Spekulatius

Google Bard has become much better than ChatGPT when you stick to the free version.

What Einhorn is saying that starting in 2019 he realized that GM trading at a PE of 5 doesn’t matter, since they were not paying a large dividend or buying back a lot of stock back then. So shareholder yield (buyback and dividends ) was quite low, despite the low PE. He is now preferably looking at stocks with a high shareholders yield.

The Chinese economy just need some stimulus - like strippers buying the empty homes on credit. This isn’t exactly a hard problem to solve.

lol:

One thing I have learned is that it’s hard to make money on a stock when management works against you as the owner. It’s hard enough to make money when management is on your side, but if they are decidedly not, I think it’s time to move on, unless there is a path to get rid of them. This applies even more so to nano or small caps than to larger business.

You can only forecast things you can control. An oil company can’t control prices, they will make a forecast around and assumed price band and forecast production typically, but they can’t forecast earnings. Almost any company will start their operating year with a forecast for internal budgeting purposes. That will include Capex , investment and staffing plans.

@schin The Sparkassen and Raiffeisen banks resemble credit unions in the US and were designed as member serving and state/city serving institutions , so they are zombies by design. They, as well as banks in general also have been hurt by ZIRP, which means that things should actually get better for them.

Here it is. 2* rated. I have seen worse. The gist is he states that that FFH is a mediocre underwriter and investor. No credit for recent improvements in profitability and hard market don’t last forever. Worth about book. Equity Report FFH 1-2024 MS.pdf

Anyone likes $GTLS (Chart Industries). I have never followed the name, but had some time to kill and managed to listening on a Sumzero pitch on Zoom last week and found the setup compelling enough to buy a small starter position right away. The stock got wrecked due to the high debt load from the pending Howden acquisition, but the presenter made a good case that the acquisition is transformative for GTLS and makes the business more predicable. GTLS share price has been super volatile in the past. What I Iike about them is that they are in various of the gas handing value chain (pumps, heat exchangers, LNG handling), are kind of s Swiss Army knife offering if we get more into hydrogen, LNG projects etc. I was looking for plays into this that are not overpriced and had my eyes set on APD, but did not like recent comment s from management there. GTLS is way riskier, but if they execute well and things go their way, the earnings potential should be much larger too. Of course, so is the downside.

Mobius starts to like China:

@schin Which zombie companies in Europe are you talking about? Care to mention specific examples?

If passive is truly becoming more and more dominant and value agnostic, than the opportunities for value investors should only increase as there is less and less competition. So the problem with passive taking over the investing business is somewhat self limiting. If truly nobody cares about valuation any more, the few that do should be able to find extraordinary opportunities. I don’t think it will be as easy as buying all low PE or low P/B stocks, you can simply automate that process and it is ridiculous to assume it’s going to be that easy.

I think the holes are going to be plugged by bond holders of these companies, banks and insurance (Ping An etc) cos who are going to be forced to buy assets. China has the so called “National Team” to do this. Tech is only indirectly affected via economic malaise and deflation. Think what happened during the GFC and housing bubble - same issue although the players are different. In both cases, the goal was to save the existing financial system. I believe China will drag the solution out over many years unlike the GFC. Tech will be the first one to bounce back, just like what happened to the GFC in the US and rest if the world. All they really need to do is ease up on tech regulation but that’s a different issue than the Evergrande Chinese housing bubble.

If you buy a gun it better works when you need it . Malfunctions with a gun are at best very inconvenient and worst case can cost your dear life, it’s not like a toaster. Seems like a no brainer to spent a bit more for something you trust will work as intended, but what do I know.

If you like NG or LNG, then you may want to look at $GTLS. Today was a presentation on SumZero about Chart Industries that looked compelling enough to buy a few shares almost immediately. lots of things to like! But also some risk (see the news from Biden to pot. postpone new LNG export facilities). https://x.com/BDubes82/status/1755312527389729213?s=20

SDF - Kali & Salz is a totally different business (salt mines). They are a high cost producer in this commodity space (Belarus and the Canadian potash mines are low cost producers) so I don’t think it’s an attractive business. KWS is family controlled and it’s the 4th largest seed producer in the world and the only publicly traded pure play. It’s a unique business with lots of IP and deep barriers to entry. KWS plows 18-19% of their revenues into R&D . The third largest seed producer is the French Vilmorin and they went private a year or so ago.

Also bought just a bit of PARA so I stay interested in the soap opera. Added a few shares of PM premarket (earnings looked alright to me). I bought a starter in KWS.DE (seed company) as well on a weak earnings report. They did keep the annual forecast but we will see.

Apple has another winner with “Masters of the air”. Top notch show throughout (cast, production, special effects, storyline).

Watched it for ~45min and had to stop. Simply depressing.

The more I read his CC transcript answers, the less I like Ghasemi , the APD CEO. Her is for example how he defends the cost inflation with their Louisiana project. his answer is basically, we make double digit return and a double digit return on $7B is better than a double digit return on $4.5B Capex. Granted some of the cost increase is just increase in scope, but still, the logic alone gives me shivers. There are other things in the latest conference call that give me second thoughts like the back loaded guidance which assume an extremely sting 2nd half after guiding down Q2 below the prior year. Ai think chances are high they don’t make their earnings target this year. (I sold my few shares pre market today, putting APD back in my watchlist.)

I also bought a few shares at the same price towards the close. I have to say I did not like management answers in the CC at all. His answer regarding the smallish dividend raise was downright strange and somewhat concerning. Really, the dividend is dependent on the share price based on a target yield? I have not heard that one before, except with some badly managed MLP’s. Anyways, may not matter long term and it’s a business I understand well. I think a couple years from now, this will be larger and more profitable, but near term, things could be a bit choppy.

Should have monetized my “unique insight” better. Thought about buying some short dated puts but those things work maybe 1/3 or 1/4 times for me, so left it alone. I very much like the industrial gas business. It’s like having a small royalty on industrial growth Each semiconductor fab build in the US will consume technical gases as long as they operate. This is a structurally advantaged business because once a supply is locked in, the customers rarely switch and the suppliers are highly concentrated. (Air Liquide, Lind, APD, Nippon Sanso (Matheson in the US) ). Those business will grow for decades and likely more than the GDP.

He always seems to be selling something. Not sure about Tiny either, saw it peddled on Twitter and in a podcasts. Anything that is peddled on Twitter (or X now ) should be approached with extreme caution.

The GFC may have a bit to do with BRO stagnation in that timeframe. When you look at earnings and revenues for BRO from 2006-2011, they were essentially flat for BRO and only started to rise again in 2012. Rising share prices are simply fueled by rising revenues and earnings and both simply were not there from 2006-2011. Any 100 bagger will likely go through periods of underperformance that last for years.

@cknucks regarding APD - did you see the very marginal dividend increase? It’s only a bit more than 1% and traditionally, APD raised their dividend by 10% annually. The current raise is much smaller. I may be reading tea- leaves here, but I think there is a decent chance that their outlook disappoints or that there is an issue with their ongoing investments.