Spekulatius

Sold NUVR ( concerns over negative comps next quarter ) and GRIF ( quick trade, bought at ~$34 a couple of days ago ). This is my second round trip with GRIF. Edit: Also sold MSG (fear the Sphere)

I believe that WeWork may well work out to the Enron or Lehman of the next downturn. If that’s the case, it won’t just be WeWork either, there will be a host of similar cases. I also think that SoftBank will be pulled into this, they own crap like WeWork, UBER and seem to have wildly overpaid for ARM semi as well and who knows what else. Mr. Son has been there before, he lost the vast majority of his wealth during the first dot.com bubble but a few smart investment (Alibaba) bailed him out. Luck or skill , this remains to be determined . I don’t think his Vision Fund co- investors have the stomach for 85% drawdowns.

Sold NUVR ( concerns over negative comps next quarter ) and GRIF ( quick trade, bought at ~$34 a couple of days ago ). This is my second round trip with GRIF.

I believe the B- mall comparison if WMB vs AM is a very good one. No doubt money can be made from these junk yield plays, I just decided for myself to never go there again, because the baseline success rate is not good and errors will be severely punished. I don’t have numbers on WMB contract adjustments , it was a bit of a give and take as CHK extended the gathering contract length and the guaranteed area for G&P services in exchange for lower fees, if I remember correctly.

BNTGY, RYCEY, MOG-A, trimmed some FOX and CMCSA

I believe that AM’s contracts with AR ( which fee indeed very favorable to AM) will be revised, even without an AR bankruptcy. Same happened with the gathering assets WMB acquired from CHK a while ago.

Odd lots / Bloomberg has a great episode with John Hempton about banks (mostly) https://www.bloomberg.com/news/audio/2019-08-16/john-hempton-on-what-s-ailing-bank-stocks-podcast

I am avoiding gathering midstream companies like a plague. My largest position is WMB, which I recently build up. They have gathering exposure too, but it’s only~30% if EBITDA. I bought it for the Transco assets mainly, one of the best perhaps the best regulated pipeline assets in N.A.

I don’t think he raises Yen denominated debt because he has a deal in mind for a Japanese business. I think it is just one way for him to raise very cheap debt. He could even hedge out the currency risk, if he wanted to, but he doesn’t care about Market to market fluctuations, so he probably won’t. I don’t think the Yen is currently very undervalued relative to the USD either. Companies like PG have some business in Japan somit makes sense for them to raise some Yen denominated debt as a Natural currency hedge, somit speak. I don’t think this is the case with BRK though.

Belated answer - the $4.3B in net debt with a $12.5B equity base is still higher than many other insurance cos that are typically 20-25% levered. Most other insurance cos don’t have the equity exposure that FFH has though FF India, Africa and various other holdings. It clearly is a more levered insurer than many others. FWIW, I sold my FF holding when it went to $480+ and essentially put the proceeds into BRKB, which consider a better bet. I would consider buying back FFH below $430, but that would probably be for a trade.

The problem is now that so much hybrid capital (catastrophe bonds etc.) is on standby to take advantage of any hard market, should it occur. Unless we have an unfavorable credit market at the same time than a hard insurance market, I don’t see hard markets lasting.

Sold me last batch of FB shares ( yesterday )

Are you buying puts with the VIX around 16? No, I have not yet done any put buying. I’d like to see premiums coming down more and look for a VIX around 13. I haven’t made a decision if I follow through at all this time, I have been trimming positions , especially in anything that is cyclical.

Interesting read . It looks like Applied Underwriters was competing for business with Berkshire subs. BRK generally doesn’t integrate their subs and this one had minority interest outstanding, so even if they wanted to, they couldn’t without buying out minority interests. That’s one of the limitations with Berkshire’s modus operandi and a sale is the better option at this point. Also on a side note, workers comp claim stats tend to get far worse when the labor market goes cold in a recession,

The semi downturn may last a while. on the business, I agree, it looks like quite high margin. And. decent ROE. I put this on my watchlist.

Why is the stock down 15% today?

Referring to your earlier post, have you ever seen a recession that was priced in? I agree that top down doesn’t work. Analysis of individual companies prospects is where the money is made, but at the same time, the prospects are dependent on the macro environment to some extend. Or one can take the Howard Mark point of view and just try to assess broadly where we are in the macro cycle and go from here. Most would agree that we are more likely late in the cycle rather than early. My own thinking is that there are a lot of political risk too, our current administration, as well as the election in 2020 represent a risk of a substantial paradigm shift with unclear, but most likely adverse impact on the market. Then we have Iran, Brexit and a host of other things like trade wars and crummy start ups to worry about. It isn’t clear to me they any of this is priced in the market they is just 3% of its high and at a historical high valuation. Average valuation is a skewed number as there are certainly quite a few of stocks with low valuations around. but then again, if the broad indices are selling off, it seems to me that this means that at least for mid and large caps, pretty much everything will sell of, perhaps simply because Indic selling is indiscriminate. So my point is that this is a time to be more opportunistic than bullish and simply wait until Mr Market gets one of its fits again and presents great opportunities like in late 2018. I am inclined to believe, that those opportunities I’ll very likely represent themselves, perhaps in the near term future.

RV’s are supposedly a good measure because strong RV sales indicate a lot of consumer confidence (since it is large outlay for those who tend to buy them and it’s totally discretionary ) as well as easy to obtain credit (most are bought on credit). I think boats are similar and their sales also have weakened recently.

Well, there is worldreginfo, which I have found useful in some cases: https://www.worldreginfo.com/

You know what Venezuelans said about Chávez early on: “ He runs the country like his hacienda”. The problem with the tariffs and the game of chicken that is played are the knock on effects on confidence. Now China is slowing down, Europe is slowing down and now the US is slowing down as well. How much of this is trade war and how much is just the long economic upturn petering out is hard to know. I don’t think that interest rates and rate cuts at this point are going to make much of a difference, rates are already too low to matter, imo.

Considering what happens on the other side of this is one of the scariest parts of the rate conundrum. WSJ articles will start referencing convexity a lot more frequently. Yeah, it’s a one way street. Once we are in that zero or negative interest rate hole, we can’t get out of it, without bankrupting virtually the entire financial system.

Sounds like negative interest rate is a surefire way to destroy the banking system. I guess we will find out if US Banks follow the zombie apocalypse if their Japanese and European peers. The US banking system has less competition, so It won’t be quite as bad , but I could see a world of permanent sub 10% ROE and valuations below tangible book.

The guy's an ass clown. China never confirmed that negotiation for a new trade deal have restarted after Trump tweeted that “China wants to do a trade deal badly”. I guess Trump probably just wanted the markets to stop tanking after he had been overzealous bashing China and ordering companies to stop doing business in China. https://www.cbsnews.com/news/trump-china-trade-latest-trump-says-china-called-u-s-trade-team-twice-and-wants-to-make-a-deal-as-companies-are-leaving/

I wish puts were cheaper, but with a VIX if 19, puts are a no- go for me, so I raise some cash instead. I do share the aforementioned concerns.

I believe they most Chinese believe that their government has done a good job. For once, the for average workers have increased tremendously, it’s not just the super rich, average Joe have seen double digit increases in buying power. They have slowed down, but they still far exceed what US or European worker bees get. https://images.app.goo.gl/k4Ej4ZLE4U83uECt7 I think it gives them goodwill to fight for a while.