Spekulatius

Interesting factoids: $PLWN ( funeral plot in LI) up 40% today, apparently expecting business to pick up. $RGA - Life re-insurance company down substantially the last few days. They do not like the low interest rates and apparently Mr Market expects an increase in mortality as well. No position in either one.

The Corona virus outbreak will very likely cause a deep recession in Europe, Asia and quite possibly in NA. Depending on how well it is handled, it could well influence the outcome of the election. I mentioned this in the “what did you sell today thread”, but I made a market timing call and sold a substantial part of my equity holdings during short lived bounce today. I did not do so during the 2018 fall/winter downturn, but the current situation is different (I think) and at vastly higher equity valuations, I think we are very vulnerable to further correction and possibly a liquidity event. I sincerely hope I am wrong.

Sold too many to mention, including stuff that I just bought recently. Went into a sales frenzy during lunch time when we had an inter day bounce. I also sold my beloved BRKB, except on my taxable account. Amazing to see the SPY just 7% below the peak with all that stuff going on. That said, my timing typically sucks.

Sold most of my SDI.

Not Algos, they depend on live events which might get cancelled if things go Corona south. MSGN is tied to the same mast. The volume surges definitely seem like algos, and zip within ranges quite noticeably. Either way, at worst, this is a one off hardship assuming its full blown Resident Evil. Hardly enough to impair the value 10% when it's already discounted 20%+. Just markets being skittish. Could be worse. Like AMC. I know I repeat myself regarding MSG, but “fear the sphere” (in Las Vegas) is a bigger concern than a virus induced zombie apocalypse for me. I can see already the news headlines about cost overruns first and a $500M write down next. Anyways, added to PSX and a bit more DFS, STAY and FRA.DE

Not Algos, they depend on live events which might get cancelled if things go Corona south. MSGN is tied to the same mast.

Definitely. And next year Q1 and Q2's earnings will look amazing in comparison... Market right now seems to be expecting these warnings, so we'll see what their magnitude is and how the market reacts. Liberty, pre-virus we had what looked to be close to a mild global manufacturing recession in 2H 2019. Germany and Japanese economies are not doing well. Europe looks weak. The watchout is if the virus causes consumer confidence to fall, particularly in the US (as they are driving the global engine at the moment). If the virus leads to a mild recession earnings in 2H 2020 then earnings next year might not look so good. I am not saying this is my base case. But the bond market is no longer flashing yellow they are on full stop red. And up until 2 days ago the stock market was at all time highs. Someone has it wrong (bond market or stock market). Should the virus outbreak get worse (spread to the US) my guess is the Fed will respond with anemergency cut. So even if things get worse stocks may do well :-) I think the risk to the economy are real unfortunately. I hear already salespeople’s postponing travel and China will definitely take a hit and companies operating there as well. Germany is Slow too and has zero growth basically and travel in France is down 30-40%. It would be one thing, if the stock market were down like it was in late 2018, but so far, we have a mini reaction and are up 30%+ from these levels or down just 5% from the peak. On the other hand, some sectors and stocks really have become cheap now. Take your pick. I had some QQQ puts, which I sold of a bit too early this AM. I am going to reload, if the volatility comes down and SPY or QQQ puts are priced reasonable again.

I think we will see an avalanche of earnings warnings this quarter and next resulting from fallout from the corona virus.

AMA.AX announced horrible results today. Out at a 30% loss today after just a couple of days. Ouch, there goes the compounder. fortunately this was a small position, as I wanted to wait to buy more until they release results. This one is in the penalty box.

Added some ODET.PA today. Stock was down almost 8% while BOL.PA is down 6.5%. I have mo idea why both are getting hit thwt hard today. I managed to buy some at the lowest print of the day, below my ask. Wild market.... Also added some odds and ends (VIAC, CCU and a few others.)

Buffet is waiting for a fat pitch. If the stock trades at 80% of fair value and he buy back 10% of the stock, he moved the fair value by 2% - not a big deal really. If the stock goes to 50% of fair value and he can buy back 20% of the outstanding shares now that’s a different story. I think Buffet regarding buying back his own shares the same way than buying anything else ˋ- a 20% undervaluation is just ‘meh’ and doesn’t really interest him. He wants a fat pitch and is willing to wait.

I enjoyed the Motley Fool Podcast with Ben Hunter (Epsilon theory). They discussed a bunch of topics, including the importance for the CEO to generate narrative, stock buybacks as well as a bunch of other things. https://podcasts.apple.com/us/podcast/industry-focus/id717428711?i=1000466372547 I think especially his observation that narratives seem to be more important than fundamentals nowadays is an interesting factoid that has occasional been touched here.

