indirect Posted February 21, 2021 Share Posted February 21, 2021 I am a shareholder of Tripura, which i initially bought because of spin-off dynamics, one share of TSU for every 72 shares of BAM. As I started to own and study the company, part of the book value was european runoff from reinsurance in 08-09 era, part of the book was surety business in Canada and they were planning to spawn fronting business in USA. Now three yrs later fronting business in USA has taken off with good execution and runway. In the meantime they are planning to spawn surety business in USA. Their underwriting is excellent in Canada and should be similar in USA. I am sure there is some synergy with BAM business and BAM management owns 10% of TSU. So now the market has realized the situation and stock is selling at 4X BV. With the wisdom of spawning from Mohnish, I do not plan to sell and see how surety does which is even bigger market than fronting. Furthermore who knows 3 yrs later they may be spawning another new business. Thank you for the lesson, Mohnish Link to comment Share on other sites More sharing options...
ContrarianValue44 Posted February 21, 2021 Share Posted February 21, 2021 Mohnish Pabrai actually stated in his lecture video that you posted that he owns four spawners currently. Nice Holdings Co., Rain Industries Ltd., Shinoken Group Co., Sunteck Realty Ltd., Reysas Tasimacilik, and Edelweiss Financial (all of which he owns) have the potential to be these "spawners" that Monish discusses. Yet, what concerns me about these companies is that one of them is a fuel/gas/oil transportation company (which may be in a secular decline) and two of them have an interest coverage ratio that is less than 1. Does anyone else find this concerning? Link to comment Share on other sites More sharing options...
shamelesscloner Posted February 21, 2021 Author Share Posted February 21, 2021 Mohnish Pabrai actually stated in his lecture video that you posted that he owns four spawners currently. Nice Holdings Co., Rain Industries Ltd., Shinoken Group Co., Sunteck Realty Ltd., Reysas Tasimacilik, and Edelweiss Financial (all of which he owns) have the potential to be these "spawners" that Monish discusses. Yet, what concerns me about these companies is that one of them is a fuel/gas/oil transportation company (which may be in a secular decline) and two of them have an interest coverage ratio that is less than 1. Does anyone else find this concerning? Shinoken and Reysas are definitely two of them. Pretty sure NICE also fits the bill. I don't think any of them generate the bulk of revenue from fuel/gas/oil transport. Link to comment Share on other sites More sharing options...
ContrarianValue44 Posted February 21, 2021 Share Posted February 21, 2021 Mohnish Pabrai actually stated in his lecture video that you posted that he owns four spawners currently. Nice Holdings Co., Rain Industries Ltd., Shinoken Group Co., Sunteck Realty Ltd., Reysas Tasimacilik, and Edelweiss Financial (all of which he owns) have the potential to be these "spawners" that Monish discusses. Yet, what concerns me about these companies is that one of them is a fuel/gas/oil transportation company (which may be in a secular decline) and two of them have an interest coverage ratio that is less than 1. Does anyone else find this concerning? Shinoken and Reysas are definitely two of them. Pretty sure NICE also fits the bill. I don't think any of them generate the bulk of revenue from fuel/gas/oil transport. Thanks for the reply Brad. Reysas actually generates a significant amount of its revenue from transporting fuel, liquidified natural gas, and petroleum. Do you see the low interest coverage ratio that these companies have as an issue though? Especially with Pabrai stating that he has a history of investing into some stocks that had financial troubles due to their high debt. Link to comment Share on other sites More sharing options...
MattR Posted February 21, 2021 Share Posted February 21, 2021 Games Workshop Group PLC (GAW.L): Creates miniatures for board games, most known for Warhammer 40k, think it will grow especially with the video games they let develop. Endor AG (E2N.MU): Sells racing wheels for PC and consoles, should pick up steam with racing games becoming more popular . Helios Towers: Cellular Towers in Africa. Why do you think any of the above qualify as spawners? If so, which new business lines have they created? Games Workshop expands in creating new IPs and video games as well. Endor creates tournaments and is very focused on the e sports side Helios Towers: New towers in unchartered countries. Link to comment Share on other sites More sharing options...
no_free_lunch Posted February 21, 2021 Share Posted February 21, 2021 Shameless, that's just pabeais style. I have looked at his stocks a few times even back in 07 when he got famous, they are always sketchy. Sometimes they go bankrupt and sometimes they are multibaggers. If I were to follow him I would have to clone his full portfolio. Link to comment Share on other sites More sharing options...
