Philip Morris IV

So on the servicing side, RKT uses Black Knight's software, and even sold BKI the source code to their CRM. https://www.prnewswire.com/news-releases/black-knight-and-quicken-loans-broaden-partnership-301003509.html It appears they use proprietary tech for origination but hard to believe it's markedly better than BKI's or Ellie Mae (ICE). Those two are rapidly adding software capabilities and clients, which only makes this space more competitive. I happened to just refinance with RKT and while a good experience overall it wasn't a fully digital one. Had to go to a Regus office to sign closing docs. According to the agent they tried digital closing for a minute and had to backtrack. Amrock also wanted to mail me checks, for me to then mail to my lender, and were somewhat bewildered by my request for a wire/electronic transfer directly to Wells Fargo. So they have some kinks to iron out there. BKI is interesting in its own right; a digital picks and shovels provider to any or all points on the mortgage life cycle. ICE, RDFN and ZG have strong aspirations here and are not to be ignored either. All fundamentally different investments, but an exciting space to play in right now.

SCHW checks a lot of boxes. Forward-thinking management, long-term focus on product innovation and client service, juicy margins, and the AMTD combination yields a scale monster. They had long been preparing for the $0 trading fees hammer drop last fall - by that point, they were only ~4% of revenue. Their emphasis on the independent RIA channel is an underrated advantage in my opinion. Most of the competition treat their RIA services as a side gig and devote more resources to retail, slinging loaded funds to FAs (what year is this?), or employer sponsored plans. RIAs are in effect a "free" salesforce for sticky assets, and continued platform innovation is low-hanging fruit for efficiency gains. Dimensional Funds realized this decades ago and has leveraged their RIA kool-aid to great success. The elephant in the room with SCHW is they are very leveraged to the x-factor of interest rates. You could joke that the above is all just happy-talk. I owned SCHW for a few years and my observation is that whatever credit they get for their operating progress is usually short-lived and overshadowed by rate movements/expectations (try plotting it against TLT). To that end, whether SCHW is a great company at a cyclically low valuation or dead money depends largely on where you see rates moving. Alternatively, you could use it as a non-expiring hedge should rates surprise north.

For anyone interested, I spoke with FCFS IR. They have successfully lobbied for essential business status across the vast majority of their markets, so their stores remain open and business as usual. They do not plan to release any business update prior to earnings on 4/22, so no current comment on PLO and merchandising trends of the past few weeks. If there were a time for the counter-cyclical features of this business to shine, it should be now. They are providing liquidity and secured credit to the un- and under-banked that are most under pressure. My concern that they are put an excess of forfeited collateral does not phase them. Merchandise should exhibit something of a "dollar store effect" as consumers shop down from traditional retail, and they have the pricing power to quickly adjust LTVs to uphold margin in such a situation. I won't attempt to guide the MXN peso or their sensitivity to it. Anecdotally from private conversations, the pawn industry has somewhat struggled for growth in the last few years as the consumer and financial economy had been so strong. Recent social welfare programs in Mexico didn't help either. This would suggest earnings were somewhat constrained and may likely be no longer. I know this is the EZPW thread, but just in case anyone is familiar with pawn from looking at EZPW, understand/like the industry, and are willing to pay up for quality, you may find this FCFS info useful. The overall quality of the business, their financials, governance and disclosures is totally night and day - and the valuation reflects it.

Also interesting that FCFS has sold off almost identically, despite being the paragon of this industry and having none of the governance or other overhangs of EZPW. If counter-cyclical is the bet, FCFS is a purer play. And if EZPW gets choked by their balance sheet, FCFS could be poised to take share. It's not hard to see PLOs increase from here, perhaps even drastically. More difficult for me is underwriting (1.) the risk they get swamped with forfeited collateral they can't move and (2.) whatever the heck transpires down in Mexico (whose government has yet to take COVID-19 seriously). Even if PLOs spike down there, they still have to fight the MXN peso in free-fall.

Bank of Hawaii (BOH) has always stood out to me. They consistently churn out great numbers -- even through the 2007-2010 period -- and trade at a significant book value premium to the sector and Hawaiian comps, at 2-3x BV (3x today). Hawaii is unique for the US in that the Big Four (and all other mainland banks) are absent there. The banking market is almost entirely controlled by BOH, First Hawaiian (FHB), Central Pacific (CPF) and American Savings (a subsidiary of Hawaiian Electric - HE). It would appear this insulates them from mainland/asian competition, but of course their geography naturally limits growth. This is very obvious on their 10yr financials and I believe reflected in their below-market earnings multiples.

