What are you buying today?

[Spekulatius]

Hedged out the bulk of my GM position. Lightened up in high $30's a few months ago and have locked into a trade that makes this now or never with capped downside. Incompetent management and naive shareholders are a recipe for basically what this company has been since its IPO. Things are not dandy when your stock has gone no where, dividend hasn't been raised in years, buybacks nonexistent, and ratings agencies considering your debt-junk. Yet some continue to tell themselves things are great; probably fueled by Buffett inspired "value investor" wisdom.

 

Don't forget pissing away money on Lyft, Maven, and probably Cruise.

 

While Ive long liked Cruise, it is hard now not to view it through the tainted lens of Softbank being the main reason it's considered a home run...

 

All the car companies except Tesla have been trading like junk for the last 12 month almost without exception. that includes Europe, and to a to a lesser degree Japan. They are like the c malls of the industrials.

 

For sure, with regard to the sentiment, but 2019 was yet another record year for auto sales(in $ figures). The problem is they are terrible allocators. E&P companies are probably better peers than the malls. They make tons of money in good years but give none of it back to shareholders because dumb career industry folks run the companies based on out dated and inefficient theories for "what you're supposed to do". Then during the bad years... shit gets ugly.

 

As my bearishness on the overall market has grown, GM has started to bother me more. If this is how they perform in a record market, I probably dont want to be around for when things stop going perfectly.

 

How would you run GM better? Large buybacks may not be the best course of action because the stock really didn’t move. In a way it would be wasted.

 

GM will bleed probably bleed $10B+ In cash during a recession because they would need to spent on new models and because the industry is in transition on electrification and self driving cars. There isn’t an easy way out, the business is a value trap.

 

If I had to buy one stock, it would be FCAU. They are winning market share in trucks and the merger with Peugeot will fix their ailing European business hopefully.

[Gregmal]

Yea FCAU has long been a regret of mine. Its been the better investment, largely because Machionne was a world class manager.

 

With GM, you cant be a growth company when revenue isn't going anywhere. You cant be a dividend play, when you cant even bump the payout a mid single digit % every year. You cant be a buyback machine if you refuse to buyback stock, and you cant be a conservative company with a strong balance sheet when you are teetering on junk status.

 

So, I'm not an auto executive and Im not arrogant enough to say I have the formula for running an auto company. But what I do know, is that I would find an identity and just stick to that. GM has half assed everything which is why its gotten credit for nothing. They've gotten some push from shareholders occasionally, and like with Tepper, done enough to shut them up for a bit, and then revert back to bad behavior. Einhorn had a flawed presentation, but the right idea with the dividend shares, and then growth shares. I also think the ship sailed on Cruise. There was a huge opportunity to IPO that in Hong Kong, or even here, and they did nothing. Now its hard not to question that valuation, given it may be another Softbank special.

 

The right move IMO, which would obviously never happen, would be to shut the sedans, sell/JV the truck lines to Toyota or VW(someone dying to get into the NA truck market) and then become a pure play EV/autonomous driving company with only modest exposure to the best parts of "old auto".

[Gregmal]

Picked up a few DD as close to $60 as I could

[StevieV]

Yea FCAU has long been a regret of mine. Its been the better investment, largely because Machionne was a world class manager.

 

With GM, you cant be a growth company when revenue isn't going anywhere. You cant be a dividend play, when you cant even bump the payout a mid single digit % every year. You cant be a buyback machine if you refuse to buyback stock, and you cant be a conservative company with a strong balance sheet when you are teetering on junk status.

 

So, I'm not an auto executive and Im not arrogant enough to say I have the formula for running an auto company. But what I do know, is that I would find an identity and just stick to that. GM has half assed everything which is why its gotten credit for nothing. They've gotten some push from shareholders occasionally, and like with Tepper, done enough to shut them up for a bit, and then revert back to bad behavior. Einhorn had a flawed presentation, but the right idea with the dividend shares, and then growth shares. I also think the ship sailed on Cruise. There was a huge opportunity to IPO that in Hong Kong, or even here, and they did nothing. Now its hard not to question that valuation, given it may be another Softbank special.

 

The right move IMO, which would obviously never happen, would be to shut the sedans, sell/JV the truck lines to Toyota or VW(someone dying to get into the NA truck market) and then become a pure play EV/autonomous driving company with only modest exposure to the best parts of "old auto".

 

Just thinking out loud here.  They aren't going to become a growth company.  Seems like you'd want to - sure up the balance sheet; buyback shares; steadily raise the dividend --> in that order.

 

I don't think that you want to get caught flat-footed on electric or autonomous, but I am not sure overspending in either area makes sense.

 

Regarding EVs, I'm not sure what GM's plans are, but I wouldn't go rushing into launching all kinds of electric vehicle models.  Why rush to launch a bunch of unprofitable vehicles that aren't demanded by the marketplace?  Certainly prepare, but I don't think it is necessary to launch huge lines until there is demand and potential profit and battery tech to make them attractive (I am not familiar with all regulatory issues).  Launch EVs when you can be successful with them.  I'm not sure early unsuccessful generations help.  Did the Bolt and Volt help (though I admit, I though that a plug-in hybrid was a good idea)?

 

I may be way off base, but I don't see EVs as a huge technical challenge for the car companies.  We've been told repeatedly how simple electric motors are.  They aren't developing the battery cells and chemistries (I don't believe).

