kab60

Because current and NTM earnings means very little for the intrinsic value of a stock. People focus on the low P (like rubbish commodity investors...), when the bubble seems to be in the E. Now this time might be different and all, but exploding gross margins are the hallmarks of a commodity (up)cycle. Lumber bros, met coal bros, shipping bros, gas bros can all tell semi bros a story as to what probably happens next.

I've been buying Adobe. Adobe sells tools to professionals, and I only think AI is gonna make those tools more powerful (they already have launched some very neat features saving professionals a lot of time). Prompting might work for some crude instructions. But translating the imagination of a creative into something tangible is probably easier by hand (mouse+keyboard) than by prompting. It's not like people are already particularly good at articulating their (creative) visions. There is competition at the edges, but I think it's a bit overblown. Adobe could buy Figma with one years' worth of free cash flow (and probably should pay for a new ballroom to make it happen)...). With all the AI slop being generated, trust is only becoming more important. I think strong software vendors with good customer relations will do fine, as long as they keep up with competition and improve their offerings. Adobe might've gotten a bit arrogant, so I don't mind if they lay off the price hikes for a bit and increase freemium offering.

I don't understand why anyone would ever be an 'oil bull' or 'oil bear'. Unless you're trading the commodity, there are ways to be involved that aren't just beta. That seems to be overlooked by both sides.

Supermicro wants to drink from the hose (although peanuts). If Intel is smart, they too will raise a ton of cash. It's really quite hilarious to see them try and front-run SpaceX and these AI Labs. Meantime, it seems like it's mostly programmers that are getting a kick out of LLM's (and anyone researching a new topic - like investors!). I can't help wonder how much of the hype stems from the fact that there's this massive echo chamber, given VC's/Silicon Valley and tech co's are all about 'tech' and 'programming' and thus they're seeing some real gains in areas they know well. And as an investor/researcher, these things are great too! While meanwhile, the rest of the work mostly seems to function as it always did. I always prod service professionals I work with - product managers, lawyers, accountants, animation folks + photographers - and even went on a Claude Course with a bunch of them. And none of them really seem to be gaining much from this shit. They were all afraid for a while that their businesses would be affected in a bad way, but they've seen very little impact and hardly seem to use it. Some have toyed with some Claude Code to 'build stuff', but then given up when a button suddenly stops working. I think the world is completely LLM-pilled. Outside of programming, customer service was the one area which everyone considered 'dead' (as in call-centers...). But people don't wanna talk to a bot if they have issues, and even in customer service, everyone now seems to agree it'll be a hybrid between people+tools. Just like it has been for decades now... Hell, I tried to build a logo for my own firm using Nano Banana, and it was useless, so I hired a graphic designer (like the old days). I really don't think most people wanna 'build' stuff and maintain it, unless it's core to what they do. They wanna buy stuff that works and is maintained and gets real shit done.

8m barrels is still a massive supply shock. Yes, pipelines will be built. And I also own something which should benefit from RoW supply growth. But pipelines aren't quickly built. Another day, another deal. You might be right in Iranian oil fields, but same was said for Russia. I think these petro shit states usually find a way, and they are used to suffering. Hopefully, end is close. My thesis however is that it is in Irans interest to inflict serious damage on Trump, so the world knows they have a nuclear option in the future. But perhaps they, or himself, already did enough damage to approval ratings. (My portfolio will do much better if I am wrong fwiw. I mostly own what others consider levered shitcos)

The spice must flow, and a bit does, but it's still the biggest supply shock in history. Inventories, not least in China, seem to be doing the heavy lifting. That's not infinite though. And no amount of jawboning will change the physical realities. One risk to Trump is that while he has had some success in talking down the price of oil, if he doesn't get the strait open, eventually that might backfire. E&P companies aren't eager to increase supply currently, given the risk of getting rugpulled (and investors feel the same way... Who wants to go big into energy now?). These prices are easy for the US economy to handle. But I still think the market is a bit complacent on a tail risk scenario where the Strait is closed for a long time. Not saying it is likely, but I don't think many oil companies price that option in.

I'm stuffing myself to the gills with $FOUR. It has all the hallmarks of something hated right now. Payments. Software. Financial shenanigans amongst peers (Fiserv) as well as fundamental business problems (Paypal). Aggressive accounting (like everybody else apart from Wise and Adyen). Leverage. Massive acquisition in Europe that won't help numbers before H2' 26 and beyond.