What's the maturity on the debt you're looking at? If the concern is that these businesses might really start to decline 7-15 years from now (which would greatly affect the equity), how much does the yield on 5-year debt tell you? From what I can see today, 6-9yr debt for DISC is trading around 3.3-3.8% and 23-26yr debt is trading around 5.2%. Still looks like a decent debt/FCFE yield spread even on the long end.

Unless the common dividend is cut I don't see how they can decidedly split the income- from the growth-investors in the shareholder base. If GM wanted to execute a less wacky version of The Einhorn Plan, they could cut the common dividend and watch their stock tank, then tender/exchange a large portion of common shares for new preferred shares (or issue preferreds and use the proceeds to buyback common). That would effectively transfer the current dividend to preferred shareholders while the common would be rewarded with a huge EPS spike. But GM is probably (and rightfully) skeptical that the institutions would react how they/Einhorn expect.

FWIW I've had a Leesa for just over 2 years and would strongly recommend them. In my view the company delivered what it promised -- a great mattress at a reasonable price -- and the experience is significantly better than a B&M store purchase. Their generous return policies are worth noting. My only caution with online mattresses is that the sheet industry has yet to catch up with their noticeably shorter heights. Leesa, Casper etc. mattresses are generally around ~10" thick while the vast majority of sheets are made for mattresses 14" and taller. You may have to buy straps to keep your fitted sheets taut.

Just curious, why do you think bank preferreds should be doing shitty?

GM kicks ass, as usual: http://www.gm.com/mol/m-emergency_news-2017-gm-2017-q1-release.html EPS $1.70 vs. consensus estimates of $1.46 Stock price is still -9% from announcement of Opel/Vauxhall sale.

Yeah I can't recall ever hearing of a discount broker-custodian referring clients to an RIA. With thousands of RIAs on their platform, how would they choose? Maybe if a client asks TD customer service and is in the same local area, but I can't imagine that happening often, and $10M AUM/year is not insubstantial to receive via referral.

+1 Until their account RIA business reaches $15000001 in size probably :P We joke but this is very difficult to model. For RIAs, changing custodians is a huge PITA because every client account has to be closed, re-opened and transferred, and at the risk of attrition. You could say there is a high switching cost involved and most RIAs generally do not switch custodians unless they feel especially compelled. (While RIAs can certainly use multiple custodians, for small advisers you can assume they will only use one to meet minimum AUM requirements.) I like this name overall but strongly feel IB needs to up their game in this space for me to be comfortable buying. The minimum AUM requirements for most other custodians (Schwab, Fidelity, TD etc.) are around the $10-15 million mark as noted - not especially high for this business - and advisers breaking away from wirehouses will overwhelmingly meet those requirements and go with the more well-known custodians. As well, most RIAs passthrough the ticket charges onto clients and therefore are not very cost-conscious, so the key to competing in this space is advisory software, service and brand name - all of which they appear to be trailing peers on. It is an attractive market since RIAs are effectively a cost-free salesforce for accounts and assets, so this should be a serious area of focus for them, but it doesn't appear to be.

According to his blog, he owns varying amounts of common (with "an embarrassingly high basis") from pre-2008 and series N preferreds from Aug 2009. All in Fannie, none in Freddie. No information on amount.

Fidelity does have an RIA platform, however they have a minimum AUM requirement. Last I recall several years ago it was in the $10 million neighborhood.

Correct, it is more than just words (I also didn't catch the S&P ratings upgrade today), but it always was. The point was that positive news is now being met with positive reaction. Contrast this with the following catalog of reactions in 2016: 1/13/2016: GM announces $9 billion buyback, 2016 EPS guidance of $5.25-$5.75, and increases dividend 6% > stock price closed -4% 2/3/2016: reported EPS $1.39 > consensus EPS forecast $1.24 (12% beat) > stock price closed -4% 4/21/2016: reported EPS $1.26 > consensus EPS forecast $1.01 (25% beat) > stock price closed -2% 7/21/2016: reported EPS $1.86 > consensus EPS forecast $1.52 (22% beat) > stock price closed -2% 10/25/2016: reported EPS $1.72 > consensus EPS forecast $1.44 (19% beat) > stock price closed -4%