Spekulatius

I'd be interested to hear what long term compounders are trading cheaper than last March and at substantial discount to IV. 8) I guess EXPE is but it was cheaper in November and without virus overhang for near term business. Me too. Even summer 2019 was cheaper and Dec 2018 was much cheaper. In Addition, we now have a Real problem with the economy that we didn’t have last year. A selloff always offers some bargain, thats true, but it was way more true in Dec 2018. Linamar! Auto parts, yada yada, cyclical, yada yada, but their growth is real. And you get in at an almost 50 pct discount to BV while their capital allocation is to go for plus 20 pct returns. Obviously, their ends markets are pretty bad, but even then you get a fat yield and 5-6xPE. And they tend to come out stronger through a downturn. Hasn't traded here since 2013 and has reinvested almost every penny in the business or bought back shares (talking my book, 18 pct position). I agree on Linamar. Obviously a well run company, in a very tough industry with a bad near term outlook. Timing is key in these situations. It is not a buy and hold compounder in a sense that very likely, the bulk of the return owning this will be made in a short period of time, I think. That’s the Problem, value to the shareholder accrues very unevenly. There are lot of stocks like this currently on sale. The basic problem is that even if these stocks are cheap, they will go down with the Market (if the Market falls) and probably go down even faster. If we get to the point where they stop going down and bad news, then it’s time to buy. Generally, such a moment never comes because value stocks never get cheap enough, relative to market. The only time I remember is in 2000. I vaguely remember buying Allstate insurance in February 2000. I looked at it and told my coworker that it’s darn cheap, Gradeinteilung at way below book, low PE and buying back their own stock like crazy. He was laughing at me, everyone was in tech stocks back then. The Company stocks I was working for was up 500%, while Allstate stock went down. Then I recall a big kahuna moment in March 2000, when tech stocks started to get destroyed. Allstate also missed earnings that month, but the stock ended up positive on earnings day. Every tech stock on my watch list was bloody red. I don’t think we are at this point yet with value stocks. Perhaps we will never get back to this point any more with ETF and passive investment driving the bus. End of rant, I am running out of juice. At some point I will own Linamar, I think. Thanks for posting about it.

The problem aren’t really the death rates or number of new cases, the problem is that the only way to stop this is to essentially shut down large parts of the economy. (Travel, Social Events, Public Transport, Restaurants etc.). This could easily become a 2008 recession. With some luck, it will blow lever at home and we have just have the disputation of the supply chains from China, international demand and most likely a recession in Europe. Overall, we are just back to the prices from October 2019, oh the horror...

I'd be interested to hear what long term compounders are trading cheaper than last March and at substantial discount to IV. 8) I guess EXPE is but it was cheaper in November and without virus overhang for near term business. Me too. Even summer 2019 was cheaper and Dec 2018 was much cheaper. In Addition, we now have a Real problem with the economy that we didn’t have last year. A selloff always offers some bargain, thats true, but it was way more true in Dec 2018.

You know all hope is lost when an oil company emphasizes their “carbon reduction leadership” in their sucky earnings presentation.

GD (starter), a bit of TRV, adds to ORI, CMCSA

I don’t get why people like Lagavulin. I had one bottle. My friend said it tastes like old socks. Lol I have never tasted old socks, so I wouldn’t know what to expect. I am sticking to California wine (Sonoma county, because I lived there for a long time).

Reminds me of TARP in 2008. We really are in trouble.

Anyone has any idea ( other than the 3:45PM ramp) why the index ended positive for the day, let me know.

Interesting factoids: $PLWN ( funeral plot in LI) up 40% today, apparently expecting business to pick up. $RGA - Life re-insurance company down substantially the last few days. They do not like the low interest rates and apparently Mr Market expects an increase in mortality as well. No position in either one.

So we know that VNO will naturally gravitate towards 50% of its NAV in the most liquid real estate market in the world. Interesting times..,

You can’t go wrong with Buffets largest position, which is DAL. I think airports may get interesting too. Sold mine off in a selling frenzy, but FRA.DE ( Frankfurt) is trading at a multiyear low and we know it will be there once we return to normal.

RR announced results today and they look pretty good. Lots of noise, but it seems like things are better with the Trent engine and most importantly, FCF was decent. https://otp.tools.investis.com/clients/uk/rolls-royce/rns/regulatory-story.aspx?newsid=1375472&cid=171 Obviously a lot of noise around the aircraft industry right now, but this does look very very cheap, if they generate 1 GBP in FCF/share. Stock is up this AM, deservedly so.