Pistachio_Lawyer Posted February 21, 2021 Share Posted February 21, 2021 Shameless, that's just pabeais style. I have looked at his stocks a few times even back in 07 when he got famous, they are always sketchy. Sometimes they go bankrupt and sometimes they are multibaggers. If I were to follow him I would have to clone his full portfolio. In his book he frames his approach as "Heads I win; Tails I don't lose much". He is considered a value investor. Link to comment Share on other sites More sharing options...
Parsad Posted February 22, 2021 Share Posted February 22, 2021 Shameless, that's just pabeais style. I have looked at his stocks a few times even back in 07 when he got famous, they are always sketchy. Sometimes they go bankrupt and sometimes they are multibaggers. If I were to follow him I would have to clone his full portfolio. I don't think that would be necessary. For example, he made it pretty clear at different times what stocks he was concentrating in...BAC & GM warrants, later Fiat, recently Micron Technology...I think an investor could have done very well just picking and choosing a few of Mohnish's more concentrated bets. Probably better than the overall portfolio in fact. That being said, I've only bought BAC at the same time as Mohnish...got into Fiat more for the dividends and special dividends (basically missed the whole Ferrari spinoff)...and didn't invest in Micron. Overall, alot of my ideas don't overlap with Mohnish's...I'm more of a plain, vanilla value investor...he usually takes a very holistic approach to an idea (I wouldn't always call it value). Cheers! Link to comment Share on other sites More sharing options...
GordonGekko69 Posted March 5, 2021 Share Posted March 5, 2021 Thats an extract of the 2021 President Letter of Constellation Software. Maybe the rise of a canadian spawner. "In parallel with our established and growing small andmid-sized VMS practise and our nascent large VMS practise, we are trying to develop a new circle of competence.We areseeking attractive returns, asustainableadvantage, and the ability to deploy large amounts of capital outside of VMS.That willrequire highly contrarian thinking and is likely to be uncomfortable in the early going.Hopefully, we have built enough credibility to warrant your patience as we explore new and under-appreciated sectors." Additionally they cut the dividend to zero to fully reinvest in operations. I am not invested in CSI but looks very interesting and I will definately monitor that. cheers Link to comment Share on other sites More sharing options...
jbauman142 Posted March 19, 2021 Share Posted March 19, 2021 A potential opportunity that I am looking into concerning spawners is Meritage Homes (Ticker: MTH). I am wondering if anyone else has spotted this company. On the surface, this looks like quite an interesting opportunity as it is trading at a Total Enterprise Value / EBIT of 7.23. Not only is this company a cash flow generating machine, but it also sports a great balance sheet that is able to generate attractive returns. Meritage generated an astonishing 20% ROE in 2020. Of course, this isn't sustainable; however, I do think with a sales to capital ratio of about 1.6 (industry average 1.3) they could be able to maintain a return on capital of around 15% for the next few years (well above their current cost of capital). I've done quite a bit of research on the company and am interested in getting others' opinions on this opportunity! Link to comment Share on other sites More sharing options...
ourkid8 Posted March 20, 2021 Share Posted March 20, 2021 +1 I am a shareholder of Tripura, which i initially bought because of spin-off dynamics, one share of TSU for every 72 shares of BAM. As I started to own and study the company, part of the book value was european runoff from reinsurance in 08-09 era, part of the book was surety business in Canada and they were planning to spawn fronting business in USA. Now three yrs later fronting business in USA has taken off with good execution and runway. In the meantime they are planning to spawn surety business in USA. Their underwriting is excellent in Canada and should be similar in USA. I am sure there is some synergy with BAM business and BAM management owns 10% of TSU. So now the market has realized the situation and stock is selling at 4X BV. With the wisdom of spawning from Mohnish, I do not plan to sell and see how surety does which is even bigger market than fronting. Furthermore who knows 3 yrs later they may be spawning another new business. Thank you for the lesson, Mohnish Link to comment Share on other sites More sharing options...
