thepupil

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)

I’ll never fully understand why people love to hate this guy and/or dismiss his record. We don't have all the data, you're right, but I've yet to see evidence that Ursus is not short only or very short biased. Here we have an updated figure: -0.7% / year for Ursus, which is phenomenal. I hadn't seen this article until now. Looks like Chanos has a 100% long fund that's made a spectacular return (through the end of '17) though I bet his short alpha is heavily front loaded (but may be improving now). https://www.institutionalinvestor.com/article/b1b00ynrgtn05r/How-Jim-Chanos-Uses-Cynicism-Chutzpah-and-a-Secret-Twitter-Account-to-Take-on-Markets-and-Elon-Musk But since 2009, Ursus has lost about 70 percent of its value — 11 percent on an annualized basis — and is now less than $100 million, making it a relatively insignificant portion of the firm’s overall assets. Although Kynikos’s Tesla short may be in the money for the year, Ursus was down 19.3 percent through July, according to a recent report to investors. The secret to Chanos’s longevity as a short-seller is Kynikos’s flagship fund, the vehicle where Kynikos partners invest, which was launched alongside Ursus in 1985. Kynikos Capital Partners is 190 percent long and 90 percent short, making it net long. Unlike most long/short hedge funds, however, the longs are primarily passive, using such instruments as exchange-traded funds, as the intellectual effort goes into the short side. Chanos argues that by protecting the downside with his shorts, an investor can actually double his risk — and over time that has proved a winning strategy. Through the end of 2017, Kynikos Capital Partners has a net annualized gain of 28.6 percent since launch in October 1985, more than double the S&P 500. That has happened even though the short book — as represented by Ursus — has lost 0.7 percent annually during the same time frame, according to a recent Kynikos document Institutional Investor has obtained. “It’s one of the greatest records ever,” says one fellow hedge fund manager, initially skeptical of the results. “No one has made a 28 percent annual return since 1985.” The increased gross leverage — offset by virtually breaking even on the short side — helps explain the returns. However, as is the case with most hedge fund managers who’ve been around for decades, the big money was made in the early years. In 1990, Kynikos was one of the top-ten hedge funds in the world, with Ursus running $660 million, according to Chanos. After a few rough years, that fund was down to $150 million before an investment by the Ziff brothers — known for their savvy investments in hedge funds — saved the firm in the mid-’90s when they invested in Kynikos Capital Partners.

blast from the past here. and i very well may not have included interest expense in my spreadsheet of 6.5 years ago. Let's say I have a $1 billion family office. I might go to Chanos and say "can you run $50-$100 million of notional short exposure for me"? Here's my account at Pershing. I will give you discretion over this sub-account and to you will maintain 100% short exposure in your alpha generative short ideas. In that same account, please go long 100% SPX futures. Note in a recent interview that Liberty posted, Chanos mentioned he managed some SMA's that require him to maintain a certain exposure. This is a very plausible scenario. This account would be 100% long SPX, 100% short Chanos collection of craptostic companies. It would generate the rebate return + chanos short alpha (as it is market neutral) and provide a differentiated source of return for the wealthy family.

potentially so. I'll give you an example in my backyard. Behold this Zillow listing: https://www.zillow.com/homedetails/5500-Friendship-Blvd-APT-817N-Chevy-Chase-MD-20815/37195057_zpid/ this is in a well-located but tired building, it is spitting distance from Whole Foods the Friendship Heights metro, etc. $500K gets you a 1200 sq foot 2/2 with some outdoor space that would rent for $2,500 - $3000 (the listing shows a rental at $2,950, I assume someone would rent a little lower than that). If you paid cash, you'd still have a $1000 / month HOA. this is a decent albeit somewhat unhip location. the building was built in 1968. I think its a terrible investment proposition. $2600 /month rent less $1000 HOA = $1600 / month before any other expenses. We're already at an extremely low cap rate. Maybe it goes for lower, but I happen to know a lot of investors own units in this building (let's just say I know a former tenant very well); the units seem to move slowly but they do sell at prices indicating ridiculously low cap rates. Let's walk across the street, to EQR's property (formerly owned by Archstone), Wisconsin Place. Wisconsin Place sits atop Whole Foods (shared parking garage) which also connects to the Friendship Heights metro, which connects to a little retail center that includes movie theater, department store, restaurants, gyms, etc. This was built in 2009 and is in good shape. https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments https://www.equityapartments.com/washington-dc/friendship-heights/wisconsin-place-apartments##bedroom-type-section-2 A 1000 square foot two bedroom is listed for $3600 / month and up. studio's and one bedrooms $2,100-$2,200 and up. this is kind of a contrived comparison using anecdotes, but the first one trades at an 6%-7% rental yield or so and as you point out EQR is closing in on a 9%. But the maintaince and capex and running cost of that 9% are LOWER because the building is newer and the room for error is higher because the rents are high because of the quality. you are buying property in areas where even old kind of tired buildings still command high prices because (in this instance) this is metro-accessible high rent areas with amenities and stuff. and jsut for shits and giggles, you all will be happy to know that GEICO's corporate headquarters is right next to both buildings:

