kab60

There is no equivalent of Mag7 in Europe, but are they good long term bets? I don't find them attractive around these levels, and while I focus on long term fundamentals and valuation when I invest, I also tend to turn over stocks pretty quickly. There's lots of durable businesses with decent economics and some growth at 5-10x FCF returning most of their cash either through buybacks or divys. I think investors (and European politicians) could sorta write off Trump the first time he got elected, as people thought it was a bit of a joke and a fluke. Now he has been elected twice. If that's the kind of guy US voters gravitate towards (you do you!), who knows who'll be next, or whether the next guy will be better or worse for Americas historical partners. I know I don't know, and it seems pretty clear politicians are trying to reduce reliance on the US. Would it be better for Europe with a more neutral posture towards both the US and China? Again, no clue, but I don't think China has threatened any European countries recently, and foreign politics has always been dirty anyways, so perhaps it could be.

With US stocks making up 75% of MSCI ACWI-index, it seems like every investor and allocator has rushed into US equities during the last decade (no shit). With Trump running the WH, I'm not sure that's prudent anymore. Everybody knew prices were extended, now folks might have an excuse to leave the party. Who's the incremental buyer of US shares here? (I'm not making a bet that the above will happen - but I think the odds look favorable and find a lot more interesting stocks in UK, Canada and the rest of Europe currently than the US anyway. I used to be almost entirely in US stocks, as a European, but am basically out now).

Let's see. I don't think folks in Europe feel like that. Right or wrong, people basically have the US on the side of Russia, North Korea and Belarus now. Everybody, all over the world, has gone long US equities. I wonder who the incremental buyer is now, but I can see a lot of institutions in Europe, and probably elsewhere, having to reconsider.

BUD wouldn't be a bad idea if not because the stock looks pretty cheap as is, Americans have finally started to NOT boycott it again, and we Europeans don't drink that weak piss anyway. Starbucks CEO is still in his honeymoon period, so perhaps it goes higher still, but it does look like a pretty good consumer short with the added risk/upside of ex-US consumers avoiding it. Tesla looks like the most obvious 'victim' though. I don't think Germans are rushing in to buy after Elons antics (pretty sure most Germans, and Europeans for that matter, didn't like his 'heiling that wasn't heiling' or whatever it was he did).

Trying to stay on course, Bloomberg had an interesting article on Canadians buying Canadian. I think the same thing is happening in Europe to a lesser degree. Tesla is the most obvious 'franchise' at risk. A lot of my neighbors in Denmark drive Tesla. I don't think anyone would buy one today given Elon. I wonder if this is what finally breaks Teslas share price. It seems to me like he's alienating his very customer base while appealing to a lot of folks who probably prefer their gas guzzlers. At the same time, there are finally plenty of good EV alternatives. Something like Starbucks at 40x earnings and -4% SSS could be at risk as well - there are good coffee alternatives most places in the world today. It's an iconic American brand which would be easy to boycott in Canada and Europe. And then you might have increased consumer weakness in the US if tariffs increases inflation and DOGE leads to meaningful layoffs.

I can understand why Trump got elected. People want change. Look at the recent election in Germany, the political situation in France etc. etc. What I can't figure out is how any of his policies, or whatever we call this, accomplishes any of this. I find it fascinating how Trump supporters think that Trump and Musk are fighting for the little man. Or ignore what happened during his first term, where the US deficit grew significantly as he cut taxes. "The federal budget deficit increased by almost 50%, reaching nearly $1 trillion in 2019. This growth occurred despite campaign promises to eliminate the national debt in eight years." That was just a massive one-time-win for corporations and shareholders. It's debatable whether or not Trumps' 'threats' towards Canada and Greenland are actually real threats, or just tactics, but I think a lot of Americans would be surprised as to how these things are received in Europe (and Canada). It actually makes me more bullish Canada and Europe, as this might be exactly what's needed to wake them up.

