What are you buying today?

[Gregmal]

Covered OPK short.

[longlake95]

added to GIL.TO

[kab60]

Some Ulta, ECL

 

[Broeb22]

 

 

 

I don’t care to much about NKE, maybe they want a techie CEO. NOW stock was down a lot because of general weakness in the SAAS group and the CEO transition heightened the concern that the CEO change portents bad results. I thought that the more likely explanation for NOW’s CEO is that he wants to do something completely different.

 

I had NOW on my watchlist since Druckenmiller mentioned it in late 2018 at around $165 as a disruptor. It’s now even roughly at the same price in terms of price/sales relatively speaking, so I thought I dip my toe a bit into this. It’s one of the more moaty business in this space and might be a good value, if they keep growing and improve profitability. They are no slouch in terms of stock related comp, but are a bit better than WDAY.

 

Having observed and used NOW at my prior job as a kind of procurement tool for my group, the UI was not super impressive to me. My teammates constantly complained about NOW's functionality.

[kab60]

added to GIL.TO

Mind sharing a bit of your thesis? Thx

[longlake95]

I'll post and update on the Gildan thread

[Gregmal]

Which puts Gregmal if you don't mind?

 

They are crazy expensive due to shorts/volatility but, yeah I can see this going way down in time. Everybody can make this shit even Maple Leaf Foods and Tyson. $10 billion market cap is nuts for something that will be commoditized.

 

I bought some Jan 2021's ranging from $50-$100 strikes. Its basically a 2-3 month trade idea. I think the lockup easily takes 25% off the share price. The thinking goes, yea... straight short you're paying 175% neg borrow which can be yanked at any time and the rate can and likely will go up. Shorter dated puts are insanely expensive and a sucker bet. 2021s that are out of the money that far are only pricing in time value. Ive got like 16 months til expiration and if 2-3 expire, there s still a whole lot of time value likely for those options which still have a good chunk of value whether the stock goes up, down, or sideways. But if I'm right, and we get a 20-30% or greater move down on lockup expiring(which really isn't much of a stretch given how some of these things trade, let alone if you follow what TLRY did)....we eat well.

 

Not all of them work out as planned, but this was pretty freaking easy. There's still likely a bit of downside, but the IV and derivative effects of that are probably peaking, so it's time to close this out. I'd again encourage those interested to look at TLRY chart to see where this ends up 3, 6, 12 months from now.

[hummbaby]

Greg, Looking at the TLRY chart, why not hold a portion of the BYND LEAPs for longer?

Still substantial downside ahead, especially over the longer term...

 

 

 

[Gregmal]

Greg, Looking at the TLRY chart, why not hold a portion of the BYND LEAPs for longer?

Still substantial downside ahead, especially over the longer term...

 

Because the IV is massive right now since we are a week(less than) away from lockup expiration. For instance the $60 Jan 21s are now $10. If you spare some downside, you can probably re enter the trade as a straight short(or even possibly through options) with a much lower negative carry hurdle. TLRY was 450% heading into lockup and trading in the $80s. Several months later you could short it outright in the $60 for a tiny fraction of that cost. Once all those lockup shares start coming to market, the cost to borrow comes down. From there the downward spiral is all but locked in, and then valuation typically becomes the primary driver of value.

[Spekulatius]

Bought some PYPL, and a first lot of CTVA. Bought some SPY puts at the close.

[Spekulatius]

 

 

Having observed and used NOW at my prior job as a kind of procurement tool for my group, the UI was not super impressive to me. My teammates constantly complained about NOW's functionality.

 

Thanks for the feedback. I cannot comment on the purchasing part. As a user, I have used the GUI For IT Service and it is head and shoulders above  what we had before. I cannot really comment on NOW software overall but I do know that workflow management is one of those things  that is really core to a companies business processes, unlike applications like slack, which cover communication amongst employees and can get replaced relatively easily without disruption. I think the same thing about some analytics (which tend to affect only a few employers and something managment just says, screw them and put up) or security (which may become more commoditized).

 

So in other words, if  NOW’s products is in a company, it’s almost impossible to get it out gain.

