FCharlie

I have a question for the Seritage shareholders here. I would love to know what the Seritage faithful see in SRG that they don't see in competitor Macerich. I see Macerich as similar to Seritage in that both companies have seen their shares beaten to death over the last few years and, while off their bottoms, they have both just barely begun to recover. Yet MAC feels like a one foot hurdle as it already has solid FFO, a respectable dividend yield but with only a 35% payout ratio, and I believe tons of upside over the next few years as rent abatements cease, occupancy returns to a more normal level, and dividends double/triple from here. Looking at Seritage, I understand the appeal on some levels, but then I just can't get past the fact that it has negative FFO and I can't come to a confident decision about what eventually happens with their assets as so many assets end up being sold to raise cash to fund CapEx. Basically, every time I look, Seritage always ends up in the "too hard" pile. So just curious if anyone out there has any thoughts on Seritage vs Macerich and what upside do you see with Seritage that you don't see with Macerich or perhaps other competitors?

As of April 5, Lampert still owned/controlled 9.1% of the company. This is according to the proxy https://www.sec.gov/Archives/edgar/data/1628063/000117494721000392/def14a-50918_srg.htm#a_022

Disclosure: I haven't owned BAC for several years. But here are my contradictory thoughts: 1. Momentum is real. It is generally better to hold past the point where value investors get nervous. 2. Banks (at least since 2008) give you ample opportunities to re-enter at attractive prices. I agree with KCLarkin. Momentum is in favor of BAC and there's no real reason for it to stop here. There have been nine positive earnings revisions since January and I'm expecting even more positive earnings revisions in the future. I think the loan loss allowance is too high and reserves will need to be released. I wouldn't be surprised if today's price ends up being only about 12 times 2022 earnings. Hardly overvalued for where we are in the cycle. Where are we at in the cycle? Beginning, middle, or end? I don't believe the NBER has even declared the end of the recession so unless the central bankers and governments blow the whole world up, I'm going with beginning.

Disclosure: I haven't owned BAC for several years. But here are my contradictory thoughts: 1. Momentum is real. It is generally better to hold past the point where value investors get nervous. 2. Banks (at least since 2008) give you ample opportunities to re-enter at attractive prices. I agree with KCLarkin. Momentum is in favor of BAC and there's no real reason for it to stop here. There have been nine positive earnings revisions since January and I'm expecting even more positive earnings revisions in the future. I think the loan loss allowance is too high and reserves will need to be released. I wouldn't be surprised if today's price ends up being only about 12 times 2022 earnings. Hardly overvalued for where we are in the cycle.

I'm surprised he bought at 50 and not at 15. Could be that he couldn't because he was in possession of material non-public info. Now that the earnings are out (2x what they made last year) maybe his blackout period, before and after an earnings release, is over and he's buying some for himself because he thinks the horse looks good in this race. I haven't added at these prices, but I'm not selling for a while either. I've been sitting on this while it traded sideways since 2019 and now that the plane is in the air, I'm not parachuting out. Those are sales, not purchases. About 1% of his position so not really a big deal, unless he continues selling of course... which would be very surprising and would contradict his recent positive commentary in his annual letter to shareholders.

WFC's cumulative net income between 2015-2019 was $109 billion. Their average net income was $21.8 billion during these five years. As recently as last last month, WFC's market cap was $95 billion, or five times what they might be expected to earn in any normal year. No consideration given to buybacks being resumed, loan loss reserves being released, the asset cap being lifted, or NIM ever rising again. Sometimes stocks get so cheap and so hated that they can rise 40% in a month and still be dirt cheap. WFC is one of those stocks.

You just nearly perfectly summed up why WFC is one of the best deals in the market. The last four years have been nothing but one disappointment after another. As a consequence (and aided by large scale share repurchases) the market cap of the company has declined from around $300 billion to around $100 billion. But to anyone who is new to the stock, the opportunity is huge. Today, the stock is absurdly inexpensive relative to the earnings power of the assets under any normal environment. No one cares because all investors see in the future is further disappointment. Up next is the dividend cut, which will be followed by the company reporting losses for Q2. I've been buying WFC slowly and steadily for the last few weeks. I don't know where it bottoms, but I know we're close. The Government has dumped cash on its citizens through stimulus and through unemployment money. Banks have said that the average customers checking account balances are 30% higher than normal. WFC is provisioning pretty heavily, but who doesn't pay their bills when their checking account balance is 30% higher than normal? I also recall Wells Fargo saying the average LTV on their commercial real estate portfolio was about 70%. That's really not that aggressive and even if they have significant defaults in that portfolio, they may not lose that much money. What they do lose probably won't be enough to bring the stock below tangible book value and you are correct that investors can buy the stock today at a discount to tangible book value even after they take their hits. Combine that with the reality that at some point they get their expenses under control, get the asset cap lifted, begin buying back stock again, and begin increasing the dividend again, and this stock could see a decade of outperformance starting really soon.

