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loganc

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Everything posted by loganc

  1. lognac, I don't think that I've replied to your post. Putting all that aside, I don't know exactly what you mean. My post was in plain English text and I can see it with no problem. I don't know what you mean by formatting that is decipherable. Can you send me a screen grab? Maybe we're having a technical issue. I misread your post. I apologize.
  2. What?? 2000 was not even referenced in the post. The post started with Bush in office. If you don't think the weaker economy in the rust belt had any effect then you need to do more reading. It doesn't take a national issue like 2008. Regional can matter too. Against my better judgement, I am going to try to shift this political discussion to something that is more relevant to investing. Tim, I have seen some of your investing commentary and I respect that you are thoughtful in that regard. I have also seen some of your political commentary and would say that I am generally in disagreement with respect to Trump. To be clear, I am certainly no "Liberal" as it pertains to economic policy. Given that I haven't read everything you have written on all things Trump, I am going to make some assumptions here about your support for his economic agenda generally and as it pertains to trade. If I am wrong about this, I apologize. That being said, I am curious as to why you think the Trump economic policies that we can make reasonable predictions about at this point are going to actually help, rather than hurt, the rust belt areas. Specifically, I think it is pretty clear at this point that there will be some sort of anti-free trade legislation passed in some form. Given the EOs so far, the Trump trade rhetoric during the campaign, and the commentary from Navarro, I believe that is a near certainty that either (1) the corporate tax reform bill will include some sort of border adjustment tax or other measure that will be a de facto tariff on imports or (2) direct tariffs or border taxes (the same thing) will be implemented against China, Mexico, etc. I am in agreement that things like lower tax rates (individual and corporate) and deregulatory measures will be of some help to the rust belt areas. However, it seems to me that there is a very high likelihood that border adjustment taxes or tariffs are going to ultimately be a net negative. I am EXTREMELY skeptical that such anti-free trade measures will ultimately result in any significant increases in jobs for low skilled labor and that the nearly certain rise in consumer prices will be a net negative for these individuals. Further, the second order effects from ad hoc economic policy (e.g. border tax on Mexico to pay for the wall) are very likely in my view to have very negative unintended consequences. So, I am just curious if you have any specific empirical data that would support the notion that a border adjustment tax or some similar measure will yield a significant net positive benefit to low skilled labor in the rust belt.
  3. How exactly do you come to the conclusion that Trump represents fairly accurately what the Republican party wants? First, he is a protectionist, which is just about the most anti-free market position possible. Second, he has proposed fiscal policy (to the extent that one even exists) would result in massive deficits (i.e. cut taxes, increase military spending, 500B+ infrastructure spend, no cuts to entitlement spending, and ??B on the wall and other nonsense. Essentially, his budget plan is like Obama's stimulus plan on steroids. So, you are telling me that these two pretty major talking points of his campaign are in line with Republican thinking? Do you not remember the massive fights that have happened over the last 6 years over the debt ceiling? Does the Republican party all of sudden not care about the national debt? Does the Republican party all of sudden not care about entitlement reform?
  4. If you can't tell the difference between comments about sexually assaulting women and those comments from Clinton, then you have serious problems. Edit: As a matter of fact, the response from the hardcore Trump supporters on these comments simply validates the accuracy of the "deplorables" comment.
  5. With a few words snipped that is a excellent summary of this election. The dangerous, corrupt, bloodthirsty, war hawk politician vs. the dangerous populist xenophobic demagogue that, well, who knows what he will do. I find it fascinating that "war hawk" would be a pejorative for Hillary Clinton from the standpoint of the Trump supporter given that a consistent rhetorical position of Trump is that the military has been underfunded (good luck proving that based on military budget allocation through the Obama administration from actual data). Further, a major talking point of Trump is something like knocking the hell out of ISIS (whatever that means - he apparently knows more about ISIS than the Generals) and encouraging increasingly brutal "enhanced interrogation." How is increasing military spending, increasing military actions against ISIS, and encouraging more intense "enhanced interrogation" (plus, encouraging war crimes by "kill[ing] their families") not the actions of a bona fide war hawk?
  6. Interesting talk. I agree with the general philosophy espoused - "capacity to suffer" and reinvesting capital for long term growth in spite of current earnings. However, can anyone provide the long term investment track record of Russo? Edit: (paraphrasing) The top 100 people in Illinois that work for Kraft speak 0.9 languages, per Russo. Good luck with discounting 3G.
  7. So, why aren't you a shareholder of CSU? Too expensive right now? Thank you, Gio Gio, I have not made an investment because I have not done significant work on this company. I think Leonard's track record is incredible and what I gain from listening to the Constellation calls justifies my statement. However, I will not make an investment on that basis alone. I try to take the "punch card" notion pretty seriously in my investment process.
  8. +1. Not a shareholder of CSU (unfortunately), but Leonard is incredible. QSR/BKW performance blows my mind. I'll go ahead and make the obvious, while controversial, nomination: VRX - Pearson. Flame away.
  9. If I could get a PM as well, it would be much appreciated. Thanks in advance.
  10. I can't say anything about the exact US federal cash taxes that BKW has paid, but BKW doesn't have "earnings" anywhere close to $12 billion. I suspect there was some kind of a typo here or misunderstanding.