Packer16 Posted March 20, 2021 Share Posted March 20, 2021 IMO the issue with most homebuilders is they are in two businesses. One, homebuilding, which can be a good business & land banking, a poor business. NVR is the US is the only homebuilder that has optioned the land so they have primarily a good business. Shinoken in Japan has a good business also as it sell the homes to a REIT after development & get recurring management revenues also. The only other firm in the US similar to NVR is Dreamfinders but it has lower inv turns & less local economies of scale (margins are about 50% less) than NVR. One way to compare the mix of businesses is to look at inventory turns. For most US builders, the turns are less than 1, for NVR they are 3.9, DFH 2.3 and Shinokin 2.4. Margins measure local economies of scale. Another way to see long-term returns is by looking at LT charts. Look at homebuilders & the only one with high RoEs & the stock price moving up cycle over cycle is NVR. Some of the others have gone up 4x since 2011 but NVR has gone us more than 7x. Packer Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 20, 2021 Share Posted March 20, 2021 IMO the issue with most homebuilders is they are in two businesses. One, homebuilding, which can be a good business & land banking, a poor business. NVR is the US is the only homebuilder that has optioned the land so they have primarily a good business. Shinoken in Japan has a good business also as it sell the homes to a REIT after development & get recurring management revenues also. The only other firm in the US similar to NVR is Dreamfinders but it has lower inv turns & less local economies of scale (margins are about 50% less) than NVR. One way to compare the mix of businesses is to look at inventory turns. For most US builders, the turns are less than 1, for NVR they are 3.9, DFH 2.3 and Shinokin 2.4. Margins measure local economies of scale. Another way to see long-term returns is by looking at LT charts. Look at homebuilders & the only one with high RoEs & the stock price moving up cycle over cycle is NVR. Some of the others have gone up 4x since 2011 but NVR has gone us more than 7x. Packer The same dynamics apply in o/g, where a company agrees to farm-in on someone else's land in return for agreeing to pay for the drilling. The risk with this practice, as it is with optioning land for a land-bank, is that the land owner doesn't have to do it. They could just as easily drill the prospect (or build on the land) themselves - and they just need to earn more than the premium being offered. They be utter sh1te at it, and it just doesn't matter. There is a reason why these businesses hold both these types of assets. It is really just another cost of doing business. SD Link to comment Share on other sites More sharing options...
ContrarianValue44 Posted April 4, 2021 Share Posted April 4, 2021 On 3/19/2021 at 4:25 PM, jbauman142 said: A potential opportunity that I am looking into concerning spawners is Meritage Homes (Ticker: MTH). I am wondering if anyone else has spotted this company. On the surface, this looks like quite an interesting opportunity as it is trading at a Total Enterprise Value / EBIT of 7.23. Not only is this company a cash flow generating machine, but it also sports a great balance sheet that is able to generate attractive returns. Meritage generated an astonishing 20% ROE in 2020. Of course, this isn't sustainable; however, I do think with a sales to capital ratio of about 1.6 (industry average 1.3) they could be able to maintain a return on capital of around 15% for the next few years (well above their current cost of capital). I've done quite a bit of research on the company and am interested in getting others' opinions on this opportunity! Interesting, may I ask if you favor Meritage over M/I Homes and if so, why? Thanks in advance! Link to comment Share on other sites More sharing options...
dabuff Posted April 5, 2021 Share Posted April 5, 2021 Out of curiosity has anyone found a broker to trade in Turkish stocks? (Thinking about Reysas here). Link to comment Share on other sites More sharing options...
ContrarianValue44 Posted April 5, 2021 Share Posted April 5, 2021 6 hours ago, dabuff said: Out of curiosity has anyone found a broker to trade in Turkish stocks? (Thinking about Reysas here). I would be fairly careful with that trade. Not really cheaply valued anymore, unlikely to attract investors because of Turkey's macroeconomic and political situation. And if you look inflation adjusted results, it looks like Pabrai only managed about 300 percent gain from that trade (I may be mistaken though). Link to comment Share on other sites More sharing options...
ContrarianValue44 Posted April 5, 2021 Share Posted April 5, 2021 6 hours ago, dabuff said: Out of curiosity has anyone found a broker to trade in Turkish stocks? (Thinking about Reysas here). The rapid devaluation of the Turkish Lira and the instability of Turkey politically are also likely the reason why foreign brokers aren't too excited to add Turkish stocks Link to comment Share on other sites More sharing options...
dabuff Posted April 6, 2021 Share Posted April 6, 2021 All very valid points. Thank you. Link to comment Share on other sites More sharing options...
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