I think they will cut to 15-20 cents. They probably don't have to cut this much but I would imagine a huge concern would be to not cut enough and then to have to cut it again later this year when their earnings continue to fall. It's interesting that the market isn't really selling the stock down even after WFC confirms they will cut. Feels like it's priced in but you never know.

I'm not in any way attempting to downplay the negatives here for Wells Fargo. The asset cap. The fact that WFC can't grow to offset falling net interest margins. That WFC is losing customers as they cannot offer them what they need. The need to provision for huge upcoming losses and the fact that WFC isn't even earning their dividend.... But the market cap of this company is down by about $200 billion over the last few years from a combination of price declines and buybacks. They still have $2 trillion of assets, and in any decent environment, these assets should allow WFC to earn a 1% ROA. So in spite of all the problems, I see a company trading at about 5X what they will earn when things are back to normal. This doesn't even consider the possibility of actually growing one day or even just getting back to large scale buybacks. Most probably won't agree with me but it sure seems like Wells Fargo is one of the best opportunities out there.

Altria price increases are typically 7 to 9 cents per pack a few times per year. It's really not that aggressive when you think about it. I am pretty blown away that in a world where interest rates appear to be going negative globally that a 9% yielding dividend KING with 54 increases in the last 50 years is so unloved.

Lots of buying by the CEO & CFO down here in the $2.00-$2.50 range. From what I recall, these guys nailed the bottom back in 2016 with a flood of insider buying. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001383414&type=&dateb=&owner=only&count=40 I don't particularly love BDCs long-term, but buying here with insiders at 25% of NAV doesn't seem like a bad idea at all.

The quick answer to your question is.... Not any time soon. After all, this is a $20 stock and if bankruptcy were imminent it would be a penny stock. But I've been thinking about this a lot ever since Berkshire sold 13 million shares last week. Delta had $2.9 billion of cash at year end. They had $3.1 billion of revolver capacity. They drew that down plus took $2.6 billion + $1.0 billion secured financing. That's $9.6 billion of liquidity. They will receive about $5.7 billion of grants from the US Government to pay labor expenses. The main two expenses for airlines are fuel and labor. Fuel prices have dropped from about $2.00 per gallon to about 75 cents per gallon. On top of this, Delta has cut capacity by about 70%. Between capacity cuts and fuel prices falling their fuel expense should be down by 85%-90%. Labor for the next six months is paid for with the grants from the government. So if Delta is burning $50 million per day, the question is, on what? If they are burning this on refunding cancelled flights, there has to be an end point where the refunds stop. If they are burning it on lease payments and capex, I suspect they can defer some level of capex, and I suppose they could work out an agreement with the leases the same way that commercial real estate tenants will work out agreements with landlords. Beyond that, why couldn't Delta sell forward blocks of miles to Amex at a discount to bring in cash? Why can't they take on more secured debt? The point is, I don't see this as a zero at any point this year. That said, I also don't know what it takes to reassure investors that this is a screaming buy either. I'm definitely watching, however... Waiting for more clarity. The same logic applies to JetBlue and Southwest and others. I don't see bankruptcy in the imminent future for these either.

So two weeks ago Buffett says he won't sell any airline stocks and today we get the form 4 showing 13 million DAL shares sold. Perhaps this is not Buffett but rather Todd or Ted? Either way, I expect this takes a lot of the optimism away from the airline investors who followed Buffett into this trade.

United Rentals went up 45X between 2009 and 2018. They survived the last downturn by selling underutilized equipment to bring in cash flow. Prior to the last month or so, EPS estimates were for $25/share next year so if we as a society ever get back to any kind of normal (which I think we will) the earnings power should still be there. May take years to get back there but URI should do well.

From what I can remember, Ebola made it into the United States in 2014 and airline stocks got hit pretty hard. Looking back, however, I don't think any of the airlines lost money due to Ebola and over the next year, most airline stocks rose by 50%-100%. One thing that I haven't heard much conversation about... Delta uses over 4 billion gallons of jet fuel annually. American uses about 3.5 billion. Jet fuel prices are down 50 cents per gallon since December. Yes there's a revenue hit, but there's a huge offset with fuel.