You should never listen to oil bulls. If anyone had much success trading the worlds largest and most liquid commodity, they wouldn't spend all day on X. Anyway, as someone with 15% of my portfolio in a Canadian SAGD producer ($IPCO), I'm not sure I really want anything more than 90-100 USD oil. I'd much rather a long period of sustained higher prices than a massive spike, which leads to demand destruction as well as an acceleration in alternative energy sources and most likely lower-through-the-cycle-FCF. (and by 'higher prices', I mean something in the range of $70-80 for a couple of years, which is fine for economic growth and a lot of earnings for the industry. And inflation-adjusted, it's really nothing special). The most obvious reason prices aren't higher is that oil inventories were very, very full going into the conflict. The longer it drags out, the more those inventories get drawn down. I have no clue on tank bottom or whatever the oil bulls are pitching, but it makes sense that massive inventory draws will most likely mean there's a higher bid for oil post-conflict, if the US and China decides to restock their inventories. The joker in all of this is obviously Iran. They seem to have figured out Trump as well as the leverage they hold. I really don't see why it would be in their interest to end the conflict, before they've really hurt Trump. It's the first time anyone has really stood up to him and told him to fuck off. He's obviously frustrated with the lack of progress, but it's hard to see an easy way out. I don't know how much leverage China holds over Iran and whether they'll eventually force a deal, but I think Trump made a massive mistake, and it would make sense for Iran to take every pound of flesh that they can.

I'm a bear, but it's definitely not accurate. It's very hard to figure out ROI outside of the infrastructure/hardware layer (chips, memory etc.). But, I think one of the biggest winners of 'AI' so far is META (although it doesn't trade like one!). While they've wasted a ton of money on Llama with little to show for it externally (hardly at the frontier...), a lot of their capex is to improve their recommendation engine > higher ad conversion. And their revenue and profitability has really leaped upwards (some of it due to cost cuts). Then the big Q is the hyperscalers. How much of their cloud growth is AI? There are so many open questions. But given the lack of obvious revenue, outside of the AI labs like Anthopic and OpenAI, it's really hard to discern ROI. And it's also kinda funny that everybody chasing AI is currently chasing the bottleneck companies. But bottlenecks, obviously, increase costs and should, all else equal, lead to less demand near term and more supply long-term. But I guess everyone is looking to exit at the top, just before hyperscaler capex growth slows down.

Yeah, I am not highly confident in how it plays out, so it is not central to my thesis. In general, I do think investors often overestimate product/tech and underestimate distribution. Distribution and selling just ain't sexy.

That's my working assumption as well. It's not like department stores became more profitable when the escalator was invented. Everybody eventually adopted it, and consumers enjoyed the surplus. That seems to be the way it goes with new technology in most industries. Obviously with the caveat that execution matters, and some will be better and worse at adapting. I've been buying a lot of Autotrader in UK - an online marketplace for used car, which is basically a monopoly and a royalty on used car sales ( @changegonnacome that's one example of a good business at ~10x '26 profits assuming they keep up the buyback at these levels. They bought 0.6% of shares last week...). I didn't buy Autotrader because of AI, but I think they're an example of a business that should be able to keep some of the economic gains for itself. Both directly, on the cost side, but also in the form of launching more features/increased product velocity, which improves ability to take price. In the same vain, I think investors sometimes focus overly much on new technology vs. the power of distribution/sticky installed base. If AI increases product velocity meaningfully, it should help (well-run) companies with a large installed base of customers but perhaps not the best tech/product. Everything is tbd, but that could be someone like Global Payments.

A lot of the earnings are circular though. Nvidia books earnings upfront, customers depreciate these things over 5-7-10 years. Of course you get a massive spike in earnings. Question is what follows. Sure dotcom had silly companies, but take a look at Tesla/SpaceX. The magnitude is beyond anything we have ever seen.

On memory, I will just say; look at all the covid winners, who are now - 5 years hence - still struggling. Some of these businesses would have been way better off had they not had that massive demand spike, which led to malinvestment as demand signals were all screwed. I don't know what happens to memory, but it looks like a massive bubble to me. It's a commodity, should be a matter of time before you get a supply response or people design around it. As for LT contracts, they usually have those in shipping as well during boom times... Then they get renegotiated when things turn to shit. Happens in a lot of industries, all the time. Look at EAF...