Hmm, another buyout another problem. Price for FOPE SPA seems a bit low at nary a premium. I own a few shares recently acquired at 8.4 Euros. It seems like aninvestor has acquired shares from the controlling family for 9.25 Euro and now wants to tender for shares from minority shareholder for the same price. I wonder if I should hold out for more. knowing this is Italy, I shouldn’t get my hopes too high I guess. This is a nice business I think - high end artisan jewelers sold in their own stores., worth 9x EV/EBIT? Where is Arnault? width=600http://i.imgur.com/nemNQnJ.png]http://i.imgur.com/nemNQnJ.png[/img]

I am just glad these guys weren’t put in charge of writing the Bible. An investors letter with 128 pages! Gheez.

The annual letter is shorter and less imaginative than former ones. No doubt, both Charlie and Warren are slowing down a bit. While the economy is performing well, manufacturing and railroads are not exactly performing that great right now and all things considered, the performance of their operating business is decent, but it’s clear that both Lubrizol and PCP weren’t great buys. Their Insurance business is performing well. Buying back 1% of their shares is better than nothing. Things could be a whole lot worse.

Good catch. This was in 2001 or 19 years ago. It is likely that his thinking has evolved since then.

Schrodingers software helps with drug discovery, but I don’t think it has any impact on the time consuming clinical trials Phase I-3 where the real money is spent. CRISP at this point is ay an early stage and we do not know how effective that approach will be. Any treatment likely is at least 5 years off. It is likely that there will be opportunities where the hype cools off and those type of stocks can be acquired way cheaper, but who knows.

I listened to a podcast a while ago, but forgot the source. The risk is that if you buy into a dumpy Park, the tenants may just leave and leave dumpy trailers behind that may be costly to remove and discard. Tenant selection is always critical when renting, but the further down in quality and creditworthiness you go, the more important it gets. A good friend of ours also rents lower end and section 8 housing in a town nearby at double digit cap rates. he has done this for a long time and tried lots of different things (pool halls etc) and has good results with south East Asian immigrants (Vietnamese, Cambodia) which have sort of a local community there and while they often have no credit, they have cash. He does put a lot of work into this, so it is really a second job for him and after doing this a long time, he is scaling back. I wanted to pick his brain a bit more, but I think a lot of his ‘excess’ returns just come from hard work and somewhat painfully gained experience.

End of the saga - I sold my shares at 128.5 Euro (exactly the tender price) as they started trading again and there was a huge bid out there, presumable from the broker house administering the tender. Whew - problem solved! Now I need to cancel my transfer request with Fidelity (the shares were still in my IB account) Thanks to everyone who helped out here.

Shorting momentum trash is a good way to get over by a dump truck lately.

I can see my personal Fidelity accounts now, but I can't see my 401K. It looks like Fidelity's Netbenefits site is still down. Same here. This happens quite frequently lately.

Tweet of the month (imo): https://twitter.com/capitalobserver/status/1229769517045252096?s=21 ;D

More AMA.AX (car repair rollup in Australia, kab60’s pick). A small add to CCU as well.

I have developed some persistent lower back pain last year and then did some research on YT and settled on dong these exercises every morning for 10-15 minutes as well as some pushups. Worked wonders for me.

I think 1) - applying nonspecific filters - is the way to go for most individual investors to avoid getting into fraudulent investments. Proving fraud is very very Hard and few have the forensic accounting skills and resources to dig deep enough. Enron is a good example where the story looked much better then the numbers. A more recent example was Valeant, where the GAAP results as well as the balance sheet looked horrible, and management provided all kind of mental gymnastics to justify the business model. Perhaps a more recent one is Tesla, it it’s overused, so I won’t elaborate on this. I believe now thwt tech and specifically SAAS companies are probably misrepresenting, although I am not sure their financials are fraud, I think the fraud lies more in the fsct that the GAAP financials may be more representative of the economic reality than the adjusted numbers that management is representing. Case in point may be YEXT, a SAAS company. I have no idea about their product an TAM etc, but I have rarely seen a company that has a gross margin of ~72% and manages to spent an even higher percentage on sales and marketing and losing 50% of their revenue on a GAAP basis. one would think that such a company gains economy of scale on S&M too, but that’s actually not the case, this outfit managed to increase their S&M expenses since the IPO more than revenues actually, indicating negative operating leverage. Perhaps there is a good reason for all this, but I fail to see any explanation why all this expense will lead to an explosion in profitable revenue in the near future. It’s not accounting fraud per say in a sense that the GAAP numbers may well be correct, but if just the GAAP numbers matter in this case, this company would be absolutely worthless and you would have to pay a buyer to take it. YEXT isn’t a sole exception either, but it’s one I have taken a closer look after some folks mention it on Twitter. I hope they know what they are doing, but my sense is that those folks tend to ignore operating results altogether and invest solely based on some momentum or qualitative factors. For me, when the numbers don’t make sense on a first principle basis, I tend to stay away from these stocks as far as possible.