thepupil

I think your credit score is important. 4/4 of my jobs have done a credit check and a background check. I have a fiduciary duty (note that I'm not working now so my increasingly frequent post are not me completely shirking that duty) . A black mark on credit is a no go for my job. it can recover, but it could still be a pain in the ass. Likewise, it is standard to do background checks and credit checks on all important partners in my job. we won't do business with someone who has shit credit, or at the very least, we want to know why if someone has anything that is less than perfect. It is true, that you can extinguish debts through bankruptcy and start over, to an extent. It is also true that certain types of retirement/ERISA accounts aren't exposed to creditors (varies by state: 401k/403b, IRA's in most states, HSA etc.), so one can have very positive net worth and "walk" from recourse debts, but it would a) kill your credit score b) hurt your future job prospects c)if you have substantial income, you will likely have a payment plan to pay off some portion of your debts. I'm not saying that no one has over modified a loan or taken advantage of banks or whatever, and again I'd reiterate that I run my own life at a fair amount of leverage, but you generally can't walk away from debt in a recourse state without significant and potentially highly detrimental consequences.

As someone who has recently taken out an 80% LTV 1st mortgage and a 80-98% second lien mortgage in the past 12 months (in Maryland), my reading of the mortgage documents is that both instruments are RECOURSE and are personally guaranteed. Maryland, specifically: https://www.nolo.com/legal-encyclopedia/deficiency-judgments-after-foreclosure-maryland.html https://www.tuckerlawpllc.com/blog/deficiency-judgments-in-maryland.cfm In fact, most states are (by the letter of the mortgage document) recourse states for residential lending. https://www.creditsesame.com/blog/loans/guide-recourse-non-recourse-loans/ There are some non-recourse states: Sharper, I'm not trying to pick a fight here, but I will again ask you to prove the statement you're making. By the way, I generally agree with you about being a borrower, I took out my loans in good times to preserve liquidity and maximize flexibility. I feel much better for having taken them out, it's allowed me to have many years of liquidity and be ready for a big and long drawdown rather than money tied up in an 80 year old pile of bricks and sticks. But the mortgage docs say I'm on the hook for my debt and I think that is the case throughout much of the U.S., with the exception of primary homes in the states above, and with the exception of many commercial mortgages that are explicitly non-recurse outside of standard "bad boy" carve-outs.

https://emma.msrb.org/Security/Details/?id=531127AC2# If you live outside the US and are not a US taxpayer, do not read further. If you don't make a lot of money and pay a high tax rate, do not read further. If you think owning any bonds is a terrible idea, do not read further. Like many an idea curated and implemented by yours truly, this one starts with a "hey I read an old VIC pitch on this, stored it in the memory bank, and occasionally check in on it" https://valueinvestorsclub.com/idea/Liberty_Dev_Corp-_GS/4329033560 During the most recent turmoil in the municipal market this security has bounced around, it gotten as low as $100 / 5.15% and is now around $120 / 3.5%; I have been a buyer throughout, as I believe the security is attractive. 3.5% tax-free yield guaranteed by Goldman Sachs and backed by their global headquarters building works for part of the fixed income portfolio. These are municipal bonds, triple tax free for NYC residents and federal tax free for folks who live elsewhere (my "clients" (aka parents) are florida residents). Importantly, a lot of very rich people live in NYC and I think that will continue to be the case, creating strong demand for tax advantaged paper, potentially even moreso if tax rates go up. So what are these bonds? After the September 11th attacks, there was a program to create a bunch of triple tax free bonds to help rebuild lower Manhattan. Partaking in this program was the storied US investment bank, henceforth known as Vampire Squid, Goldman Sachs. Vampire Squid was tired of sucking blood from its clients and society from a rather shitty 30 story building at 85 Broad. They needed a new shiny HQ from which to troll the ocean for prey. So they borrowed $1.65 billion using the Liberty Bond program to build 200 West. https://en.wikipedia.org/wiki/200_West_Street In 2005, they issued 30 year bonds at $110.7 with a 5.25% coupon. They are now 15 year bonds and rates are more than touch lower than in 2005, but the bonds are only a smidge higher in price (and even traded to par in mid-march!) That's all...you make 3.5% for 15 years lending to Goldman Sachs the corporation and the $2 billion HQ building. I think it offers excellent relative value, but do not size it up because you are a) writing a depression put (even Goldman may fail in a depression). in 95% of scenarios I think Goldman survives, but the bond portion is for the tail, so it is a bit incongruous to lend to an investment bank for your tail protection/bond portfolio. But given that this yields far more than alternatives, I can buy this and hold more cash in the cash/fixed income bucket (barbell approach). b) it is kind of related to NYC real estate (but not really) which I own a bit of I think they should trade at $150 / 2% or higher.