I'm very confident there's a massive bubble in anything related to AI as well as the Elon complex. It's the dumbest market I can recall, but it also seems like a tremendous opportunity. I've never had as many actionable and juicy ideas, as AI has sucked out the air (and capital...) of large swaths of the market. It even deflated most of the 'quality' bubble, so unlike in the past, I can even buy great franchises at 10x fwd FCF instead of (just) dumpster diving. SpaceX is trying to go public at close to 2T. It does 20B in revenue and loses money. Tesla is a shitty business shedding market share but still commanding a trillion dollar+ valuation. Does anyone really think making cars and selling space-beamed broadband will be a great business? Or launching rockets into space? SpaceX only makes sense if data centers in space works and he has a monopoly on that sort of thing, but given he can't make his cars run autonomously in Austin ten years after proclaiming self-driving was here, I'll take the under on that one... But there's also this weird dissonance in the market... Because if people will pay 2T for SpaceX based on some datacenter-in-the-sky fancy, shouldn't all hyperscalers, neoclouds and what have you be selling off due to massive sunk costs? Memory is another one... It reminds me of 2021, when every 'quality bro' was doing 100p deep dives on pool companies, junk yards and tile stores and capitalizing a one-in-a-lifetime boom... But memory is a certifiably crappy business, how exactly is it gonna end well paying trillions for commodity companies due to a temporary bottleneck? Google, Meta & Amazon are a bit different. They're not crazy expensive on the typical metrics. But I still struggle to see how Google, despite fending off Open AI somewhat in search, isn't a worse business than it used to be. These companies used to stay in their lane and be royalty-like businesses. Now they think they're in some kind of existential battle with each other and investing like a drunken E&P major (on 'roids). And given Google now has real competition in search, which requires massive commute to compete, that just seems like a much worse business than an asset-light business with +90% market share and no competition.

Yes, people are generally easy to rattle. Most people are also lemmings. Looking at the 'what are you buying today'-thread, I don't get the sense that people on here are any different than the average investor! What I will say, though, is that Liberation Day was caused by Trump, and he had the ability to - and quickly did - backtrack in a big way when equity markets tanked. Nobody had any interest in covid screwing up a fragile global economy either. What's different here is that the outcome of the conflict in Iran isn't up to Trump, at least as far as I can tell. I think he made a big mistake, perhaps emboldened by Venezuela or just the fact that most everybody bent their knee to him. But the outcome of this conflict seems to be very much up to a (decimated) Iranian leadership that few seem to know. One reason why Countries generally don't cut off the head of states of other nations in a conflict is arguably that it makes negotiating some sort of settlement difficult! As I know just as little about these guys as everyone else, I have to resort to a simple framework of incentives. And it seems to me that it'll be very much in Irans interest to do enough damage to avoid future attacks (and gain long-term leverage and perhaps meaningful income from the SoH). And my point is that given prevailing equity prices of some select E&P companies, even if I'm wrong and this conflict is resolved before oil moves (much) higher, I don't think I lose much. While it doesn't have to be terrible (I don't think it will be!), every day is drags on is millions of barrels of oil drained from global inventories which, all else equal, should be helpful for medium term prices (and I would expect - and have bet accordingly! - that it might also be a kicker for deepsea, offshore oil outside the Gulf).

Appreciate your view, but those names are probably not for me. I like founder-led companies, and I don't like companies on a perpetual treadmill of drilling wells. SAGD is basically all I find interesting in Canadian O&G.

Could be. Or perhaps people have gotten complacent as these things haven't stung for a long time and buying the dip always worked. I really don't know, and I'm not calling for a big crash due to oil, I think it's unlikely, but I still think there are tail risks which aren't getting properly priced in. And while the market might generally be smart, and right, I think this is a tricky one to call. The US cut off the head of numerous Iranian leaders. It's a Country with very strong structures but also decentralized power (to make it resilient to attacks from the outside...). I don't know if other Gulf Countries, or China, can eventually put enough pressure on Iran to change course. But the status quo seems like a pretty good scenario for Iran, and every day this thing drags on, the higher the odds that oil eventually moves (a lot higher) for a while and people start panicking. Which I really think will be in Irans long-term interest. They just found out they had a nuke all along, so they better make it count.

Yeah, I don't recall many people getting these calls right, and whenever anyone is highly confident, their credibility is shot in my book. Inventories were very high going into the conflict, so it makes sense it muddles around here on the idea that things will normalize in the not too distant future. Reason why I like a select E&P here is company-specific, not a confident call on oil prices. I do however think, generally, that some bad scenarios look mispriced. I do think oil goes higher the longer this drags out, and I think equity markets are underpricing that risk, given I think that should be in Irans interest, and it's not clear to me exactly what Trump can do near-term. The whole situation and complacency gives me some jan/feb 2020 vibes, but that's not to say a bad scenario for most other things than energy is likely. Just that the odds look off and I don't. Let's see.

I don't know Hemnet well, but it was valued very dearly. Might be worth a look now. Generally, I think these are some of the best businesses around, although with the caveat that growth and reinvestment opportunities aren't great. But MSD growth without capex, expanding margins + little terminal value risk can be quite powerful over the long haul if combined with sensible capital allocation...

