Spekulatius

I recommend this one if you like crepes (The Billig): https://goo.gl/maps/TTAcH1vQF9tyHKNV8 We also enjoyed the Montmorency falls.

Hard work= more chances to be lucky Skill= Improving the odds to get lucky. Most people who get lucky do both of the above, but as always, exception confirm the rule.

If I had to condense what's happening with respect to interest rates I would say that the world is long central bank confidence and short common sense. I have no idea what is going to happen and how it ends, but I think it could be a trip to financial market hell like in 2008 and possibly worse. Going long real assets like real estate, gold, land etc. seems to be one way to escape. Even buying bitcoin seems to me a better bet than buying a 100 year bond yielding nothing. At least with bitcoin, you have a chance to make money (vs fiat currency ), while with a 10” year bond, you are almost guaranteed to be a loser.

Bought a little GRIF (piggybacking on BG2008) and added to REZI.

Is there any plan to use more debt with the company? It looks cheap on an EV basis, but if they don't use any more debt, I don't see how that changes. Yes, it trades at around 7x trailing EBITDA. I like that they essentially use zero debt at this point. One thing to consider is that interest rates in Mexico are fairly high right now (be careful with MXN on margin , I paid more than 8% on a little of margin debt at Interactive brokers). Megacable is a pure play broadband bet for me. I think the economics are close to what they are in the US and much better than Europe, and the penetration is still low, so there should be a good LT growth potential.

This is an example of a badly produced podcast. The talk is monotonous (single person, no dialogue) and the podcast is way too long. Not recommended, unless one is a Singleton junkie. I put it away for good after 20 minutes.

Adding to MEGACPO.MX (Megacable)

^ Negative loans still have amortization as main cash expense for the borrower, so default is possible.

I am waiting for the day when a couple of negative interest rate loans default. If indeed momentum and hope for capital gains (betting on negative interest rates becoming more negative) is the driving force, then everyone knows it’s a fools game and jut hopes they can sell before the rest does and once momentum turns, things could get rather strange when everyone runs for the exit.

Same here.

I believe the increased valuation in some stocks is due to the rush into compounders. I believe after one of the longest economic expansion in modern history, a lot of companies look like compounders, but are more cyclical than they seem. We will see after the next recession. Since many of them are roll ups (albeit well run roll ups), there is also reflexivity at work, such that a high valuation enables faster growth through acquisitions, due to lower cost of capital. Example are Heiko, ROP, DHR, TDG, ROK. They are well managed companies well worth keeping an eye on, but the valuation is a couple of bridges too far, since investors now discount many years of current growth rates into their stock prices. I'd agree with that. As an example, ROP has spent $11 bn on acquisitions in the last ~9 years to grow FCF from $471 mm in 2010 to $1.3 bn today. Meanwhile, EV/rev has more than doubled (~8.5 now from ~3.5x in 2010) and EV/FCF has nearly doubled (upper teens in 2010 to low 30s today). ROP acquisition targets aren’t cheap - the last one was done at around 17x EBITDA, so that keeps ROIC down. However, their return on tangible capital is very high due to the asset light business model. They can pay the high prices, because their cost of capital is very low, due to their high valuation and because debt is very cheap. Nevertheless, the comparison with Valeant doesn't hold water - ROP leverage isn’t high and they don’t buy cigar butts (at least they haven’t so far) to milk cash. my concern is simply with the valuation and the suspicion that some of their business lines may be more cyclical than thought. The one company they I am a bit suspect of is AVGO, especially after their pivot into acquiring software companies (and low quality one at that - CA Technologies).

I believe the increased valuation in some stocks is due to the rush into compounders. I believe after one of the longest economic expansion in modern history, a lot of companies look like compounders, but are more cyclical than they seem. We will see after the next recession. Since many of them are roll ups (albeit well run roll ups), there is also reflexivity at work, such that a high valuation enables faster growth through acquisitions, due to lower cost of capital. Example are Heiko, ROP, DHR, TDG, ROK. They are well managed companies well worth keeping an eye on, but the valuation is a couple of bridges too far, since investors now discount many years of current growth rates into their stock prices.

They just need to get hold of his blackmail material ( tapes?). I agree it could be interesting. Also, do all scumbags bank with Deutsche Bank?

