legacy issues (PPI, fines and restructuring in case of BCS). Thanks a lot to Rasputin for his helpful input.

How do they get their 16% margins when competitors get around 10%? the margin improvement is relatively recent and last years margin was around 10%. this years pr forma EBITDA is heavily adjusted due to a prior merger. While I don’t have pro forma stand alone financial, this seems very indebted. DXC has just issued a note at 7.45% interest rates, that deep into junk nowadays. Having one customer (US government) is risky, if they ever put your on notice for misconduct or lack of performance, watch out below. This may work out, but I think it is a very risky spinoff.

The set top boxes are yesterday’s hardware because generally speaking their user GUI and user friendliness is just crap. Apps in a device of your choice are going to get you a much better user experience.

The problem with this is, that if you believe in what OAK is saying, there is no reason to own the units, as you almost certainly will get it cheaper in selloff that for sure will accompany problems in the credit markets. If you don’t believe them and think that everything is just fine and will continue as is, then there is no reason to own OAK either. Almost a perfect Catch 22.

You don’t have to trust Malone to be in Charter, you just watch the economics either unfold as expected or not. It will be a slow process, so there should be time to react accordingly.

A mutual system should have some self interest in serving its members as well as self preservation in the long run. It isn’t a surprise that most mutual institutions are in insurance. There is a simple economic realty that if something can’t be paid because it isn’t affordable then it won’t. The folks running Calpers know this, but can’t tell their members, so they kick the can down the road as long as they can.

I think Scott has been smoking something again. The idea to use other people’s money to build something of value and then default on the mountain of debt that it took to do so, has some merit, although I suspect the devil is in the details. And, I agree that Donald T would be the right person to do so, because he is intimately familiar with defaulting on debts and generally doesn’t overthink complex matters. ;D Back on that matter, I had an inlaw collapsing in the heat on my visit in Germany. he as taken into and ambulance and a few hours in thr emergency room. I prepaid 100€ on his behalf and the whole bill was 400€. It would ave been up to 1000€ if he had to spent the night in the emergency room. This was for an US citizen without health/ travel insurance in Germany. I am guessing the cost would have been 20x if the had occurred to a foreigner in the US. Also for those that state single payer =nationalized medicine - well that’s not necessarily true. The German system is single payer, but resembles a mutual Insurance System rather than a nationalized system.

Could you elaborate on thr differences in risk weighting between European and US banks. I thought these are now standardized, as well as the CETC1 ratio.

Gross margins have been increasing from 8.4% in 2012 to >14% in 2018, if you include the higher margin service revenues. The man bull thesis is that JD creates a better customer experience because they own their logistics network. I have not seen nothing in the this short thesis to refute this. The thesis makes some points that are fair, but th same could have been made about AMZN, which started out as a book retailer and does not resemble anything to what it is right now. it is a question of management being able to adapt and invest smartly and creating a better customer experience. if JD can do they, they should be able to succeed and it should pay out handsomely, if no t this will fail. I have a small position in JD, which I regard as an option play of sorts and as that, I think it is pr9bably undervalued right now.

At 2x Tangible book, the retail return potential of buybacks seems muted. I don’t think they will do more than 15% ROE over the cycle, if that.

I don’t think that BAC is that cheap here. Tangible book is $17/ share, while the share ate $30, so this is about 1.75x tangible book here. They need to do 15% ROE over the cycle to justify the share price. I actually think their valuation is close to JPM now. Both BAC and JPM CETC1 ratio is about 11.5%/11.8% and those values have been sliding down a little over the years. That is actually lower than most European banks. DB’s CETC1 ratio is ~13.4% and LYG’s ~14%. Of course the US banks have profitability going for them, while DB is hovering about breakeven and the English banks still have legacy issues (PPI, fines) to deal with (LYG less, BCS more). BAC has over the years narrowed the gap towards JPM quite a bit and I think they can almost match them in terms of ROA and risk. I do think that buying back stock and reducing the capital base at 1.75x (BAC) or 2x tangible book is short sighted. I am aware of the stress test results and they both pass, but I think these models don’t take into account the reflexivity that is inherent with banking. Just look at the perception that DB is having right now despite solid capital buffers.

I went with Chesko182 suggestion and read the CC. I agree it is quite interesting, not just because what was said, but also because of how they stated it. 1) This is clearly run a private company and we are just along for the ride as minority shareholders. 2) They don‘t sweat quarterly or even yearly earnings numbers too much. 3) Their strategy is to improve their service /equipment and probably build market share and use the cash from the moving business to build a self storage empire 4) They don’t seem to control the finances very tight (either decentralized decision making or the owner makes it up). See 2). 5) I don’t even think the owner and management cares too much about the stock price I agree it is undervalued, but maybe due to above, it deserves a discount. Dividend payments are small as all the cash is recycled within the company. I don’t think that stock buybacks are likely either, because trading volumes are way small to do a $0.5B stock buyback. They would need to do a tender offer, but I am not sure they get much done without paying a big premium over market prices. I am guessing they will just build more self storage, if they have excess cash.

Biggest risk is that interest rates in Italy go north, imo.

UHAL has been adding roughly $900M to their property plant and equipment net for the last several years. This isn’t all Self storage either, they put roughly $600M property, but also sold an about equal amount. They only added about 30M/year in self storage revenues and they equipment investment does not seem to generate much incremental revenue either. Their self Storage occupanccy went down - this shouldn’t happen either , because they have a lot of storage facility maturing, which should improve their occupancy. FEIW, I added a few shared today at $321, but I think I will watch this closer, the trends are not encouraging.

DB is not going bankrupt, it would be rescued by the ECB and/or German government for sure. What I am not sure of is how the shareholders would be doing in that case. the Greek banks didn’t go bankrupt either, but shareholders didn’t make out well.

Gotta get rid of the crypto stuff, if you can’t trade it anymore. In that sense, it makes sense to pay for treatment, with the caveat, that the hospital staff may get infected.

The results were lousy, imo. Above valuation does not take into account the net debt ( one needs to start with EV rather than market cap), which adds about $2.8B.

I didn’t know that filing regular FDIC and SEC doc US is now considered regulatory overreach. FFH is not an US Company and it’s US insurance companies still have to file the statutory accounts with state regulators and file with SEDAR. OZRK is an US bank and hence regulated. they are the only bank that I am aware of that does not neither file with the FDIC and the SEC. This will be an interesting case study a few years down the road.

The fine is up 4% of the global revenues. This law does have some teeth: https://www.eugdpr.org/key-changes.html

The cost to file with the SEC may be relevant for a bank with a $100M balance sheet and $10M in equity, but it for sure isn’t a factor for a bank with a $6B market cap and $22B balance sheet. I don’t own of any public bank of similar size that does not file with the SEC and I don’t know of any other bank that does not file it’s the FDIC. I didn’t even know that a bank can avoid filing with the FDIC even the dinkiest banks that are “dark” file with the FDIC. truly unique and you really have to ask yourself, why they are hiding or avoiding scrutiny so much. I thought I have seen it all, but apparently that is not the case. LOL I don’t think these guys are stupid, they are smart, but they are also gamblers. It does not matter if they have been right 5x or 10x in a row, because the way they bet, OZRK will go broke if they are wrong once. I am with Oddball that thr way to trade this is for tail end risk.

It is very hard to prove fraud, but it is relatively easy to detect possible or likely fraud.