It is bullshit like this that will keep this limousine liberal at heart on the right side of the aisle, if only to act in vain as a hopeless offset to the rise of this particularly damaging breed of populism.

Yes, I think these are a good substitute (within limits) for long term treasuries as part of a duration barbell as part of a portfolio of cash and high quality fixed income as part of a retirement portfolio. These are part businesses (purveyors of extremely sought after luxury goods, top 0-20% of society design their whole lives around their kids college admissions) part government contractor (research), part non taxable investment manager and real estate owner. They are some of the best and most durable businesees in the world. Only the crappiest of colleges have gone bust and I presume many will but not MIT Harvard Cal Tech etc. I bought some shorter term Princeton muni’s for 2.4% that mature in 6-8 years the other day, that’s an amazing tax-equivalent yield, only snagged $10K of em. But as I said, I mostly like the long ones. If the economy really takes a hit and stocks drop, rates go through zero, etc, I think the 30 year will be zero and these will be up 50-100%. LVMH can borrow for negative rates to buy Tiffany, why shouldn’t The best universities in the world trade to 2% yield if dollar rates go the way of Euro/Yen. Something that pays 3.5-4% (a reasonable withdrawal rate) in a asteady state and has huge convexity to a deflation / further rate drop has a role in a diversified portfolio in my opinion. I think it gets harder to hold at lower yields. An alternative to an annuity that goes away with death or whole life which is super illiquid and has no duration upside. I owned a good bit of 30 year zero’s/regular tsy’s for my parents when they were at 3% for the same reason (sold way too early). Of course, they are illiquid (which may hurt the re-rateability). I only posted this after I’d bought a good slug for for fear of inviting too much competition for odd lots. but whatever just put in your Fido fixed income screener for the highest yielding AAA and AA credits. You get Exxon and a bunch of world class universities. they have huge downside of rates/inflation pick up. I don’t want these to do really well because it means the corporate equities and real estate are probably getting destroyed.

Was able to buy some century bonds of a very prestigious liberal arts college today at a 4% yield, a credit/liquidity/century spread of 280 bps to the 30 year. low cost structure, $1mm endowment/student, good niche. sadly, their mascot may go extinct over the course of the bond's life. PS: $100K of Caltech 3.65% of 2119 are offered $104/3.5% on Fidelity, have traded as low as par offering a juicy 3.65% for the privilege of lending your hard earned dough for a century. Go Orange Beavers?!?

silly me for asking for investment ideas on an investment forum when someone said they had better ideas. this follows a consistent pattern of you playing it close to the vest when asked for more information. again, unless something is illiquid, I do not understand why one would not share their ideas or strategies. if you already have a position on, it is in your interest to share. https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/what-is-considered-a-win-for-trading-inout-sp500/msg398903/#msg398903 I have never understood your posts and not wished to to discuss until now. Resuming the prior policy. To be clear, I am not trying to claim superiority. I have lost a lot of money this year and you can see why from the things I post about. you are apparently up 3x and all your positions are house money. I have no clue how and I have concluded that that will remain the case. apologies for filling up the airport thread here.

yep, it sure is a shame. I haven't been looking at any ideas or posting about any companies/ideas over these past few months. just can't be bothered. just too lazy and my time horizon is simply too short. if only i worked as hard as you and found and posted about all those super high quality easy multi-baggers for the benefit of the group. if only i could inspire others by somehow making 3x year to date swing trading the market. I'm just not as smart as you. I don't possess your alchemist like trading skills that turn the dogshit canadian energy stocks that you post about into ridiculous gains. One day, maybe I'll learn, maybe if I look at those other exchanges. What exchanges would you suggest as a start? enlighten the mortals among you.

There’s an article on Bloomberg today about PIPEs (Private Investment in Public Equity) and that there’s a lot of competition between PE firms to do them because they have so much dry powder. It says that CAKE spoke to 20 different parties and chose Roark’s deal, which gives some credibility to the idea that CAKE sees Roark as a value-add/partner or at the very least found their terms less objectionable than others.

ahhh yes, Peyto and Whitecap. Silly me for not realizing every widow and orphan places such beacons of business quality and stewards of shareholder capital in their portfolio alongside their Berkshire Hathaway, Nestle, Johnson & Johnson and Microsoft. I guess we'll go with answer B. high quality, best of breed, widow and orphan stock are not adjectives I would use to describe companies where the only question is if they survive. guess that's what makes a market.

