Spekulatius

yes, we should stop the ME discussion here (deleted my post). there are a few good "Osint" accounts - this is another one I follow: https://twitter.com/UKikaski

I added a bit TIPS (fund) in 401k yesterday. Also added some $LUV.

That's a great sign that the Ruzzians call it a grave mistake - shows that it hurts. People want a bit more range these days:

Only Murders in the Building S3 (Hulu) is fantastic (the seasons before were also good): https://www.imdb.com/title/tt11691774/

Totally non-investment related but it is fascinating how long some ancient borders last. Below is picture of the Polish election map outcome:

@Pelagic Looks like put the ATACMS to good use. Manufacturing date 10/1996 so 26 year old. I guess we are putting our old stock to good use. The only thing missing is "Leroy was here" face. Love to see it.

if you want to have some fun look up "avdiivka russian offensive" or similar keywords. Russians get royally wrecked there. I I think they also lost a bunch of K-52 helicopters in an near frontline airport( (Berdiansk). I think the Ukrainians are grinding away with the Russian army, but progress has been slow. Perhaps winter brings some good news, once the ground is frozen. Edit - here are some pics of the Himars attack on Berdiansk. love to see it:

The moat is not a direct input in a DCF model but an indirect one via the length of growth or perhaps in the margins (if you model goes into this detail) or perhaps the discount rate. If for example you subjectively assume that the probability that the moat is going to be narrower/less deep in the future, you can handicap this with a higher discount rate. Anyways, the value of a DCF (or reverse DCF) is not the number that you are getting, but the range of outcomes you can obtain based on the variance of your input parameters (like rate of growth, duration of growth).

this works not just for defense stocks, I recon.

Well, it's quite simple - these drugs are not approved for weight loss. ADHD drugs have obvious side effects that make them unsuitable unless you have severe ADHD as well. So yes, Ozempic/ Semaglutide is different.

I think it is also lazy to think that something can't happen because it hasn't happened before, especially if there is strong evidence to the contrary. For example you read comments like "people should eat less instead of taking X drug" Funny though that GPT-1 just does that - they make people to eat less and in addition control diabetes. We can argue that some takes are overplayed but I think the ripple effects from this are quite real. now the question is how large this can be, but I think there is a strong possibility that the number of people who take this class of drugs is higher than single digits, especially of these drugs get cheaper after they come off patent in about 2032 ( at earliest) that assume that no LT side effects are found that make it unsuitable for LT weight loss use.

Arn't housing starts around 1.4M annually. Thats actually pretty healthy. The problem was low building rate past the GFC for many years. Also, it is pretty clear that low interest rates don’t make housing more affordable - if anything, the opposite is the case in the long run. So, I think higher interest rates over time will increase the cap rate for homes, apartments, which inevitable makes housing cheaper. It just takes a long time, much longer than 12month which is the current duration of the rate rising cycle.

As we all know, productivity growth and lower fuel cost never get competed away, the great business they are. Also, $80M in savings for a $50B revenue business is a real game changer.

This has been the case for two decades since the shale got started in the Barnett. The productivity growth in terms of drilling have been enormous while some people just think you can look at the rig count to determine drilling activity.

We eat less means we shit less means we need less bathrooms and toilets. This means less housing, (smaller houses) less lumber etc. Also services like plumbing (less clogged toilets), lower water consumption (less flushing), so utilities also will have problems. Longer term, less obesity will mean higher life expectancy which will destroy social security. All drugs but GPT-1 (which cure everything) will be mostly useless , so health care and the rest of the drug sector will shrink considerably. Thats 20% of our economy right there. Basically GPT-1 sets off a deflationary spiral that could destroy the entire economy, as we know it.

I think the US and the western world needs to build some surge capacity to increase the military industrial complex (ha) output when needed. I think one thing we learned is that conflicts could be more protracted then assumed resulting in much higher consumption rates of material and consumables. Right now, the defense contractors are not capable of providing capacity, beyond what is planned in the budgets and even that isn’t a sure thing with all the political shutdowns. So, there is no surge capacity whatsoever. COVID-19 has clearly showed this with secondary impacts on external supply chains, even though the defense contractors and their suppliers were never shut down (deemed essential work). Yet, the whole supply chain snarled and there wasn’t even a war going on (until 2022 that is). Talent also is leaving due to retirements and difficulty replacing the jobs because the younger people are not exactly keen on getting this sector for good reasons, imo (economic mostly ). It is not the 60‘s any more and what you read in the book about Lockheed/ skunkwork book. Some political decisions will need to be made for the longer term.