[CorpRaider]

EBAY

[Stuart D]

More SMTA. As far as I can see all looks good. Vote passed, portfolio sale expected to close in a few weeks, Shopko term loan fully recovered. According to the proxy management expects $8.50 - $9.35 per share in distributions. My own calculations get me closer to the top of that range. In fact even slightly above that range but that probably means I am too optimistic about the workout assets.

 

Shares were initially up today (what I would have expected) but around the close there was massive volume and SMTA ended down ~2% instead. Best explanation I could come up with is that some funds are not allowed to hold companies in liquidation and had to sell at today's close. Seems congruent with what happened in the market.

 

But maybe I missed something. Not the most fireproof explanation ever.

 

Even back in the $8.40s SMTA still looks cheapish to me. Not hard at all to come up with an expected distribution figure of over $9, even using conservative assumptions.

 

How did you go with SMTA? Looks as though the distribution has been paid (either that or there is some catastrophe causing a 90% drop).

[Jurgis]

Spek - you should probably start NOW thread.

 

What I don't like about NOW is 0% insider holdings. Which makes it difficult to decide if leadership is gonna be any good going forward - and possibly explains why CEO jumped the ship. With all the issues of insider control ( We know what We mean ), I'd still rather invest in a company with insider holdings or control.

 

Also it's difficult to decide what high-growth, but no/low earnings companies to buy. NOW? WDAY? ZEN? HUBS? PCTY? CRM? VEEV? TEAM? (I have a smattering of tiny positions in some of these).

[Lance]

Wrote puts on CXW and GEO

 

 

Thanks

Lance

[gokou3]

MPLX at <$27; 10% yield.  1.4x distribution coverage. K1.  Possibly catalyst from Elliott requesting to break up MPC (sponsor).

 

https://www.remakingmpc.com/

[Spekulatius]

MPLX at <$27; 10% yield.  1.4x distribution coverage. K1.  Possibly catalyst from Elliott requesting to break up MPC (sponsor).

 

https://www.remakingmpc.com/

 

A breakup of MPC ( Sponsor and majority owner of MPLX  ) is not a positive for MPLX most likely.

[gokou3]

MPLX at <$27; 10% yield.  1.4x distribution coverage. K1.  Possibly catalyst from Elliott requesting to break up MPC (sponsor).

 

https://www.remakingmpc.com/

 

A breakup of MPC ( Sponsor and majority owner of MPLX  ) is not a positive for MPLX most likely.

Could you kindly explain?

[writser]

More SMTA. As far as I can see all looks good. Vote passed, portfolio sale expected to close in a few weeks, Shopko term loan fully recovered. According to the proxy management expects $8.50 - $9.35 per share in distributions. My own calculations get me closer to the top of that range. In fact even slightly above that range but that probably means I am too optimistic about the workout assets.

 

Shares were initially up today (what I would have expected) but around the close there was massive volume and SMTA ended down ~2% instead. Best explanation I could come up with is that some funds are not allowed to hold companies in liquidation and had to sell at today's close. Seems congruent with what happened in the market.

 

But maybe I missed something. Not the most fireproof explanation ever.

 

Even back in the $8.40s SMTA still looks cheapish to me. Not hard at all to come up with an expected distribution figure of over $9, even using conservative assumptions.

 

How did you go with SMTA? Looks as though the distribution has been paid (either that or there is some catastrophe causing a 90% drop).

 

No, stock went ex-div for $8 today. I bought, then I bought more, then I bought more, etc. Was by far my largest position yesterday. Though not very risky given the large upcoming distribution. Basically you could invest a ton of money with very little risk to end up with a small position in the stub on the cheap. I like situations like that. Good spots to park your excess cash for a few weeks if you do your homework.

[Spekulatius]

MPLX at <$27; 10% yield.  1.4x distribution coverage. K1.  Possibly catalyst from Elliott requesting to break up MPC (sponsor).

 

https://www.remakingmpc.com/

 

A breakup of MPC ( Sponsor and majority owner of MPLX  ) is not a positive for MPLX most likely.

Could you kindly explain?

