frommi

I see my whole nicotine/tobacco basket as an incredibly capital light business, in fact they return 80% of the money earned as dividends/buybacks. I studied returns in inflationary periods and these were the best performing stocks in these times. Maybe this time is different i dont know. Holding them since some time now, so maybe i am just wrong, or the market simply still hasnt come to the same conclusion as i did. Brokers like IBKR or OTCM (should have held onto this one) are also capital light. FAST, SPGI, MCO are also in this bucket, but not cheap at the moment.

36% Tobacco: 9.6% BTI 8.5% PM 6.8% MO 6.8% IMB 4.4% Karelia Tobacco 26.4% FFH 14% Net-nets: 4% GIGM, 2.5% MSN, Rest are smaller positions. 6% REIT's: 3.2% EPRT 1.5% AMT 1.5% SRC 5.6% CMCSA 4% PKX (Posco) 3.6% SPY & DAX long term put options Putting the list together was interesting, thought my FFH position is bigger. Looks like i can buy some more

What are your thoughts on OZK at the moment? They also look pretty solid on Burry's chart and had pretty remarkable shareholder returns in the past.

I know macro is pretty much ignored in this forum, but is nobody afraid that we see a recession in the next 6-12 months? My systems tell me there is a >70% chance for that and i doubt that bank stocks bottom before we even have seen the start of the recession. I stay far away from banks for now because cyclical stocks tend to look very cheap at the top of the cycle. If you really want to dabble here i would just buy quality, at least thats the lesson i took from previous crisis.

The volume decline last year was just downtrading, look at IMB, their volumes have gone up +2% in the US last year. I doubt that this goes on for long, since that was because of inflation and that is already cooling.

Thats 2-3 years out and will start very slowly. Its not even clear if HNB will be a success in the US. Declining customer base is nothing new and has not stopped Altria from being the best performing stock for a very long time. Missteps were made by the old CEO, he is replaced already.

That is not in my circle of competence, i always think that NY real estate is in a bubble

But since you dont like it i pick Karelia Tobacco as my pick of the year . See Investment Ideas. GIGM is statistically also a good bet, but its possible that it wont be the best performer at year end, because you have to sell into price spikes.

Who cares about revenues? Latest Altria Q3 numbers: (and it was a horrible year with 9% volume declines) Total cigarettes 64,971 71,370 (9.0) % Revenues net of excise taxes $ 13,731 $ 13,655 Reported OCI $ 8,112 $ 7,901 2.7 % $ Add in share buybacks and you have 4% EPS growth in a very bad year with 9% volume declines. These 9% volume declines are not the long term average and are just that high because smokers have downtraded to cheaper cigarettes. That will normalize and Altria will go back to 7-9% EPS growth. Should trade back to a P/E of 15 someday. They also have a lever to pull when they sell their BUD stake.

S&P500 future puts. and more Karelia Tobacco

I am surely not a market wizard, but when you already created 10% alpha in 1 week, putting 3-4% into S&P500 puts for protection in a time where valuations are very high has nothing to do with market timing, just with prudent portfolio management.

Maybe i am completly of the marks, but most equities here are not cheap. When you look at big businesses in the S&P 500 they still trade at fat multiples. That doesnt look like a bottom. And while a lot of people after the latest moves think the bottom is in, i really doubt it. We didnt have a real panic move yet. Can imagine it happens soon. Biggest downmoves in the markets happened always after the FED has cut rates not before. I have a simple system based on yield curve, inflation rates and unemployment rates that has 12 month recession probabilities at 60% right now, which is a new high. An uptick in unemployment rates next report and it has a 3/3 risk off signal, meaning you are better off hedging or going out of the market. This has not happened since 2008. So be careful, a drawdown like in 2002 is possible. The current situation is very comparable to the end of 2001, you had the tech bust, retouch of 200 day average line and still high valuations. In the current market i wouldnt touch anything that is not recession resistant. But thats just my opinion, will also probably add hedges to my portfolio soon, since i am already up so much for the year that i can easily afford it.

https://www.multpl.com/10-year-treasury-rate/table/by-year True, but interest rates were not. I except inflation to come down a lot this year, long term yields are signaling this since october (gone down from 4%->3.5% already)

Maybe, but they did very well between 1995 and 2007 where we had inflation of 4-5%. And when we get a recession and long term yields go down these REIT's will probably outperform bonds over 2-3 years. I wouldnt use Realty income in that sector because its already too big and they need big aquisitions to move the needle. But a small underlevered REIT like EPRT that has a great model is where i want to be. Stable predictable cashflows and safe dividends that can be reinvested.