Note how all the Arabian countries of significance (Egypt, Saudi Arabia, Gulf states) have been quiet about this. Ok, Iran makes some noise, but they have no common border with Israel. Some skirmishes with Hisbollah won’t make much of a difference. Anything can happen in this region, but my bet is that there will be no escalation. Invasion of the Israel in Gaza is a given, because the IDF is collected there and ready to go - it is now or never. My guess is that crude prices go up somewhat perhaps when the ground invasion starts because of the traders and then fade. The whole thing is not exactly bullish for the world economy either, which puts pressure on energy prices in the medium and long term. The whole thing could change if Iran gets more involved and then gets sanctioned on oil sales. That would causes spike in crude prices similar to what we have seen in the Ukraine war in 2022. It may not last either though. Anyways the key is to watch Iran, what they do and what they don’t do.

Inflation is almost always volatile. It hits different parts/ goods at different times and to different degrees. It’s makes it hard to plan ahead and for this reasoning is detrimental to business.

I think the CPI shelter index with lag represent what the majority of the people who own houses or rent actually see. Market to Market rents matter if you happen to change apartments. The CPI is designed (or tries to) to measure what the population actually sees in reality, so I would argue it matters. Sure the market to market rents arena leading indicator, that’s true, but why shouldn’t care? Or should the Fed in the future bump up rates immediately when market to market rents rise?

Investorvillage - what a blast from the past. I used to be there too, it this board became an echo chamber during COVID. Totally useless for investing. It‘s just grumpy guys ranting at this point.

Looks like inflation comes in a bit hot: https://www.cnbc.com/2023/10/12/cpi-september-2023.html

@John Hjorth Open ended credit funds without carry are essentials. CEF‘s. They won’t end badly for BX or KKR, but they will end up badly for their clients (meaning they will trade a discount to NAV), if they trade at all in some secondary markets.

I Wasn't aware of the insider buying cluster until you mentioned it. I agree it makes ZBH more interesting. I don't really have a clever question other than how ZBH product (hip/ knee replacement) compare to SYK (the big kahuna) in terms of pricing and function. I just noticed that ZBH gross and EBITDA margin is higher than SYK. I thought its the other way around, but it may be a result of a different product mix. SYK also spends more on R&D as a percentage of revenue and of course in absolute terms. I just wonder if we buy a cigar but like market share donor (to SYK here). Then I guess his view on how the GPT-1 weight loss craze may impact the hip/knee replacement business would be interesting. Thanks for doing the expert call.

Since med tech was mentioned the kidney dialysis plays $DVA and $FMS are down ~18% (on Ozempic news), $BAX ~9% and ZBH $5.6%. I am more interested in $BAX and $ZBH then the former $ZBH is close to a 52week low and has produced decent (but not great numbers). BAX is heavily leveraged at around ~5x EBITDA, but at least they cash flows have been improving. BAX has a business supplying kidney dialysis consumable which was supposed to get spun off. I am not sure this is an option now, but we will see. $BAX dialysis business is less vulnerable to GPT-1 disruption than $DVA and $FMS because it is mostly foreign (imo). GPT-1 seems like wrecking ball for the med tech sector. If you regard this as a zero sum game than the gains of LLY and NVO are coming from the med tech co's that have business connected to diabetic and overweight people. For example, ZBH business (hip and knee surgeries) has a disproportional exposure to this group because overweight people tend to have bad hips and knees. On the other hand, nothing will change quickly here.

Skunk works is good but if you prefer the audio format (which I do nowadays) then the Acquired Podcast episode is very very good. I personally also will go through older annual reports for some business, I posted the Lockheed Corp annual report from 1958 and they are just such a wonderful read. I whish they would write annual reports like this nowadays.