 

As a majority holder of units, MPC would be on both sides of the transaction. If a transaction is favorable for MPC and marginally favorable or neutral for MPLX, it would pass a fairness opinion and would go through. I believe the main Elliot pitch is that MPLX units should be distributed to shareholders. If that happens, I would expect a hell lot of selling because most shareholders can’t or don’t want hold MLP units.

 

This is not directly a negative for the MLP itself, but certainly for the current minority unit holders.

[Spekulatius]

Spek - you should probably start NOW thread.

 

What I don't like about NOW is 0% insider holdings. Which makes it difficult to decide if leadership is gonna be any good going forward - and possibly explains why CEO jumped the ship. With all the issues of insider control ( We know what We mean ), I'd still rather invest in a company with insider holdings or control.

 

Also it's difficult to decide what high-growth, but no/low earnings companies to buy. NOW? WDAY? ZEN? HUBS? PCTY? CRM? VEEV? TEAM? (I have a smattering of tiny positions in some of these).

 

I don’t feel like a thread on just one of these stocks will get much traction, perhaps a thread on SAAS stocks? This is not typical value investor terroir,  but nevertheless interesting.

[gokou3]

MPLX at <$27; 10% yield.  1.4x distribution coverage. K1.  Possibly catalyst from Elliott requesting to break up MPC (sponsor).

 

https://www.remakingmpc.com/

 

A breakup of MPC ( Sponsor and majority owner of MPLX  ) is not a positive for MPLX most likely.

Could you kindly explain?

 

As a majority holder of units, MPC would be on both sides of the transaction. If a transaction is favorable for MPC and marginally favorable or neutral for MPLX, it would pass a fairness opinion and would go through. I believe the main Elliot pitch is that MPLX units should be distributed to shareholders. If that happens, I would expect a hell lot of selling because most shareholders can’t or don’t want hold MLP units.

 

This is not directly a negative for the MLP itself, but certainly for the current minority unit holders.

 

Understood, thanks for the elaboration. Of course there is no guarantee that things will go the way Elliott envisions, but I believe their plan calls for a simple three-way split of the company, i.e. the MPC shareholders end up owning shares in 3 companies.  Wouldn't this simply involve the MPC shareholders getting a pro-rata share of MPC's current 63% ownership in MPLX? I am not creative enough to imagine how MPLX will get screwed in this process.

 

I do agree with you that there may be forced selling after the spin, but the Elliott plan also calls for the conversion to C-corp at the same time so perhaps some forced selling can be offset by new shareholders who currently cannot buy into a MLP.

 

Do you have any insight into MPLX's assets?  Seems like demand for the New England pipeline capacity (20% of EBITDA) is slow, but assets in other areas are in high demand and have good growth opportunity.

[Spekulatius]

I do agree with you that there may be forced selling after the spin, but the Elliott plan also calls for the conversion to C-corp at the same time so perhaps some forced selling can be offset by new shareholders who currently cannot buy into a MLP.

 

Conversion to a C Corp means a huge tax bill for LP’s especially those that held the units long term and have a low tax basis (distributions adjust the cost basis downwards). Same thing happened when Kinder merged then LP into KMI.

 

I agree this would be more technical than fundamental,  it we might get a huge puke, when these initiative comes to pass and LP owners freak out.

[Gregmal]

Added a little bit of ILMN after hours at 298. If the PACB scenario has taught anything, its how dominant ILMN is in that space. And its a beautiful space at that!

[lnofeisone]

I do agree with you that there may be forced selling after the spin, but the Elliott plan also calls for the conversion to C-corp at the same time so perhaps some forced selling can be offset by new shareholders who currently cannot buy into a MLP.

 

Conversion to a C Corp means a huge tax bill for LP’s especially those that held the units long term and have a low tax basis (distributions adjust the cost basis downwards). Same thing happened when Kinder merged then LP into KMI.

 

I agree this would be more technical than fundamental,  it we might get a huge puke, when these initiative comes to pass and LP owners freak out.

 

Agree that MPC holders that don't want/can't hold MLP (as a corporate structure) would sell MPLX if Elliot's plan goes through. However, MLPX can choose to be treated as a C corp for tax purposes without all the headaches of MLP to C corp conversion.