bizaro86

I hadn't considered them selling ECN, and agree that would be a home run. I'm somewhat skeptical of that, in the same way I don't like accounting for intangibles on finance companies In all seriousness, I agree completely a financial can deserve a premium to TBV (eg Geico) but I'm uncertain that their origination platform delivers high enough ROEs for it to have much intangible value. Probably the best case would be they find an alt-manager looking to expand or someone looking to build private credit capability who pays up. Anyway, ECN seems like a mix of too hard and not rich enough for me right now. I'll probably nibble on the DRT debs, as it seems like management wants to get them repaid, which is a surprisingly important factor in credit investing imo. And the spread is very high. I took a brief look at ACD and sort of like their debs as well, and might add there. Obviously only 11% ytm but I did a deep dive on them years ago and think they do a good job. Recent large write-down not withstanding I think factoring is a reasonably low risk operation. The equity might be the better bet there as it's cheap and a go-private probably pays close to TBV

I'd say a contemporary example of a cigar butt would be a biotech firm that had its drug candidate fail and is now trading for less than the cash on the balance sheet. There have been many of these lately. Anything with a decent ongoing business (which includes most merger arb) doesn't qualify as a cigar butt, imo.

So it took me much longer than a week to get to looking at these, and I missed a pretty solid move in the ECN debentures, so congratulations! ECN did lower the balance on their senior credit facility using the proceeds of the equity raise you mentioned, and now they have enough space on that line that they could refinance the debentures into it, which is a pretty good backup plan. I'm a bit skeptical on how much of that capacity is going to be there in the long term and the credit facility expires before any of the outstanding debs come due so they'll need to renew first. Capacity might be lower because they've been selling down their finance assets, that is deleveraging but also is getting used to cover losses. They do have positive equity~=market cap here, but much of that is goodwill/intangibles, and I'm a bit skeptical that those are worth much in a finance/leasing business. I also dislike that they've been reducing exposure to floorplan loans (Which I think are pretty solid) and ramping up exposure to areas I think are riskier. Basically I think at the mid-teens YTM these are at right now they're probably priced about right. But getting in here when the last Q came out and they showed the deleveraging from the equity raise was a great trade and you're up 20 points since then! DRT is definitely higher risk/reward. YTM is obviously extremely high, and I like that their credit facility is essentially undrawn so they don't really have debt senior to these debs. But their business is probably impaired by work-from-home. They've been shutting down plants (and without the charge for that last quarter they'd have made money) which hopefully gets them on more solid footing. The major owners being willing to fund the rights offering is a great sign, imo, because as you noted they're putting in money that is effectively junior to the debs. Having a major owner committed to the equity is a good thing, because a share-for-debt restructuring would be a completely fine option here, but a CCA filing would probably not result in a good outcome, imo. The other one I've always thought probably has a greater ability to pay off their debs than the market expects is Wildbrain, from the underlying value of their intellectual property assets. But those are trading pretty close to par right now.

Even inventory I think you need to take on a case by case basis. If it's a tank full of crude oil market price is fine. If it's a warehouse full of clothes that didn't sell when they were new/in-season then zero minus cost of disposal might be liquidation value.

I did a trip recently where I had a rental car for one piece and used Uber for the next piece. Waiting for Uber got old pretty fast. Especially the once where it ended up taking over an hour and a half - granted that was leaving an NFL game, but even still... In terms of the 2 public choices I think Avis is better run, but Hertz has some immediate upside as next year they probably won't buy tens of thousands of EVs that immediately depreciate because of lower MSRPs, so growth will be easier for them. I also really like (and own) the Hertz warrants. If you think Hertz is a good long term buy the warrants seem like the obvious play to me.

I've been buying the AMC debt through Interactive Brokers. The 7.5% of 2029 is first lien paper. If they filed today I don't think it would be covered, but at the pace they're adding equity to the balance sheet I think there's a good chance they get there. And if they make their maturity wall in 2026 it probably trades at a much smaller spread thereafter. I'll try and take a look at ECN and DRT this week.

I agree it's very probabilistic/event driven. Most of the issuers aren't exactly top-tier corporates - if they were they'd issue regular bonds instead. So I think a diversified portfolio/par-buyer type strategy would underperformed in the space. I think bankruptcy/restructuring type events tend to have the fattest returns here. I had a very large position in the Just Energy debs when they restructured, that I was able to fully hedge with puts for like a 20% spread in a month. Was a very big position but seemed like a layup and did close. The hardest part was getting RBC-DI to correctly exercise the puts after the reverse split. If you're interested in debt benefiting from equity issuance, you might consider AMC debt. Various issues, but even the first lien has a high ytm and they are issuing $50-$100MM/week of equity through ATM (or more recently equity-for-debt swaps)

I'm super interested in this topic, and some of my best (and worst!) returns in the past have been in this space. I've got quite a lot of floating rate prefs right now at double digit current yields, but no exchange traded debt other than CSU.DB right now.

