johnny

a true loss for the board

I would guess people who have been trying to keep their weight down have gone up, and people up, down. I'm one of the people who generally is trying to keep weight on. I've got from a peak of 205 to around 175, although the first half of that was just from moving from LA to the rural midwest. My diet has been total garbage--eating entire bags of cookies, etc. So I'd guess probably 120% of the weight lost is muscle, with the -20% being fat gain. It'll be interesting to see some attempts to aggregate the life expectancy outcomes of all of these lifestyle degradations, and weigh them against the actual COVID impacts. Probably won't be politically acceptable to play that game for a few years. But still interesting to consider how many 30 year olds are doing sort of irreparable metabolic damage to themselves in order to help their (probabilistic generalization) grandparents squeeze a few more months out.

There's just so much emotion-driven anti-landlord sentiment. I don't get putting the best cap rates in the entire real estate world on what I think has the most frightening populist tail risks. You guys need to understand: 75% of dem primary voters under 40 voted for Bernie Sanders. Have you ever listened to Chapo Trap House? When every underemployed 25 year old is on Facebook leftist groups sort-of-joking about putting their landlords into gulags, doesn't this make you think maybe we should be adding a few hundred bps to our required yield to compensate for guillotine risk? Real estate is the ultimate rule-of-law bet. I've seen way more deterioration in the social contract on that (from both parties) over the past few years than seems priced in by a 20% move.

Hostile-activist-nonagenarian-Buffett would be a very cool final act

This is a great specific example of something I'm generally concerned about in this area--that however high the FFO yield may be, that FFO is going to be redeployed into mallstuff by mallguys running mallreits. If I really were gungho on malls, I'd be more likely to prefer the relatively indirect 50% shot through Brookfield, since we at least know they have a plausible alternative path for cash if it ever becomes apparent it's time to cut bait. Not as cheap though, of course.

I'm not sure how much you would be able to generalize the example of the Westside Pavillion to the entire portfolio of these companies, and even if you could, I don't think it would obviously present a favorable investment. 1. West LA is in a sort of unique situation, with a lot of price-insensitive techCos deciding there's a strategic need to lock down oversized campus territory. I don't think there's a general shortage of office space, even in LA, otherwise those guys buying DTLA Prefs would be billionaires by now. 2. That mall has been a ghost-town for at least a decade. Once you add those ten years (and cash bleed) to the overall analysis, I suspect the office conversion is probably close to zero IRR. 3. After eating the losses on it for a decade, Macerich had to sell part (75%!!!!) of its interest in the property to get the ball rolling on the re-development. So they ate losses for all those years only to split the salvage value 1-to-3 with somebody else. Looks like a good outcome year-over-year, but seems like a loser to me.

im absolutely shocked to learn that a poster on my beloved value board has been getting involved in poorly thought out situations in largely ignored markets, oblivious to parentco and litigation issues

Since everybody here is so skeptical, thought I'd drop this take on the company--not exactly a screaming bull case, but it presents the important components of the bull case in a reasonable way: https://www.cbinsights.com/research/report/wework-strategy-teardown/ Some things I thought were interesting: 1) There is an implication 4 years ago that they're basically turning around and leasing, all-in, at about 2x what they pay. 2) Related to 1, this article mentions a 30-40% operating margin 3) They're really leaning hard on software to try and extract as many "desks" from a space as possible--this is probably a meaningful advantage they have over the competition, it's palpable if you just tour a few different coworking spaces. 4) This claim, for which no elaboration is offered: "This technology, combined with increasing buying power from constructing at scale, has lowered the cost of adding a new desk to $9,504 in September of 2017, from $14,144 a year prior, representing 33% savings." Though hunting those numbers down they seem to be a "gross capital expenditures / desk" calculation.

