Spekulatius

Rolls Royce has the same issues where business and is growing, but FCF is brakeven or even negative due to huge upfront outlays. Engines lose money when sold, but you later raked it in with service contracts and spare parts. This is like the Razor models, where the handle is sold a t a loss and the razors at a huge profit, except that there handle cost billions to develop and many millions a piece to build. It still a very good business and has a huge moat, just that the free cash flows are hugely cyclical. Rolls Royce has recovered quite nicely. Not trying to defended the management practices here, but Aviation will do that to you. The are huge deviations between FCF, earnings, and economic earnings in that business. They involve large numbers and take a really long time to converge.

Real estate is local and aggregate supply does not mean that much. If SRG owns a Sears box, it does not matter much if SHLD owns another Sears box 20 miles away as they don’t really compete with each other for tenants.

I stopped using middle-man sites when I realized this as well. Another change is hotels have a more lenient policy on cancellations compared to the aggregators. A few years ago I was at the airport and watched as a woman desperately tried to change their reservation made via Expedia and the airline employee said "sorry, if you purchased through us I could do a lot, but I'd recommend you call Expedia and work it out with them." She tried and without luck couldn't get anyone on the phone and purchased a new ticket. That ticket alone destroyed decades of savings she could have had from a site like that. I've paid a few dollars more per reservation since and haven't ever had an issue with cancellations or changes. I had my own experience when Rita hit Texas in September 2005. We had a trip to Mexico booked with Expedia and had a stopover in Houston the day Hurricane Rita made landfall. Expedia would not let us cancel the flight and the trip even though one of the largest evacuation in the history in the US was occurring and was all over the TV. We ended up canceling the trip and had to pay around $100, to do it. Last time I booked airfare with them.

Fits right in with his boss.

I bought some T.PPR as well. But also T.IPO and V.ATU. What’s equities these symbols? Can‘t for the life of me find what kind of security these are.

I am ny sure how you get the 8.6% cape rate. The number is almost certainly incorrect and I think the cap rate should close to 7% the or thereabouts. It is difficult to calculate cap rate precisely because a lot of their properties are not in majority held JV, so it is difficult to account for the underlying debt in those, which is necessary to calculate the true cap rate. (Corrected for spelling)

AIG has a long history on reserve adjustments. I recall at least 3 of them and each of them was supposed to be the last one. I think AIG trades at fair value and possibly is even overvalued. There are better values in the insurance secotr like AXS or RE currently, IMO. Both have a long history of positive reserve releases.

They exercised some GGP warrants that became due and I believe their position in GGP is about 34% now.

LILA’s numbers are pretty crappy too, so maybe another reason to sell. Negative FCF this year, infrastructure destroyed in Puerto Rico where the outlook was bad to begin with. Legacy Lila operation in Chile do just fine. That merger with C&W destroyed a lot of value for LILa shareholders. I own a few shares, but I am not tempted to add.

Reits are required to pay out at least 90% of taxabable income as dividend. Since SRG is still having losses, I don’t think they would need to pay out anything at this point. https://www.sec.gov/fast-answers/answersreitshtm.html

seems very excessive to me for them to pay 50% in dividends while having to redevelop 90%+ of their assets at what seems to be a very attractive returns. Is it that simple ? management will sacrifice good capital allocation for short term approval of investors (I would call them renters and not owners but this is another story) It probably is that simple, unless you have a different explanation. I don’t know any REIT that does not pay a dividend, unless it is in deep distress. Even in 2009, most if not all Reits continued to pay a Evis den (albeit drastically reduced), even after deeply discounted secondaries.

It is correct that SRG does not need to pay a dividend for tax reasons right now, due to showing losses. The reason SRG does pay is probably because it is customary for a REIT to do so and it makes it an easy sell to institutional investors, some of which require a stock to be dividend paying.

Do you mind running me through how you came up with a 7.2% cap rate. I estimated this based on $2.365B of NOI and ~$33B in EV (the stock was a bit higher when I did the math). I think this number is incorrect, however, because it neglects unconsolidstrd debt . the $2.365B in NOI given in the annual report put seems to be about correct, but also seems to contain some gains from sales of apartment in mixed used project. There are 960M shares outstanding, but GGP will get some cash from warrants they are exercised. U think they will get $500M roughly. mortgage and ST debt is $11.7B, but they is only the consolidated number. I do not know how much debt is unconsolidstrd. This is important because their NOI contains the earnings from all source (including unconsolidstrd), the GHp shares of the debt in those needs to be added too, to make it consistent. In the 2016 annual report the EV is given at $40.3B and the stock was then at $25. I assume this EV contains the GGP share of debt from minority JV as well, since it is higher then the EV from the consolidated balance sheet. If we now correct for the decrease in share price from $25 to now $20, the correct EV from the Y2016 year end would be $35.5B. ($40.3B-0.96x$5) with the 2.365B in NOI, the cap rate would be ~6.66%. My math may not be totally precise, but I think it is approximately correct.

They so isn’t that hard. If you like Sears RE, just buy SRG. There is no need to deal with the crap that comes with owning SHLD when you have a clean play like SRG on their best assets. Yes, it is more expensive, perhaps, but with SRG there no chance that it goes to zero.