  11. I kind of derailed this thread by talking specifically about BKW/QSR, but I wanted to address the above comment by Liberty because I think it is important. So, Buffett has been asked the direct question comparing 3G to "private equity" (from Becky Quick) and his response was along the lines of what Liberty says - (paraphrasing) "the difference between 3G and private equity is that 3G holds for keeps and private equity has a short term horizon and is looking to flip the asset." What Buffett said (and what many have said in this thread about the short term thinking of private equity) is absolutely true. However, I don't think the culprit is really the private equity general partners. In other words, I think the true criticism should be geared towards the short term thinking of the limited partner investors in the private equity funds that force exits from investments on a specific time frame. The perceived "flipping of companies" could very likely be explained by the selling of assets to return capital to the limited partners on the specific time frame that is demanded from the limited partners. Ultimately, I think it is a gross oversimplification to place all of the blame of "short termism" on the private equity investors, when the private equity industry in general does not have access to permanent capital and must therefore return capital on a strict time frame. I think this particular dynamic is worth thinking about.
  12. No idea why he passed on it in 2010. I guess it would have been a pretty small investment for BRK at that time, so maybe that has something to do with it. I recall him mentioning passing on the initial deal during an interview on CNBC which happened around the time of the THI deal. No idea whether BRK ends up with significantly more of QSR or not. It certainly doesn't seem outside the realm of possibility. I would say that Buffett has been blown away by the progress at HNZ and I am sure he is really excited about the KRFT deal.
  13. To be fair, I think 3G has done a pretty good job of nursing back the value the BK franchise and growing the business without the help from BRK. Buffett actually passed on investing in the deal in 2010. That was obviously a mistake as the returns from that transaction have been quite substantial.
  14. The preferred improved the capital structure of BK by decreasing the debt ratio to a respectable 5 through the preferred versus 7 with the straight debt before the deal. The $3B of debt bearing interest rates of 9.75% to 11% sounds like an anchor to me, no? Was all of the debt 3G's doing? Not. I would have to go back and look specifically, but 3G purchased BK at a 4B EV with 2.8B of debt financing in 2010. It would appear at that point in time BK had about 800MM of debt. So, obviously, 3G did load BK with debt at that point. I can't say whether the 800MM was refinanced in 2010, but it seems likely that it would have been due to change of control provisions. The 2.8B of debt that 3G used to purchase BKW had quite an onerous weighted average interest rate and they could not refinance earlier due to some costly make whole provisions. That were at the point where they could have refinance the debt at a reasonable cost just prior to doing the THI deal. It was actually expected and somewhat telegraphed to BKW shareholders from management that they were planning to do a dividend recap. However, it appears that they found the THI transaction to be much more attractive. I am pretty familiar with BKW as I have been a shareholder for the past 1.5 years.
  15. I am not sure what your point is on BK. I understand the general idea that PE firms can load a company with a bunch of debt, cut costs to the bone, and impair a business. My point is that 3G bought BK with a lot of debt and they have subsequently made vast improvements in the business operation. Then you said something about BRK coming in and removing a "debt anchor" from Burger King and nursing the franchise. It seems to me that BRK provided financing via a preferred (i.e. additional leverage) to the THI deal.
  16. I am am quite sure 3G bought Burger King in a pretty leveraged transaction and then the business de-levered over time as the business performance improved via cost cutting, re-franchising, and the master franchise joint venture growth model. The BKW-THI is also pretty leveraged via the BRK preferred. Also, in terms of the VRX thread thing. I am pretty sure Liberty never made the comparison and that I was the one that made the comment. In my mind, there is very little difference between the VRX model and the 3G model. For what it is worth, I would imagine that the two largest shareholders of VRX would probably make similar comments.
  17. What do you see 2017 FCF being for the combined entity, assuming synergies and refinancing? It appears that you have done enough to estimate this number and I am curious to compare with my rough estimate. Thanks.
  18. Wouldn't the "little guy" be able to mimic his strategy perfectly by buying BRK stock?
  19. +1. I don't think this mode of thinking is limited to investors that started in the 08/09 vintage. To me, it seems like the consensus opinion is that 08/09 is going to be a regular occurrence. It is axiomatic that the next recession is closer today than it was a few years ago, but I am just not sure that it makes much sense as an investor to be positioned like the next financial crisis is happening tomorrow. I think the most prudent action is to own shares in companies that can take advantage of whatever the future brings. Given the namesake of the site, the obvious example is BRK - BRK stock will go down during a calamitous event, but there is ample liquidity to be deployed in such an environment that should ultimately result in a more valuable franchise. Is the mark to market loss on BRK stock really that horrific?
  20. I read "Once in Golconda" and it was very good - Gayner mentioned it an interview. Brooks is a fantastic writer and I will be reading Business Adventures in the near future. I can understand being skeptical around the Buffett/Gates hype, but I am pretty sold on Brooks.
  21. Do you stream content over a DSL connection? My experience with it has been absolutely terrible. My parents live in a rural area and have DSL - it is almost like not even having internet. Verizon Fios wasn't economic, so assuming they are going to expand over a huge footprint including rural areas is dubious. Also, where are you getting your numbers with respect to the profitability of Google Fiber. I don't believe Google has ever provided hard data on the economics of this project.
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