I'd say the locations I've seen seem to be something like maybe 65% "rented" space v. 35% community space. But the rates on the 1 person offices are pretty silly high on a per square foot basis. I'd say you're paying something like $800 for 60 square feet in DTLA. So add 40sqft of shuffleboard or couches to that and you're paying $8/sqft in a market where comparable office rents are probably like $2-3. Their pricing on substantially higher occupancy arrangements don't seem to decay very much on a $/sqft basis either, so going off of the 1-person office is not as distortive as it may intuitively seem. You're never going to be able to drop bonds in half-billion dollar increments being that boring bro

14M sqft as of April '18, giving us a very clean $2,500/sqft valuation, before community adjustments of course.

I'm in LA and I'm seeing a lot of higher-end coworking spaces sprout up. Everybody keeps insisting to me a major component of WeWork's value proposition is the networking opportunities offered to members, and the Community Value. So how do we project the qualify to that community when all the richer or price-insensitive people are Hoovered up by some place with more comfy couches and in-house baristas? The only non-cost advantage WeWork has is that they can say that members have access to coworking spaces all over the world. But I'm trying to visualize that Venn diagram: People that need coworking space, live such a jet-setting lifestyle that a Xintiandi, Shanghai office has real option value, and also don't want to just pony up the extra few hundred bucks for the nicer space at NeueHouse? I guess it's just a matter of time until WeWork tries to thread the needle and open up some WeWork Reserve Centurion spaces, or whatever.

https://www.remingtonoutdoorcompany.com/sites/default/files/ComprehensiveFinancialRestructuring.pdf Now that we're rolling a year off of Trump, I'm more interested in looking around this space. Did everybody get shaken out already?

I understand what you meant, I was just joking. Like I said, I hadn't looked at the financing at all (I did initially snap-assume they were just throwing all external negative rate germany dollars at it)

I'm the wrong person to ask to make the case for it. I've been on the other side of the trade on pretty much every JAB interaction with the public markets. I just wanted to take this opportunity to talk shit about Keurig. (translation: I didn't even read the financing details) The trading has been wild though. The implied value of the equity has doubled and halved since open.

No opinion on this, but wanted to try and draw some out of any of you. The deal says DPS holders get $103.75 in a special dividend, and retain 13% of the combined company. Pre-announce, DPS was $95.65, and it's now $118.83. So by my math, if we give take Friday's closing price of DPS as IV (seems rich), the current price is made up of $103.75 in dividend and about ~$12.43 of retained DPS, leaving only ~$2.65 for the Keurig component. This only catches my attention because I remember the Keurig take private was at something like $14 Billion, and the current price of DPS implies that the value of Keurig is actually only around $3.7B. And of course, no credit for all of the synergies that could come from Snapple flavored K Cups or whatever. Since I was short GMCR when it was taken private, I feel like this is some kind of vindication. That's the only reason this thread exists. Anybody think Keurig was turned into a good business somehow in the past three years?

YE2008 A share BV was 70K, 2007 was 78K. So it went from >1.6x to just about 1x in that year.

Here's the (most) relevant part of the paper: This doesn't feel like a super robust, alpha-generating finding. This does feel like the sort of thing that produces an abstract that gets Malcolm Gladwell excited, based on a methodology he probably doesn't remotely understand. Which isn't a dig at Gladwell; I don't think I understand exactly what's being said here. At least I know for a fact I have no way of mapping this onto any notion of how much of an edge this would imply. It seems like if it implied a substantial edge, business school/finance researchers would be motivated to actually present a backtest.