Can you name your top 3-5 that fit this description? Sorry!. Do your own DD SD All for keeping illiquid ideas to yourself, but I find it odd that you won’t throw out at least one name. Where are these mythical best of breed companies cutting their dividends and trading at prices which will allow for a double or tripling to normalization? Could care less. You have a brain, use it ;) SD The ACWI quality index is down 15% through March 31 and many large cap US tech stocks are up year to date. In using my incapable brain, I am unable to identify “a great many” of “best of breed” companies that fit your description (or one for that matter). I can only conclude that you either A) are much better at sourcing ideas (hence my request for examples) B) have a different definition of “best of breed” C) are making a statement not based in fact Or maybe my brain just doesn’t work.

Can you name your top 3-5 that fit this description? Sorry!. Do your own DD SD All for keeping illiquid ideas to yourself, but I find it odd that you won’t throw out at least one name. Where are these mythical best of breed companies cutting their dividends and trading at prices which will allow for a double or tripling to normalization?

Can you name your top 3-5 that fit this description?

Lunches went from being subsidized corporate cafeteria catered by Aramark to simple at home stuff that’s probably a 200-500 calorie swing to the negative per lunch = weight loss. Work latte machine to instant coffee. Weekend dinners went from 1-2 nice restaurant dinners to 0 (we’ve only ordered delivery 2x) No work travel (work travel involves long sitting and i don’t eat well when traveling) More exercise because I needed to and can. Some degree of “hey I’m losing weight and getting healthier, that’s nice, let’s not try to stop this and Let’s go for longer runs and do some more pushups) All that = ~5% weight loss over the course of this, feel healthier. I’m super lucky and privileged, young, healthy, live in a house with a yard close to a national park with trails and trees (Rock Creek). If I were in a studio in NYC, without my own cooking skills (or a wife), or was exhausted from taking care of kids and working from home, I could see putting on some pounds.

30 year! way too short term for my taste. ;D https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/going-looooooooong-with-world-class-university-debt/msg404545/#msg404545

pre-covid: 6' 1" 198 post-covid: 6' 0.5"* 186 no work lunches and wife's portion controls at work and this despite a consistent 5:00PM cocktail and cheese hour (one must keep civility in these times). *VNO's 45% drawdown has hunched me over ever so slightly.

I'll try answer your questions. All from a very quick read, errors are very possible. 1. this is not equal to borrowing at 9.5%, this is equal to borrowing at a higher percentage, because the instrument has significant option value to a recovery at Cheesecake Factory. CAKE would take this because this is a flexible piece of paper with the ability to pay in kind (which is valuable to a closed restaurant company). A real "lender" would require cash interest and shorter effective maturity. It is in CAKE's interest to sell some upside to Roark and effectively raise this financing instead of a higher cost, cash-pay paper which is what the debt market would require [landry's just raised 1st lien loans at like 15%...https://www.bloomberg.com/news/articles/2020-04-06/landry-s-brings-first-u-s-leveraged-loan-in-almost-a-month] Who the hell lends to a restaurant now? they don't want to lend to the people who own the space much less those who lease it.. CAKE increases the probability of survival by taking Roark's money vs a less friendly party. Roark has a long history of working with/owning restaurants (it is the premier multi-unit private equity firm with an emphasis but not sole focus on restaurants). There is value to teaming up with Roark beyond the money. A debt fund/ bank just gives you money. this is a very small deal for Roark. If i had to guess, they're dipping their toes in tepid fashion, perhaps anticipating more pain at CAKE and across their empire. 2. unsure but I wouldn't worry about a common dividend at this time, they need to pay their rent and new PE loan sharks partners first. 3. $1000 Par Value / $22.23 Conversion Price = 45 shares per preferred, potential of 9 million shares or about 20% of the company. these transactions usually get 20% of the company because above 20% requires a shareholder vote and presents uncertainty to the transaction. CAKE has a bunch of closed operations and it needs cash now! Call Roark, 877 cash now! Note the language that conversion can't result in Roark owning more than 20% of CAKE. I believe (based on other companies where this structure takes place) that's to avoid a transaction in which over 20% of shares change hands, which would require a shareholder vote. Think about it from Roark's perspective. If CAKE is successful, they want to own 45 shares. If CAKE isn't successful, they want to lend to it at 9.5% and grow their liquidation preference. 4. the company is not allowed to pay this back until the 5th anniversary. Between years 5 and 6, they may pay it back at 120% of par, but Roark can convert just before conversion. After year 6, they may pay back at par but again Roark may convert. This is to protect Roark's re-investment risk. They are extracting value from CAKE and don't want to be called on their high cost paper in the event of a quick recovery, likewise they want to benefit if CAKE is at $50 and their pref's are better off as common equity. EDIT: it looks like after 90 month's Roark can demand they pay it back. this is longer duration than they'd get from a loan, offering CAKE some runway. and it doesn't show up as a scary maturity in the traditional sense.