I'd be interested in the identity of these if you're willing to share.

If you think the Canadian economy/dollar/stock market is going to tank Couche Tarde is a great choice to watch, imo. If it dropped with the market/canadian dollar, there's no reason to think it's (mostly international) business would be affected.

Right. Rig count is down and production growth is down. Rig count 2023 is 57% of Rig count 2018. Production growth 2023 is 57% of production growth 2018. Seems like productivity is similar to me. You're correct that there is natural depletion of the existing production base, but that's very difficult to determine. I'd suggest that it's probably a very comparable number between the two years - production is higher now but the % decline is probably slightly lower as the production base is more mature than it was in 2018 so has lower decline.

I think it's relatively unlikely Canada has the political will to build new railroads through the wilderness.

I understand what you're trying to do, but I think you're looking at the wrong data. In 2018 US oil production was 10.951 MMbbl/d. That was up from 9.357 MMbbl/d in 2017. So production increased ~1.6MM bbl/d in 2018. By comparison, Sept 2023 production was 13.236 mmbbl/d compared to 12.325 mmbbl/d in Sept 2022. So production increased 0.9 MM bbl/d in the last year. So production increased ~57% as much and the rig count was ~57% as high (using your numbers of 500 and 877). That doesn't seem like much of an argument in favor of increased efficiency to me.

You can't really compare rigs to overall production. If the rig count went to zero production would stay the same initially and then start declining at the rate of natural decline (varies by reservoir/pressure/stage of a well's life) Rig count is better compared to growth/decline of production.

If we're adding Scandinavian private firms I'd much prefer Lego.

I had this thread open already and saw your post, and thought "selling PayTM doesn't seem like tha big deal a deal". Then I clicked back to the main forum. RIP Charlie.

I think they need to have some sort of stable currency for the economy to function, and the peso has lost any semblance of trust. It's better for a country to have it's own currency (since it can control its own monetary policy according to domestic conditions) but I think they're past that.

In neither Prem nor Burry's case did I mean total underperformance. But the macro stuff has, in both cases, detracted from performance rather than enhancing it for the last decade or so. IE. macro trading has caused their record to underperform where it would have been otherwise. Obviously Burry doesn't have a public record except for his quarterly fillings, and with the ~100% turnover he runs I think those are probably of limited utility in estimating his returns. So I agree he could still be beating the market.

I think Burry and Prem Watsa had the same issue - make huge profits from a spectacular macro call, then spend years trying to repeat that at the cost of significant underperformance.

While it's very high, 90% is verifiably more than live within 160km of the US border. Alberta is more than 10% of the 40MM Canadians, and basically everyone here lives further than that from the border. Metros Calgary and Edmonton alone get you over 3MM, and the smaller centres and rural areas get you to 4MM outside that band. It's really only Lethbridge and some farms within that distance of the border in AB. Add Saskatoon (~300k), Newfoundland (~500k) and Northern BC/Ontario and you've got at least another million. We're having pretty significant in-migration of people who can't afford to live in Vancouver/Toronto any more...

I recommend patience and limit orders. Expect to get 200 shares at a time...

Should probably be clear I have no position here. The current multiple plus potential competition plus patent expiry puts it in the too hard pile for me. I've put snack companies in the "avoid" bucket as well based on the potential for loss of customers.

My general impression is "more effective". N=1, but my mom has tried all sorts of stuff and has been way overweight for decades. Interestingly, she wasn't able to get the full size pens this month (4 doses of 1mg) and Costco Pharmacy sold her the 4 doses of 0.5 mg pen (she was annoyed because it was the same price). She's already had many of the consequences (eg both knees already replaced) but even if there are long term side effects it seems probable that the lower stress on her heart/kidneys/knees/everything else would outweigh them.

Maybe. My mother has lost 60 lbs in 8 months on Ozempic. She's cut her spending on junk food in that time period by at least $100/month and probably $200. That might not be typical, but if you multiply that by a few million people I can imagine a world where you start to see deleveraging on your fixed costs...

John - I had to read the caption twice. I was absolutely convinced you had, for reasons unknown, posted a map of Canada's oilsands. Because in size and location what you've posted matches them fairly closely.