corporate debt: $1.4 billion + whatever they need to borrow to get through this market cap : $1.7 billion $3.1 billion + for the corporate entity $2.4 billion of asset level debt, of which $1.2 billion is Hilton Hawaiian Village. they seem to own about 30,000 rooms at share (that is a very rough calc done with my eyeballs trying to account for JV's). On a consolidated basis the EV is about $5.5 billion or $180K per room. About 7000 of their 30,000 rooms ahve asset level leverage. So another way to view it is to look at the corporate EV of $3 billion and assume they have to hand back the keys, so $3 billion for 23,000 rooms. That's $130K per room, but I'd point out that it looks like some of their most valuable assets are the ones that are encumbered, including their top 2 in Hawaii/SF Pre-corona Revpar is about $277. Host Hotels top 40 assets do about $227 (2/3 of EBITDA) the whole company does about $184 revpar. althought "total revpar" is more for HST. I'm not sure what number is apples to apples. HST has a bifurcated portfolio with some huge assets that are very valuable (the three hyatt hotels bought for $700K / room, the south beach bought for $1.4 million / room, the Don Cesar, etc.) on a weighted average basis it's lower quality (maybe) than Park, but that's because of huge scale and its ownership of some more mid range stuff, which from a data/importance to the franchisors standpoint is a small positive. Host trades for $200K / room, but just drew down their revolver completely, so they have a $2.8 billion cash horde, virtually no asset level leverage and the cleanest balance sheet int the space. I think what you may be missing is that HST is potentially a better risk reward. Although I did all of that on the fly and I could hear an argument for Park in that someone like HST could buy Park. No one will buy HST because it's the big kahuna. On a mark to market consolidated basis, Park has 70% debt 30% equity balance sheet (again all this was quickly done). On a mark to market casis HST has a $7 billion market cap and $2.5 billion of net debt or so (so more like 70/30).

I would like to buy ELS at an $8 billion EV, but Bloomberg says $9.6 billion market cap and $12 billion EV. Likewise SUI is at $14 billion EV. Is there some discrepancy on BBG or subtlety/ adjustment here that I’m missing or are your EV’s off?

we are thinking about it the same way. haven't pulled trigger on HST or anything hospitality related. There I think the EV / Key comparison is a harder to make at this time because you could be looking at a (maybe only slightly) different cap structure. Big picture, if on January 1 you knew this was going to happen and you asked how much would EQR/HST/VNO be down, I would think that most would guess HST would be down the most (75-100% of its tenants aren't paying rent for the next 2-undefined months) In actuality, HST is down 45%, VNO is down 51% and EQR is down 32%. Now YTD stock moves is not indicative of price to "value" gap. HST traded at a discount to replacement costs beforehand and had issues beforehand (EQR arguably did not) and Host now trades at a (using a sell side estimate) 50-60% discount to replacement cost. I'm not saying that HST isn't cheaper than the other two on a very long term basis, but I think the others (just using them as proxies for other type of RE and because I know VNO to an unfortunate degree) are safer and still offer upside. In a year, stodgy institutional investors will be bidding for / lending to EQR type of properties, but I think hospitality will have a longer and stronger taint/increase in the cost of capital