That's a bunch of strawmen. I addressed all your points. You didn't address any part of what I wrote but went out on a tangent. If that's the level, it's pointless. I'm done.

I do? Or perhaps I take the leader of the US at his word? I mean, I hope he isn't serious, and I don't think it'll happen, but you're basically saying I'm silly for thinking he'll actually do what he says. How does that work by the way - can we just ignore whatever we don't like and focus on the stuff we do? "In recent days, Trump has repeatedly pushed the idea that he will take over Greenland from Denmark, reclaim the Panama Canal after the United States returned it to the Panamanian government decades ago and absorb Canada into the United States. Trump said he is keeping the option of using the military to gain control of Greenland and the Panama Canal on the table while saying he will exert “economic force” to pressure Canada to join the United States." https://www.nbcnews.com/politics/donald-trump/trump-take-canada-greenland-panama-canal-rcna186591 What is that if not threats? According to media reports (now I'm sure you'll be saying we can trust those!), Ukraine was threatened to lose access to Starlink if they didn't sign a mineral agreement with the US. He's fucking over the victim while appeasing the aggressor. Blackmail seems like a nice way to put it.

I mean, didn't this guy run the Country before? Surely he has some kind of responsibility too? Anyway, I just don't see how what he's doing will benefit the US mid/long-term. If anything, a lot of this stuff is what I'd do if I was a foreign (malicious) actor. If I could even come up with it all. How does it make sense to threaten allies and cozy up to Putin? Blackmailing Ukraine? Threatening Canada and Greenland? I mean wtf. If he takes Greenland by force, will he also defend it against himself due to NATO's article 5? As for how well it's all going, European stocks have outperformed US markets YTD. No wonder. This from today: "US consumer confidence fell this month by the most since August 2021 on concerns about the outlook for the broader economy, adding to evidence that uncertainty over the Trump administration’s policies is weighing on households. The Conference Board’s gauge of confidence decreased 7 points in February to 98.3, marking the third straight decline, data released Tuesday showed. The figure was below all estimates in a Bloomberg survey of economists. Stocks and bond yields fell after the report." Doesn't sound like optimism is running particularly hot. I don't think anyone understands what the plan is. He seems to be just lobbing grenades around, while people take cover and hope it all stops before somebody gets hurt for real.

I think most countries could use a DOGE, but so far the cuts are almost meaningless. Bond market DGAF, but let's see what they come up with. As for manufacturing, isn't US defence considered high tech? Trump is forcing Ukraine to hand over minerals to pay for support while threatening with cutting off Starlink. Said he might use force to take Greenland. I don't know what is real and what is not, but I am sure every European country will reconsider whether buying military equipment - and I would think energy - from the US going forward is a great idea. I can't think of many if any US manufacturing successes on a global scale - save for Tesla. And sales have dropped off a cliff YTD in Europe (some due to changeover and new model Y probably, but also 80% of Germans now disapprove of Musk...). Isn't Tesla the biggest manufacturing success - which looks increasingly fragile internationally? I just don't see how much of this benefits the US long term. You are making allies question everything - countries that never questioned going into (dumb) wars in the Middel-East with you not that long ago.

What is getting far better? I don't see how any of what's happening is good for markets (if that is what we are debating). Less immigration, austerity (if DOGE actually implements real cuts) and a trade war with most of world? I don't see how that's bullish US stocks. As for Europe, I agree it's a basket case. I hate the EU. Doesn't mean US growth is all that impressive if you consider 7% deficits or whatever it is at the moment.