I am not denying the need for more integration in health care. A one stop shop exist already it is a non-profit called Kaiser. I had it once for a couple of year and loved it as a customer. it wasn’t cheaper than more traditional PPO’s but certainly more conventions for the customers. However when it comes to investing and commercial mergers, the outcome and success is highly path dependent and ai think CVS will have a hard to to manover through the upheaval and make it rewarding for shareholders, consideringh the price they are likely to pay. It does not resolve them from having to compete with AMZN either and often one stop shop get beaten by a focused competitor who has limited offering , but does what they do offer really well.

I don’t think the FCF yield is that high, so come of the “FCF” in the first half of 2017 came from working capital management. CVS has done a good job managing their inventory levels, especially considering the growth in the business (which came mainly from pharmacy). in 2016, they had roughly $2.6B in depreciation and amortization and $2.3B in Capes. Assuming that sustainable, their FCF is only a bit higher than their net income, but not much. I do agree that lowering their tax rate would create a nice windfall, but they is not easy to do with a local operation as they age to pay state income taxes etc. for the operation in a particular state. Trumpf tax plan does nothing to reduce those local taxes.

The CVS & Aetna merger sounds more likes what Citicorp did in the 90’s, when they became a financial supermarket they was mediocre and worse at everything. Honest, I think these type of mergers is what you see at the end of bull markets. I don’t get the logic in combining CVS with an insurance company. Sure there is some overlap with drugs, but that could have been done in a more straightforward manner. Those things like urgent care clinics (what is stopping CVS from getting into this business right now? This probably stuff that investment bankers make up to justify the merger. The whole thing will leave an unwieldy organization that is potentially over leveraged (if they use debt) and now will have to compete nevertheless in retail and drug distribution with deep pocketed AMZN. I don’t see this merger, which distracts more from the business than it helps with synergies helping to compete with AMZN at all. What they will do is pissing off a lot of their customers that they now compete with. Instead of shaking in their boots, Walgreen with rub their hands and figure out how to catch some of this free fallout from insurance and retail customers that don’t like dealing with a company that now competes with them.

I don't know. I had a starter position in CVS that I sold today. When I hear words like " strategic merger" I suspect that shareholders money will be burned by the boatload.

GGP is at at 7.8x EV/EBITDA, which is a bit on through side. however their Re is very high quality and Inthink it is safer to own high quality RE leveraged with 7.8x ENITDA than low quality RE with 5x. Furthermore, GGP has shown a long stern trend to deleverage and improve their debt metrics over time significantly. if they keep doing this, they should arrive at 6x EV/EBITDA ina couple of years, which I think would be fairly manageable. The implied cap rate of GGP is about 7.2%, which Inthink is fairly cheap for high quality RE.

I hope that this rumoutpr is not true. The combination of a pharmacy with a health insurer makes no sense to me, and CVS can’t really afford this either, they would need to issue a lot of stock to do it. Stupid mergers often occur a the end of bull markets.

EV/EBITDA is misleading, since they still have a considerable financial operation, most of which is linked to their industrial business with some legacy stuff added in. Just look at the EV/EBITDA of many car companies that have their own fencing arm, those don’t look thwt great either on the surface.

OP asked for listed companies. Gomo, as I understand it was a family business that was purchased by a listed company. The first listed company was The Dutch East India Company, which started in 1602 or thereabouts and ceased to existing in 1799. The Salt mine probably want started as a corporation 7000 years ago, but it seemed to be an organized effort at least since the Bronze Age, if not early based on ar archeology, since individuals by by themselves could never have done such an undertaken. Quite a durable resource and operation for sure.

My first investment was a quarter of an ounce gold coin in 1979, which worked out well. I sold it for a 100% gain, close enough to the peak. I bought another gold coin afte the correction, which actually trades cheaper than the face value of its gold content, but that one didn’t work, And I barely broke even. Sometimes luck or timing beats valuation. I bought my first Long term options in 1982 (BASF Optionsscheine) and sold for a 150% gain a year later. I should have kept those. It has been downhill from there ever since...

GE Aviation is a good Business. I think healthcare is doing fine. Transportation is fine too, but cyclical and currently probably close to a low point. Power is at a real franchise (GE is leader in turbines etc.), but I think I is correct to say that the profitability outlook is currently muted. Lighting is small and most likely will go. I am not sure about renewables and it might be folded into the lower division or sold off. I think that Energy actually has a decent potential and BHGE is worth looking into. It is cyclical, but I think there is a lot of potential afte thr merger with Baker Hughes to makes them a world class leader in their field and challenge SLB. What scares me are their pension issues, the issue with their LT care insurance, which most likely need to buff their reserves, as the GE financial has been the piggy bank to make the numbers for too long. It is also not totally clear to me why GE does not generate better cash flows in their industrial business. Most likely some aggressive accounting...

Gomo, that Japanese construction company, wasn’t listed so I don’t think it would count. If we look for continuously operated business of any kind, the Hallstatt salt mine in Austria, which has been operated for 7000 years (not sure continuously) probably wins: https://en.m.wikipedia.org/wiki/Hallein_Salt_Mine The Reichenhall salt mine closeby, which I visited on my trip to Germany (very worthwhile) , has been continuously operated for 500 years.