I mostly agree with you @Gregmal, but I'm seeing energy equities not even pricing in $70 USD oil. Let alone a scenario where oil is close to $100 USD for a prolonged period. As I stated before, it seems to me that it is in Irans interest to prolong the conflict and cause some pain to the US and American consumers. It'll make everybody reconsider an attack in the future. 90 USD oil doesn't really hurt the US (it's much better off vs. just about anyone on a relative basis), nor is it particularly high in a historic sense when inflation-adjusted. But also, Trump seems to do everything in his power to keep a lid on the oil price, and given the lack of price signal, that has the potential to blow up in his face down the line unless he gets this mess sorted (so far shale hasn't come to the rescue, and you can understand why given the lack of price signal, as he has already announced a number of deals and opened the Strait a couple of times...). Anyway, the above is more of a tactical and near term consideration. All else equal, the longer this draws out, the longer you should have some rather juicy oil prices for producers. Long term, I think what ultimately matters is shale break-evens, given it's short cycle and the swing capacity. Dallas FED has great statistics around that, and it seems to be around $65 USD and moving somewhat higher over time with inflation (efficiency gains somewhat counterbalanced by inflation+worse geology). But some of these companies produce a lot of FCF even with $65-75 oil, and if we get a prolonged period above that due to the SoH closure, some will generate a significant % of their mkt cap. And then there's the portfolio benefit in my opinion given that a lot of stocks and businesses will get affected (and probably sell off bigtime) if oil breaks out upwards, even if might not stay there for long. In which case, one can rebalance or whatever.

Autotraders' inventory is mostly from used car dealers, less so private transactions. It has a 50 year history in UK. Billions has been spent (and lost) trying to dislodge it, but it's where customers go to buy used cars. I don't see that changing. The tricky part is that the industry is in a bit of a tough spot, and they had some backlash over some changes they made, so they'll probably have to lay a bit low with the price hikes (they're basically a monopoly), but at this valuation it's basically trading as if ex-growth anyway and they're now aggressively buying back shares due to the silly valuation. I made it one of my largest positions.

I stole this one from Twitter, as I had to try it myself, but I can't see how this doesn't end in a bust of some sort:

Storage levels were very high going into the conflict. Storage capacity, combined with a surge in shale/short cycle oil, as well as better and faster offshore development, should all else equal mean less boom and busts than in the past. I think that's a good thing for both the global economy, as well as oil companies, as it lessens the risk of overinvestment. I agree with a lot of different views in this thread and think it's possible that a number of them can be true at the same time. Inflation-adjusted $90 USD isn't terrible. The US is much less dependent on oil than in the past. Energy is 3% of the S&P500. But perhaps most importantly, as a net exporter (let's forget for a minute that the US imports a lot of refined product), the US is RELATIVELY - to the rest of the world - much better off. Anyway, my working assumption is Iran should have little incentive to do a deal before it hurts the US economy some. And given the lack of damage to the US economy from 90-100 USD oil so far, Trump doesn't seem to be in a rush either. In that regard, it does feel a bit like early 2020, watching things unfold in slow-motion. Back then, it didn't really matter, until stock markets crashed, and it was suddenly the only thing that mattered. Now it could be that China and others will try to force Irans' hand, or perhaps the strait just keeps staying closed in which case, eventually, oil prices will move higher. It's a massive daily drawdown of global inventories at the current rate, and no matter if it resolves today or in a month, I'd assume oil prices will stay higher for longer - perhaps in that 65-85 USD range - given inventories will have to be rebuilt (at least some), and perhaps an increased risk premium. 65-85 USD oil isn't high from an inflation adjusted-perspective, but in such a scenario, (some select) E&P companies look (very) cheap. And if things turn to shit and oil prices go much higher, they'll do very, very well. Personally I have 15% of my portfolio in one E&P co. If the SoH opens tomorrow, I'll get wacked, but the rest of my portfolio should carry me through just fine anyway. And over the midterm, I still expect to make plenty of money on that position, given that it doesn't need 100 USD oil to 'work'.

Seems like Intact is coming for Hiscox now... The end of London-listed insurers might be near... That makes Lancashire Holdings a bit of a sitting duck... + Conduit RE, which has a bit of hair though but also trading at a discount to TBV. I don't own any, but I can't see Lancashire staying independent through this softening market, unless shares really rocket. It's not even unlikely that Fairfax comes at them. Lancashire seems to have a pretty unique culture and probably prefers being part of a holding company.

FIS, Shift4, MAB1