Spekulatius

My son and his friends are almost exclusively using Snapchat.

I can see my personal Fidelity accounts now, but I can't see my 401K. It looks like Fidelity's Netbenefits site is still down. Same here. This happens quite frequently lately.

Tweet of the month (imo): https://twitter.com/capitalobserver/status/1229769517045252096?s=21 ;D

VIC writeup: https://www.valueinvestorsclub.com/idea/Grupo_Catalana_Occidente/7619997068 The elephant in the room are the negative interest rates in Europe. They can be very damaging to insurers with long tail exposure.

It is incorrect that Apple outsources manufacturing. They outsource the labor, but meticulously control the know how part. They don’t do what most company does, give the print to The contract manufacturers and let them figure it out. They develop the manufacturing processes, even buy the machinery and have their own people on the floor in the contract manufacturing chain at critical locations. They do this in a very smart way and have a lot of control on what happens in their supply chain. Most other companies do not do it this way.

More AMA.AX (car repair rollup in Australia, kab60’s pick). A small add to CCU as well.

I have developed some persistent lower back pain last year and then did some research on YT and settled on dong these exercises every morning for 10-15 minutes as well as some pushups. Worked wonders for me.

I think 1) - applying nonspecific filters - is the way to go for most individual investors to avoid getting into fraudulent investments. Proving fraud is very very Hard and few have the forensic accounting skills and resources to dig deep enough. Enron is a good example where the story looked much better then the numbers. A more recent example was Valeant, where the GAAP results as well as the balance sheet looked horrible, and management provided all kind of mental gymnastics to justify the business model. Perhaps a more recent one is Tesla, it it’s overused, so I won’t elaborate on this. I believe now thwt tech and specifically SAAS companies are probably misrepresenting, although I am not sure their financials are fraud, I think the fraud lies more in the fsct that the GAAP financials may be more representative of the economic reality than the adjusted numbers that management is representing. Case in point may be YEXT, a SAAS company. I have no idea about their product an TAM etc, but I have rarely seen a company that has a gross margin of ~72% and manages to spent an even higher percentage on sales and marketing and losing 50% of their revenue on a GAAP basis. one would think that such a company gains economy of scale on S&M too, but that’s actually not the case, this outfit managed to increase their S&M expenses since the IPO more than revenues actually, indicating negative operating leverage. Perhaps there is a good reason for all this, but I fail to see any explanation why all this expense will lead to an explosion in profitable revenue in the near future. It’s not accounting fraud per say in a sense that the GAAP numbers may well be correct, but if just the GAAP numbers matter in this case, this company would be absolutely worthless and you would have to pay a buyer to take it. YEXT isn’t a sole exception either, but it’s one I have taken a closer look after some folks mention it on Twitter. I hope they know what they are doing, but my sense is that those folks tend to ignore operating results altogether and invest solely based on some momentum or qualitative factors. For me, when the numbers don’t make sense on a first principle basis, I tend to stay away from these stocks as far as possible.

LBTYA starts to trade at similar multiples than the European telecom giants like Orange (formerly France Telecom) and Deutsche Telecom, even though the latter have arguably generated better numbers , have better balance sheets and pay dividends. DTE at 7.3x EV/EBITDA and a large Part of this is the US business, Orange trades at and even lower multiple and has generated at least stable to slightly rising numbers and has lower leverage. Both have FCF yields in the 10% range, which is higher than LBTYA. Fries 1B buyback estimates for 2020 equals his FCF projection. I agree his 11B in liquidity is not real and I think he needs to use it to reduce debt. With a 4% interest rate, his cost of debt is actually pretty high for Europe. LBTYA ability to create shareholder value hinges upon Fries being able to pull off a good deal and sell out. organically from operations, i just don’t see it happening. Their UK pivot so allow other competitors access to their lightning network pretty much guarantees, that the returns in this part of the business are going to be mediocre at best.

Posco stock ‘t have huge embedded gains. I bet Munger doesn’t sell because WFC because he bought it in 2009 at a very attractive price and almost bottom ticked it if I remember correctly (<$10?). Wabuffo would know. If so, it could well be that BRK only sells down their higher cost shares with lower embedded gains and keeps the shares acquired decades ago at a ridiculously low cost basis.

The Sears - WFC analogy doesn’t resonate, those a totally different circumstances. I have no opinion yet on WFC CEO, but merely wanted to point out that Munger doesn’t seem to enthusiast about him , which may explain why BRK is selling down their holdings. Make out of this what you will.