 

I think AVs are a huge technical challenge and something else you don't want to miss on, but maybe GM should have moved the other way.  Let Mobileye or someone else do the heavy lifting.  Implement it in your cars.  The type of tech needed for AVs aren't what I would consider in GM's typical wheelhouse.

 

That would leave GM in a not great part of the business - car manufacturing.  However, it would at least be in their wheelhouse.

 

Anyway, just thinking out loud.

[CorpRaider]

One reason I decided to sell my GM warrants and never look back was that it appears there are huge, unstated, (mostly) contingent claims of stakeholders (i.e., dealers, unions, and politicians (jobs jobs jobs).  Arguably Tesla (and other new entrants) don't operate with the same huge debt-like claims on future earnings/road blocks to rational operations from the dealer, unions, suppliers, and/or governments etc...as a "national champion"/massive quasi-captive entities, at least at this point.  I guess it is maybe not so different than any other industry where the incumbent can't or won't cannibalize its existing business/relationships.

[Spekulatius]

Picked up a few DD as close to $60 as I could

 

Same here. Price action looks very weak. I think we will get mid fifty prices in a general stock market correction. I did notice some smaller insider sales (Breen etc) at the end of last year.

 

Edit : also added a bit of LBTYK.

[gjangal]

Added DLTR and AMZN

[james22]

VGELX

[newtovalue]

Picked up DISCK - still trading in the mid teens FCF, and now that their Debt is at a level with which they are comfortable, they will look to buyback more stock

[Lance]

WFC

 

Thanks

Lance

[Gregmal]

bought a little more MSGN

[Castanza]

WFC

 

Thanks

Lance

 

+1

[lnofeisone]

+1 on this. Definitely getting some shares put to me lest we hit 52 before Friday.

[boilermaker75]

Wrote 50-strike, Jan 17 expiration, WFC puts for $0.41 per share

[CorpRaider]

WFC

[gokou3]

Scorpio Tankers STNG

[Broeb22]

OLLI and EVI

[kab60]

Added to BERY and SAVE the other day below 45 and 40 and took at small position in GUD

[BG2008]

Added to BERY and SAVE the other day below 45 and 40 and took at small position in GUD

 

BERY should be interesting with the next couple quarters of earnings.  Down 6% volume wise last year may easily convert into up 2-4% this year which still means down 2-4%, but market will likely like it given the current P/FCF.  Refinancing at 1% and 1.5% means an extra $30-40mm of interest savings. 

[kab60]

Added to BERY and SAVE the other day below 45 and 40 and took at small position in GUD

 

BERY should be interesting with the next couple quarters of earnings.  Down 6% volume wise last year may easily convert into up 2-4% this year which still means down 2-4%, but market will likely like it given the current P/FCF.  Refinancing at 1% and 1.5% means an extra $30-40mm of interest savings.

Yep. If they can grow volumes narrative should change, and debt paydown plus further refi down the line should add nicely to FCF. What nags me a bit is whether their size will start to constrain them down the line in that there are not enough acquisitions that move the needle, but that's some years away and market is still very fragmented. In a 2 pct rate environment I don't see why this should trade at a double digit yield either way.

[John Hjorth]

... What nags me a bit is whether their size will start to constrain them down the line in that there are not enough acquisitions that move the needle, but that's some years away and market is still very fragmented. ...

 

kab60,

 

Nothing ever come easy. With a serial acquirer, based on strong operational execution & proved capital allocation skills, you'll never get over the question: "What is the next one, and how will that one look like for me?"

 

It's just a part of the game, if you invest in [to me, great] stuff like this [bERY].

[gjangal]

Added to BERY and SAVE the other day below 45 and 40 and took at small position in GUD

 

SAVE is interesting here. Cheap and has some growth in it. It is / has opened flying to a wider set of people. Probably has also increased the frequency of flying for some people. Looks cheap with growth. Plane problems in the future be damned, people wanna fly

 

Thanks for the idea

[Ice77]

2222.HK: I initially bought this at 20c a month or so back and then have been adding at 22-28c. Discovered accidentally when KKR bought a majority stake in one of their companies and i saw it in the paper. Just the residual 30% stake in that venture is worth more than the current market cap at that transacted value. Significant net cash plus their remaining biz which is growing well would be worth atleast twice that residual stake. I reckon NAV to be around ~50-60c. 

[Ice77]

CRBP

 

Interesting clinical candidate with an unmet need. It looks to me like they will need to raise cash with a secondary very soon though.

 

It shouldn't be too difficult to raise money (they've already done some licensing deals - one with a Japanese major and they also got some funds from CF foundation). Their Ph 3 results for Lenabasum should most likely be great (their Ph2 data and recent hiring shows they are prepping for approval) - out in a few months. Stock is ripping. Up 60% since this above discussion. Funnily i discovered this stock from a podcast where a healthcare VC with a great track record was pounding the table on it like crazy. 

[Spekulatius]

CRBP

 

Interesting clinical candidate with an unmet need. It looks to me like they will need to raise cash with a secondary very soon though.

 

It shouldn't be too difficult to raise money (they've already done some licensing deals - one with a Japanese major and they also got some funds from CF foundation). Their Ph 3 results for Lenabasum should most likely be great (their Ph2 data and recent hiring shows they are prepping for approval) - out in a few months. Stock is ripping. Up 60% since this above discussion. Funnily i discovered this stock from a podcast where a healthcare VC with a great track record was pounding the table on it like crazy.

 

Yes, stock has rebounded substantially. Would you mind disclosing the podcast? I am constantly looking for new material.