It's pretty insane to watch what's going on. I struggle to see any significant gains, but I can see a lot of un-intended consequences of making everyone, apparently save for Russia, your public enemy. I am a Dane, and most of my neighbours drive Teslas. I doubt anyone will buy a new one, as they're embarrassed to support Elon and Tesla. While Tesla is small in the big scheme of things, every allied country has to rethink their relationship with the US and US companies. The US, accounting for 70% of global stock market value, is suddenly a Pariah in Europe and Canada. Can investment managers sleep well with 70% of their assets in US equities? Record-high equity markets and massive in flows from around the global has given US companies a huge funding advantage as well as boosted local wealth. No wonder Europe has outperformed US equities YTD. What happens to inflated assets when buyers go elsewhere? I don't know the answer to any of this, but it seems to me like the US is making a huge own-goal. I have always been bullish the US, much less so Europe. That's changing these days, as I think there is finally a chance that Europe gets (some of) its shit together or just muddles along while stuff gets incrementally worse in the US.

I'm honestly not sure. He used to work at both Google and Salesforce before - I think he's able to sell anything. Insiders often miss the forest for the tree though, sounds like you have a better handle on the situation.

FWIW, which is very little, my friend works at Adobe (he's basically a glorified salesman) and says Figma is eating their lunch. I don't understand how or why, but apparently their products are designed in a way that makes end-to-end-production much easier. Something which Adobe can't just easily change.

There is always something to do unless one has a humongous stack. Seeing Nvidia, Microstrategy et al, I do however get 2021 vibes. I sold basically all of my remaining US holdings in November and am now basically invested in Canada and UK. I just find much better opportunities there currently, and they are catching up to the US on the capital allocation front (somewhat... But we just need a few ideas...). Best ideas are IPCO.TO, NOA.TO, MATR.TO, LNR.TO, Intred SpA, Zegona Comm, Sabre Insurance, Kitwave, Midwich... And a bunch of UK special sits

I don't have a strong view on oil prices, but most stuff today is 20-30-40% more expensive than it was back in 2019. Despite technological advances, costs to bring on supply are up (some of the cost benefits from improved tech gets offset by increased labor and material as well as probably lower quality rock). If you look at the Dallas Fed survey, breakeven prices in the Permian has increased to around ~65 USD. Considering the short-cycle nature of shale, it makes sense to me that oil prices might flucturate in a smaller band with less up and downside compared to in the past, where more growth came from longer-cycle supply like offshore. Today, high(er) prices will quickly bring on new supply, while lower prices will take supply out of the market. 65-85 USD oil isn't bad for most produces. As for offshore, just take a look at equities like Transocean, Tidewater etc. It doesn't seem like they're about to enjoy a bonanza of drilling activity. It makes sense to me than investors and companies are cautios, because these projects take a lot of time to come online + you have a threat of spare OPEC capacity.

I liked Fairfax' response yesterday, but they should just refute the report one point at a time in writing. However bad Muddy Waters' take is, they won't be able to address all the points in the call, and why most of the points are bollocks, it's not like it takes long to address them in writing.

Love your takes, @StubbleJumper. You're the only one I've seen point out how Prem was playing with fire leading up to covid, and even though he avoided a catastrophe, it's probably one to keep in the back of your mind. I'm not sure what the right price is for Fairfax, but what's different this time around is you've got a ton of earnings power locked-in over the coming years, and it seems as if there's generally little sign of softening in insurance markets. I imagine large bond losses at peers might result in this market staying hard for longer, but I'm really no expert. There's no doubt that the gravy train will eventually settle down, but when it does, book value/share should be much higher than today just from the locked-in interest, and thus investors might do reasonably well here even without multiple expansion. If we get that on top, that's gravy. I agree with others that the MW report is pretty awful. But I also wouldn't mind if Fairfax simplified a little. Those total return swaps were obviously a nice bet, but I'd prefer if he cashed in over the coming year(s) and locked in his return and switched to buybacks. He should have the money now.