The Corona virus outbreak will very likely cause a deep recession in Europe, Asia and quite possibly in NA. Depending on how well it is handled, it could well influence the outcome of the election. I mentioned this in the “what did you sell today thread”, but I made a market timing call and sold a substantial part of my equity holdings during short lived bounce today. I did not do so during the 2018 fall/winter downturn, but the current situation is different (I think) and at vastly higher equity valuations, I think we are very vulnerable to further correction and possibly a liquidity event. I sincerely hope I am wrong.

Sold too many to mention, including stuff that I just bought recently. Went into a sales frenzy during lunch time when we had an inter day bounce. I also sold my beloved BRKB, except on my taxable account. Amazing to see the SPY just 7% below the peak with all that stuff going on. That said, my timing typically sucks.

I should probably go and get some before they sell out. My wife went to Costco during the day and there was a run on toilet paper, groceries and what not. If we go into lockdown, the demand for weed might skyrocket. My SDI also did better than expected, but I sold the remainder.

USB seems like a better deal currently - the stock is currently dropping like a rock. The PE premium seems like one turn? This is a clean bank without baggage, compared to WFC which is likely stuck in the muck for a couple more years and can’t grow. I also think USB is less affected by lower interest rates, due to a high proportion of fee income (haven’t checked this recently though).

Yes, they indeed are short on cash, as stated before in this thread.

Same here. As it stands currently, I prefer CMCSA because it’s much lower valued and I see it only in part justified by DIS better asset quality. Anyways, it will be interesting how it goes with DIS new CEO. We know the spiel - reset expectations, write off a couple of assets that aren’t doing well and reset the bar so it’s easier to jump over.

The problem with VNO is that the NAV actually hasn’t moved for a couple of years. YE 2018 value was $97.9, YE 2019 value is $96. So if you include the dividends, the total return was probably about 2%. That’s the issue with Roth concentrating on NAV. The issue appears to be that the NY real estate market has topped out for the time being.

Sold most of my SDI.

Not Algos, they depend on live events which might get cancelled if things go Corona south. MSGN is tied to the same mast. The volume surges definitely seem like algos, and zip within ranges quite noticeably. Either way, at worst, this is a one off hardship assuming its full blown Resident Evil. Hardly enough to impair the value 10% when it's already discounted 20%+. Just markets being skittish. Could be worse. Like AMC. I know I repeat myself regarding MSG, but “fear the sphere” (in Las Vegas) is a bigger concern than a virus induced zombie apocalypse for me. I can see already the news headlines about cost overruns first and a $500M write down next. Anyways, added to PSX and a bit more DFS, STAY and FRA.DE

Not Algos, they depend on live events which might get cancelled if things go Corona south. MSGN is tied to the same mast.

Definitely. And next year Q1 and Q2's earnings will look amazing in comparison... Market right now seems to be expecting these warnings, so we'll see what their magnitude is and how the market reacts. Liberty, pre-virus we had what looked to be close to a mild global manufacturing recession in 2H 2019. Germany and Japanese economies are not doing well. Europe looks weak. The watchout is if the virus causes consumer confidence to fall, particularly in the US (as they are driving the global engine at the moment). If the virus leads to a mild recession earnings in 2H 2020 then earnings next year might not look so good. I am not saying this is my base case. But the bond market is no longer flashing yellow they are on full stop red. And up until 2 days ago the stock market was at all time highs. Someone has it wrong (bond market or stock market). Should the virus outbreak get worse (spread to the US) my guess is the Fed will respond with anemergency cut. So even if things get worse stocks may do well :-) I think the risk to the economy are real unfortunately. I hear already salespeople’s postponing travel and China will definitely take a hit and companies operating there as well. Germany is Slow too and has zero growth basically and travel in France is down 30-40%. It would be one thing, if the stock market were down like it was in late 2018, but so far, we have a mini reaction and are up 30%+ from these levels or down just 5% from the peak. On the other hand, some sectors and stocks really have become cheap now. Take your pick. I had some QQQ puts, which I sold of a bit too early this AM. I am going to reload, if the volatility comes down and SPY or QQQ puts are priced reasonable again.

Yes, that’s also a possibility. The earnings estimate a while ago were ~$5.5/share, so if we get a significant earnings warning and get $4.5/share, how do we justify a one $125 share price, when competitors trade at 8x earnings and 10%+ FCF yields? Even discounting the difference in quality, that a bridge or two too far imo. I can easily see DIS hit $100/ share and it still wouldn’t look cheap.

I think we will see an avalanche of earnings warnings this quarter and next resulting from fallout from the corona virus.