But the reason that ESS performed so well was because of the tech boom and the growth of high income IT workers or not? That boom is over. And btw. 4000% over 28 years is around a ~14% CAGR, Realty Incomes total return from there is 15%.

Oh and for SRC the math is 6.5% dividend+4% growth+5-10% rerating. EPRT can simply grow by using more leverage. As long as they can issue debt at 4-5% rates and buy properties at >7% caprates everythings fine. And i doubt that this gap closes to zero for long periods of time. Probably we will see higher caprates soon, or lower interest rates.

Thats pretty easy, 4.5% from the dividend, 2% growth through lease escalations, 2-5% from reinvested FFO at 7% caprates with 50/50 debt/equity mix. That is the formula since more than 25 years for something like Realty income.

EPRT has been a pretty good investment since its IPO, outperformed all other NNN REIT's and NNN Reits return on average between 10-15% over the long term. Its a pretty simple business. SRC had problems with leverage, but they are now pretty much the same as Realty Income, which was a very good long term hold. But SRC is 50% cheaper. Chris Volk of STORE Capital (where BRK invested some years ago) has created SRC and his colleague has created EPRT, and they are even better and more conservative (less leverage= more future growth) than the folks at STOR.

Sold a part of SPRB after shooting up by 150% overnight. Was part of my NCAV basket and traded at 1/3 NCAV, there was a news today that it got 15 million in cash upfront for development of some drug? With that money NCAV should be north of 4$ which is the reason i kept the rest.

I hold positions in EPRT,SRC and AMT. I think NNN and the Tower-REIT's (CCI,AMT) are the best REIT's to own, because they have the most staying power, easily survived the GFC and Covid situations without dividend cuts or problems with tenants. Especially the tower REIT's are very interesting because they can get high ROI's when a tower is leased to several different wireless providers. I think that they capture most of the value of wireless connections, while AT&T, Verizon etc. are the true bagholders. And because the big telcos always struggle for money they outsource more and more of their towers. The only risk is when some of the big telcos merge, like last year it happened with Sprint, thats the reason FFO of the tower REIT's didnt grow last year.

Sold the last bit of the energy trade, already sold out of XOM and today of IMO. With oil in freefall i am pretty sure that the forecasts for most oil companies will be too rosy. Maybe i am too early but i think there will be plenty of time to load up cheap on these names again in 1-2 years for the next inflation leg. But need to see a real recession first. Bought these companies in march/april when oil hit new highs and the oil stocks were lagging. Now oil is 50$ cheaper and the stocks are near all time highs.

Looks like a gamble at this point to me with all the debt involved and Lambert as the most knowledgable insider already selling down his holding.

Your definition is right . Look at GIGM or ACTG for real net-nets.

I own them all (tobacco is 35% of my portfolio), MO and BTI have lost 4% volume per year since more than 30 years and still grown earnings by 7-9% every year. The flywheel of price increases+lower costs are still at work. But i monitor the situation closely. BTI had problems with USD/GBP exchange rate last year. Funnily what everyone perceived as the worst tobacco stock (IMBBY) has outperformed the others last year. MO had problems with downtrading, maybe even the reason IMB performed so well. But what do i know, i only think that tobacco/nicotine delivery is one of the best businesses in the world. Makes addictive, costs only pennies to make and very high barriers to entry. (and the barriers to enter via vaping are increasing now every year when you look at the FDA actions). I also see PM as the long long long term winner, but the market has priced that already into the stock. (its double as expensive as the other options).

BTI, recession resistant, cheap, has momentum going and pays you while waiting. Debt load from reynolds aquisition finally under control and still growing 5-8% per year.