No? Because of such sentiments I think situations like this are likely to be mispriced. I suggest you try to see it as an exciting hobby like sky diving or swimming with sharks. Only instead of doing something actually dangerous you have to read tedious documents and e-mail and call with office clerks all around the world. Same adrenaline kick but much safer. And you get paid to play. Seriously, can it get any better? You are correct. The reason why in the end I don’t like that investment is because the IRF in the end was single digits. I bought this stock several years ago and thought I‘d hit on something. A brewery in Africa (growth market) with a rising dividend,a great balance sheet and rising profits and almost a monopoly (80% market share) what could go wrong? It turns out a lot - the oil Crash dunked the economy, currency tumbled, rebels taking over part of the country (and a BCAM facility for a while). Those were just the thing I am aware of and there are likely more. Profits tumbled and bounced a round, dividend was cut some too and the price faltered after rising quite a bit. I sold some shares onto a spike in 2019, then bought them back when it dunked to 80 Euro and change and then finally the buyout. ingress from the buy it looks Ok, but form start to finish, i would have been better of buying a SPY ETF and be done with it, without the brain damage in between. Although I do admit the the BCAM Ride was more interesting. Ingress there is going to be time when going the extra mile is going to be worth it, but the last 5 years that surely want the case.

Actually, even if you new nothing about the SPE, just a casual look at the balance sheet , the lack of profitability (ROIC) and valuation should have been enough to keep you away from investing in Enron.

Gems from the Daily Journal Meeting from Tren Griffin (who is well worth a follow on Twitter): https://twitter.com/trengriffin/status/1228485879397662720?s=21

LOL. This really deserves and upvote.

For those older German speaking folks: Nur eenen wönzigen Schlock!

I must have missed Munger flaming the new CEO, what did he say exactly? Ted Weschler spends half his time in Virginia, do you consider that half ass commitment? Sure Wells has these issues and it will take a few years. If there was no hair the stock would be 50% higher. Btw BofA had immense issues in 2011... My friend works at WFC in the investment bank. He says the new CEO is doing a top to bottom review of every single business unit in order to streamline. This guy trained under Jamie Dimon, I'm willing to give him a chance, SF or NYC. They still have the deposits and the branches, they just need to figure out how to make the ingredients work better. It was during the Daily Journal shareholder Meeting https://www.bloomberg.com/news/articles/2020-02-12/munger-says-wells-fargo-ceo-scharf-ought-to-be-in-san-francisco Right or wrong, I don’t think they like the latest moves and the new Management and that May be the reason they sell down their position. I agree that WFC‘s issues are fixable, but you have the pot. issue that this stock is dead money for another couple of years while the competition is moving forward.

WFC is a value trap, it will take years to work out current issues relative to the Account scandal. In the mean time, competition will move ahead of them. Also note how Munger was flaming the new CEO who can’t even bebothered to move from NYC to WFC’s headquarter. It’s shows lack of commitment. I think they just had it with WFC.

Yes, but you have the optionality to refinance over and over again at virtually no cost. I just refinanced mine for 3.375% and minimal cost. My last refinance was last year, same thing. I refinance every half % rate change. It’s so easy now, from start to finish in 8 days

Frustrating for sure and not performing anywhere near my original expectations. But a multiple of 3.7 times operating cash flow is ridiculous It also has 3.7 turns of net debt. So equity is half the capital structure and the valuation is 7.4x cash flow. This is cheap, but it’s not that cheap if it is a shrinking business. I kind of kick myself for net selling earlier or at least at the open today. I generally find that it’s best pull the weeds early. My underlying assumption was that the shrinking business would stabilize this year, but it’s just not happening. Then we have to discount weak management on top of that sickly business with a levered capital structure. It just doesn’t seem like a straightforward way to win.

Stop loss triggered for me at $19.4. I rarely do stop losses, but feel like in this case it is warranted. I think it is the outlook that killed the stock. On a high level, Leveraged bets on a shrinking business just don’t work. I think something like BERY has a better chance of working out.

Renaissance techs average holding period is about 2 days. They probably rode the momentum up and they may ride the momentum down. It is likely that their position has changed, by the time anything is filed.

Lousy results, lousy 2020 outlook. The only thing that appears to go up is stock based compensation. https://2zn23x1nwzzj494slw48aylw-wpengine.netdna-ssl.com/wp-content/uploads/2020/02/Liberty-Global-Q4-2019-Press-Release.pdf It just looks like a melting ice cube too me.

Do you believe that mentioning this stock here will boost TSU‘s share price. Based on my experience, that’s not the case, not even for small caps. Maybe for microcaps with very small float, trumpeting works in terms of temporarily increasing the shareprice, but even of that I am doubtful.

This probably ends up with my head on a stick. Things are kind of rough in some areas in Cameroon, rebels of some sort have captured one BCAM’s of the bottling plants (I guess rebels get thirsty too) for a while. Possibly one of the reasons why this investment hasn’t gone that well organically.