Ebay spun off Paypal, so the above doesn't make much sense unless you think there were special synergies at work here. EBAY shareholders got to participate in Paypal following the spin-off, which if anything unlocked value as they were valued differently and could optimize incentives and capital allocation (and cater to different shareholders). I also don't think Ebay has been particularly good at doing buybacks. They did most of their buybacks in the post-covid period where shares briefly touched $80. So while they've spent a lot of money on buybacks, they don't exactly seem to have timed them well. I'll throw Arrow Electronics in the pot. It's mostly a semiconductor distribution business. Does like 1B of net income on 3B in tangible equity. It's cyclical but as a distributor has counter-cyclical cashflows, so it's one tough cockroach to kill. It's a simple business, one Buffett likes (owns TTI and Mouser), and the industry is well-consolidated so basically just bolt-on deals+buybacks left for Arrow to do.

If AIG is 'fixed'? I'm no insurance expert, far from it, and it's always difficult to know anyway considering how much damage can be done with a pen and how big some of these things are, but I think the below suggests things have improved since new management took over about five years ago (not as CEO initially): I never invest in financials unless I'm very comfortable with the jockey, so I spend most time reading up on management and obviously like what I see.

You're welcome @Gregmal. I started following when Dan Loeb wrote about it in Q4 and thought it was an obvious opportunity as well. Then it got killed along with most other financials during March and May even though there's no deposit flight risk, and I sorta wondered if I was missing anything, but I don't think I did, so I bought... (they have some office exposure+HTM losses in their investment portfolios, but they don't have a ton of duration and investment yields are ticking up nicely...) I talked with some folks at some big funds about it, but they'd rather buy Chubb and WR Berkley with decades of good returns behind them and pointed to the meager ROE of AIG. Rearview mirror versus looking ahead, I think. I'm not saying those are bad picks either, they're great businesses and all, but they're also trading at 2-3xTBV versus <1x here, and this one is engaged in humongous capital returns AND unlocking of value through spinning off and selling down Corebridge+various subs... Next big levers is taking out a ton of costs, as the CEO wants AIG to become a pure-play insurer with a lean structure versus this bloated conglomerate with tons of costs and inefficiencies... This guy did some good write-ups on the opportunity: https://seekingalpha.com/article/4600871-aigs-underwiting-performance-is-deserving-of-a-higher-valuation (I think perhaps he was even on a podcast recently talking about the opportunity in Fairfax and AIG.).

I think Canadian producers look quiet interesting still. My largest holding is $IPCO, which is down around 30-35% this year, but realized prizes oil prices aren't all that different from Q4 '22. While oil prices have dropped, so has the differential between WCS and WTI, and the Transmountain Expansion opens in Q1 '24 which all else equal should be positive for the differential as well. I'm licking my wounds from Harbour Energy PLC, where I definitely got the European gas situation wrong (at least in the short term).

Yes. It seems like a great little business, I just don't think it looks particularly interesting from a valuation perspective considering the cyclicality. I like Kitwave, Macfarlane, S&U and Sabre Insurance around these levels. Also think Pendragon is interesting as a special situation of sorts. But the UK is where capital returns go to die, so I'd probably not go balls long any of those names. Mortgage Advice Bureau and Belvoir Lettings are also interesting plays on housing (and inflation).

Not saying this is an Autozone either, but those guys run with negative equity and negative working capital - basically having suppliers finance their operation. And I wouldn't call them levered either at 2xnet debt/ebitda. I'm not saying the cash at Wickes is 'free' per se, of course they want some at hand, but if they were aggressive they'd probably finance that through a revolver or term loan instead of equity. Like most retailers Wickes has a ton of operating leverage, and long term leases are obviously dangerous if things turn south. But I think that's just the life of being a retailer. Sure some own their real estate, which they can selloff piece-meal if things turn to shit, but in reality that rarely works out either, as we all know (cutting off limps to try and stop the bleeding...). I've been looking at Wickes on-off over the last couple of years and think it looks pretty cheap, I just don't think it's better than a lot of alternatives.

Highly levered? Do you count their leases as debt? Ignoring leases, they have 100m net cash per last Q. The accounting for UK companies with leases is confusing and makes the cash flow statement a mess. But I agree Wickes is definitely no HD.