My only real job was in LSAT prep and admissions work. Not a single person in these kids' lives have told them that a 3.0/140 can't cut it, because almost everybody in a position of credibility/authority on that topic makes it a habit to regularly lie to them about it. Even the very schools that have no interest in admitting them will absolutely refuse to say so (partly because they want to improve their statistics). Just think about this. Imagine if everybody in a position of educational authority over you constantly told you that test scores didn't matter, that they only determined "how good you are at taking tests". Your teachers in K-12, most of your (liberal) professors, the student-services administrators at your college. Imagine if, even the very institutions that use those numbers made it a regular practice to obfuscate their importance and insist that they don't have GPA/SAT/LSAT floors, but look at the "whole applicant". By the time reality rolls around, you are so far down that path that changing directions is totally unfathomable. Most people are already seniors (or graduates), a few grand into LSAT prep, and on their 10th viewing of Legally Blonde before they even begin to have the slightest sense of just how constrained they are by their numbers. I suspect even then, most applicants have a certain delusion about it until all of the rejections come in. You've spent 4 years majoring in Sociology and planning to be a human rights lawyer. You've spent 300 hours studying the LSAT instead of applying for jobs. The former mayor of Los Angeles went to an unaccredited law school, and you'll always find some dipshit baby-boomer lawyer who will insist to you that academic pedigree doesn't matter, and that he was able to become a millionaire off of ADA-extortion lawsuits with his JD from DeVry U. There's enough delusional signaling in the world to give you confidence that you too can make it. And it's helped by the fact that almost every law school is very aggressive about misrepresenting their career/salary data so the failures are well hidden.

Brown-Forman trades at almost 30x earnings. Why would you not expect it to get halved in another GFC?

"Collectables" seem generally to be speculation on certain aspects of culture (with some underlying speculation on the civilization). The value of baseball cards going forward depends entirely on the cultural interest in baseball (and how that skews across the wealth distribution). Precisely because of the slower pace of cultural evolution -and- the incomplete and unreliable documentation of "non-financial" assets, we're all susceptible to m-m-m-major survivorship bias when looking back on "how collectibles performed". By definition, if you're looking at something understood to be "collectable" in 2017, you're already looking at a winner. It's worse than survivorship bias with stocks though; at least we have the ability to correct for bankruptcy/delisting effects in equity performance. There's no EDGAR for antebellum firearms. So my first question is: what sort of things were vaguely considered to be collectible in 1950 (or 1900, or 1850) that have been obliterated from cultural consciousness? How do I even go about compiling this list? At what point do I know my list is complete? Because without a complete list, I have no ability to even pretend to know the performance of the asset class. In my lifetime I've seen Pogs, Beanie Babies, Pokemon/Yu-Gi-Oh/Magic cards, etc. all come and go. Each one of these has a credible claim to status as "collectables" but it turned out (only with benefit of hindsight) that the underlying cultural significance was ephemeral. A lot of cultures valued seashells -pretty- highly. I'm not sure who, or where, or when. But I know it happened and that at some point it stopped. Yet when we form or intuitions about the "collectable" investment class, we are very likely to not credit these against the winners. Somehow it ~feels~ totally unserious and unfair to compare Pokemon cards to baseball cards. But, why? There was some point when some player's rookie card had the same market value as a first-edition holographic Charizard. At that specific moment in time the comparison was not at all unserious or unfair, it was literally the market's assessment. So, how popular will baseball be with millionaires in 2050? You may have a very strong opinion on that, but I would say the "collectable" designation gives 99% of participants a completely unjustified sense of security/stability/common-sense-understability in what should be viewed as something more speculative than Facebook stock. And it all stems from looking back at the 50 or 100 year performance and attributing that to "collectable performance" instead of something that has nothing whatsoever to do with collectables. Such as: The great success of baseball cards occurs over a timeframe where the country with a peculiar obsession with baseball went from being in the midst of a depression (where many thought there would be no recovery, or communist revolution was imminent) to undisputed back-to-back world-war champion, and global economic and military hegemon. And it probably explains much of why pieces of paper with some chubby dude Nestle named Baby Ruths after are suddenly worth millions of dollars while memorabilia from the National Socialist League of the Reich for Physical Exercise seems to be marketed to a much narrower audience. It's also worth considering that a great deal of "collectible" value derives from the disintegration/disappearance/destruction of many/most/nearly all instances of the item in question (IE rookie cards from the 1920s). This seems like a pretty precarious investment thesis a-priori. If you tell me that a thing is going to be very valuable in 50 years because there's a 99% chance it will be misplaced or destroyed in the meantime, I'm going to need quite a big return to simply break even, probabilistically. And if you're already paying a "collectable" price, then I think that means you shouldn't be baking in any assumptions about further supply shrink. Not sure how you seperate that out from the other factors involved in appreciation.