Picked up some Cal Tech 3.65% of 2119 today $105 / 3.5% yield. These were issued in November 2019 when the 30 year was 2.2-2.4%. Now it is 1.13%. Cal Tech has a $3 billion endowment, owns its campus near LA, is a top 10 university in the world by many measures, offers a huge value proposition to its students as they graduate with great jobs, conducts essential research. It deserves to exist. Nice little addition to the japanification/long duration basket.

I don't have too much to add here, but the only thing I'd point out is that while it's true Berkshire has excess capital, it is also true that Berkshire has enough risk assets/earning assets to make an ROE that will provide shareholders with a return that preserves and grows purchasing power. A lot of people just need equities to deliver their promise of something like 3% real return over time and their retirement math works. Berkshire with $125 billion is not optimal and I want them to have done something (would love for them to sell Apple and buy back $60 billion of stock) or do a $50 billion Bank of Berkshire Bailout Program: "we'll give any good company a quick loan tomorrow: 1st lien up to 5x EBITDA, 6% PIK + warrants for 15% of your company; no dividends or buybacks allowed, not callable for 5 years. No forms to fill out or government buraecracy to deal with. Companies save on cash interest, get the buffett stamp and can focus on their operations rather than liquidity. But if Berkshire does nothing, if warren just thumb sucks, it will generate an ROE from its existing businesses that preserves and grows my and my family's wealth in a tax efficient manner. I sometimes think people get so focused on the huge amount of money and the opportuntiy costs, and are less focused on the %'s. Berkshire has $140 billion or so in safe stuff (cash + bonds). It has $817 billion of assets and $430 billion of equity. Something like 70% of their equity will generate a return. Everyday schmucks like my family keep about 70% of their retirement in risk assets. Berkshire is a portfolio in one go. I'd love for Berkshire to risk up; the excess capital and growth thereof is a reason for the discount, but if they just build cash for the next 5 years or until WEB passes, it's not an entirely terrible outcome either. As for me: I would guess they bought some stock back (maybe 1-2% of the company) and were modest net buyers of equities.

well played, good sir.

Just now when I attempted to get on to COBF, the web page said that my account was suspended and it redirected me to the below website. 10 minutes later, back on again. Did anyone else have this issue? Assuming that I haven't done anything wrong or actually been suspended, wondering if the site had some kid of issue. https://www.watermelonwebworks.com

Ha completely missed that, dumbass move on my part, remaining EQR lots are up 27%, AVB up 20%, CPT just a little, Essex up 15%. I’m not going to chase these up, but perhaps more inclined to average down with that datapoint in line with my gut feel/ read of the asset/tenant quality...maybe the hard relief rally is just getting to me

I may be weighting this data point too much, but I sized down my exposure by 1/4 at 5-15% profits. Given this is a starter basket approach as I don't think they're quite "cheap" enough, I think it is appropriate to be a little more risk averse. I will await further changes to price / fundamental data to make any more moves. Given the low leverage a 15% move in stock price is basically an equivalent move in the asset.

Initial look shows big drop in those paying rent Only 69% tenants paid any of their rent in April's first five days, according to the National Multifamily Housing Council. That compares to 81% in March's first week, and 82% in April's first week one year ago. • The actual situation for most (tenants and landlords) may be somewhat worse as the data is from a survey of 13.4M investment-grade rental apartments, i.e. likely to be occupied by higher-income tenants. • While this doesn't necessarily mean a wave of evictions (new laws around the country kind of prevent this), the delinquent rent is likely to move up the chain as landlords then struggle with mortgage payments, possibly setting off a wave of losses in CMBS-land.

my methodology was a dumb way to try to figure out what apparently actually already exists: the return of Chanos fund when combined with long exposure. It's 28% / year for multiple decades through the end of 2017 according to an article from Institutional Investor. frankly this is so freaking good it's well beyond my expectation. (I'm kind of skeptical honestly) The Ursus fund returned -0.7% / year through the end of 2017. The stated strategy on the long side is "mostly passive" I therefore conclude, in order to make the spectacular returns that the flagship fund has, Chanos has done so through VERY high short alpha. All evidence I've seen points to Chanos being spectacular at what he does. You reply with a bunch of truisms about shorting, with which I agree. I personally don't short, but you got to give credit where it's due. Chanos is killing it (through 2017, on a front loaded track record I'm sure, but still super impressive)