Much if the US power grid is 2nd world standard at best. Wooden poles leaning over until they fall down, transformers that look they are from the 60’s and high voltage lines strung and cobbled together are the norm. I list power last winter in an apartment I rented for a week. However on the plus side, electricity is fairly cheap compared to Europe when you get it. Most larger industrial facilities have multiple power connections for redundancy.

The freakonomics episode about abortion and crime, where they revisited the thesis formed in 2001 with updated data is outstanding, imo. Freakonomics is one of the best podcast series I am aware of: http://freakonomics.com/podcast/abortion/

In Germany: IKB (Industriekreditbank) and Hypo Real Estate AG were nationalized. https://en.m.wikipedia.org/wiki/Hypo_Real_Estate Yes, that IKB was very strange. The IKB was designed to be a lender to smaller to mid size industrials, but starting in 2005 or so, it couldn’t make a spread any more and started this special investment vehicle in the US, for which it had no mandate to do so and it want disclosed either, as far as I know. I was invested in IKB a long time ago (it was a very sold stock and dividend payer), bit not at the time of the collapse. Same with Depfa, which became part of the Hypo Real empire which later collapsed. It is quite likely in my opinion that European banks looking for ways to generate yield in thenUS bond market right now.

In Germany: IKB (Industriekreditbank) and Hypo Real Estate AG were nationalized. https://en.m.wikipedia.org/wiki/Hypo_Real_Estate

I am not an expert of gaming, but it seem to me that the industry has a lot of tailwinds. The move to digital distribution and having the game essentially in the cloud saves costs, makes them more platform independent and probably over the long haul cheaper to develop. It also increases the game longevity by keeping users engaged with small updates etc. The ubiquity of smartphones allows for more gaming time. EA for example looks like a decent value. They have the FIFA franchise, which has been a money maker forever and probably will continue to be. I am also curious how GOOG stadia platform works out. This could become a nice subscription based business and also be beneficial to game producers.

PACB - betting on a merger conclusion.

I’m also surprised farmland has held up so well. Prices are still above $10,000 per acre in a lot of areas. At $10,000 per acre, even the most productive farmland is yielding less than a short-term government bond. I dealt with this problem a few years ago. We had farmland that had been in the family for over 150 years. It was immaterial in relation to overall resources and generated little cash (in relation to capital value), but my family had a strong emotional attachment to it. It was indeed tough to get past these non-economic factors during the sale. So it looks like at some point AGM is going to be in deep trouble. AGM is farming equivalent of FNM/FRE.

Yes, it seems kind of crazy in Germany to not do some infrastructure investments (housing, rail etc), because in a lot of cities, the supply hasn’t kept up with demand. Fast rising housing is not popular in Germany because the percentage of homeowners is much lower than in US. Germany had a budget surplus, record low interest rates and demand that can’t be met. I instead of bitching over the negative effect of the immigration , there should be much more focus on making use of it and do what needs to be done. Seem like a no brained to build housing for a million people in cities with job growth, rail infrastructure to meet increased demand and get some of new inhabitants to work at He same time, instead of playing financial stimulus that doesn’t seem to do much. But then again, I am not an economist.

The rising rents in Germany were at least partly caused by immigration. All of a sudden, Germany has 1 Million more people they need housing adding in a short period of time. With full employment and starting with a shortage in larger cities to begin with, and little new construction, it’s easy to see why demand outruns supply. The stop gap measure of rent control certainly will not solve the problem, but make it worse. Adding to the supply is what is needed.

It s easy to bash the European bankers and the ECB, but what will happen to US banks and US insurance companies when interest rates go the way they did Europe? US bank8ng has structurally less competition so it might be a bit better, but overall, I would expect NIM to compress to near European levels, which probably means ROE<10% and compressing P/tangible book <1. The US still has a profitable credit card busInes and other niches that don’t exist in Europe, but banks have non-bank competitors in those. Insurers like BHF or LNC with long tail business or even FFH and BRK will be affected as well. Then we have issues with pension fund’s (Hello IBM, GE and many others). The winners are probably utilities (unless their guaranteed returns gets revised down, as happened in Switzerland ), real estate, infrastructure and probably solid growth business with or without capital needs that will command higher multiples.

http://www.kkr.com/sites/default/files/KKR_White_Paper_53_1906.pdf Covers pretty much everything :)

Yeah, the market in 2007 was even cheaper... Of course interest rates were higher back then as well as other issues.