Nothing to add to this thread but just wanted to say it is a cool thread and you are a good poster.

Hey is this the thread where we discuss whether or not the billionaire who remained married to a woman who galavanted around the country with other men is Insufficiently Progressive in his Gender Politics? Just want to know where to post my HotTake. Thanks in advance.

Thanks for the pushback, definitely helps me Get the company a bit. I have to admit revolvers are totally nonexistent to me, and when I was cruising through Ruger's site it was solely in pistols and rifles. I shot and hated the LC9, but obviously it lacks some of the specific advantages of the LCP that you mentioned. Is anybody aware of a data source that gives an idea of what the makeup of gun sales, by caliber, looks like?

I certainly haven't shot many Ruger firearms, but that is because the high-income gun-nuts that I know simply don't own them, or if they do own them, don't consider them worth yanking out of the safe for the trip. Maybe it's because I live in such a cosmopolitan state, but it seems to be relatively well-agreed upon among shooters (that aren't draping themselves in the American flag and occupying forest stations) that: 1. Mass produced weapons out of Europe (and Israel) are generally superior and that 2. European-designed weapons manufactured in America are lower quality than the same weapon designs manufactured in America and that 3. The only downside to these weapons is that they are generally quite expensive, which has a lot more to do with regulation and protectionism than underlying production economics (Glocks cost less than a hundred dollars to manufacture, which is probably less than Ruger's production cost per unit for its vastly inferior striker-fired series). I guess if you wanted to test the "common" wisdom you would ask what the recent procurement decisions are for informed police forces, special tactics teams, the standard military, etc. SOCOM is toting around the FN Scar (Belgium) as their rifle, the army just recently chose the Sig P320 (Germany) to replace the long-serving Beretta M9 (Italy) as service pistol. And of course "America's gun" was invented by the very un-American sounding Gaston Glock (Austria), and that seems to be what almost every cop is toting, although I can't be sure because cops tend to get spooked when I stare too hard at their holsters. AFAIK, Ruger is a non-entity in these contract wars, and the only historical significance of Smith and Wesson is that they used to be the standard for law enforcement until too many LEO kept getting slaughtered by baddies with better weapons. Hence Glock becoming America's Gun. I hope it's clear that I've not even opened the Ruger 10-K, so I'm not at all making a specific investment call here; just throwing out some things that pop into my head when I think of the name Ruger. I'm also no gun expert, so I'm susceptible to kool-aid on this stuff.

It seems obvious to me that gun sales are not going to do as well under Trump as Obama. We're looking at -20% YoY for Trump's America so far, and frankly, I'd expect that to get a little bit wider. Even though most of the political activity centered around banning rifles, what I have observed is that rifle panics end up driving a lot of non-gun people to jump through many informational hoops in order to get The Rifles They Want, and then they find that most of the friction to building out their handgun collection has also been removed, so they do that. In California there was quite a rifle panic through 2016. The naive expectation might have been that gundollars would be re-allocated from pistols to rifles for the period, but what I actually observed instead was that people were instead generally going gun-crazy, and buying pistols at a pace that I think they will be unlikely to sustain indefinitely. So, I can see very clearly the case for dramatically lower volumes. But I have no clue if that is 20 or 30 or 40%. I also am especially concerned, having looked at Ruger's website, with the fact that most of their guns seem to be garbage. It seems to me that there are a lot of cutesy regulations that have the effect of limiting foreign competition, and that a "pro gun" administration is just as likely to do damage to domestic gun companies by gutting those regulations as it is to help out by taking away the $200 tax stamp on silencers.