kab60

More WBA

Some Vertu PLC and Motorpoint PLC

Sold some WBA and SPB

AM apparently has a ROIC almost twice the norm (like 17-18 pct), so there is a fear fees will have to be cut if AR files . Perhaps that is already more than reflected, but I think some scenarios are difficult to handicap (stranded assets) which makes me more attracted to WMB (transco, management taking advantage of public/private discrepancies). There's a write up on AM on VIC with some bearish posts that are helpful to understand the bear case.

SAVE, BERY - bit of BRK the other day below 200

More Bery, More LNR

What are your thoughts on volume declines?

Company is overly indebted + terrestrial radio is a no growth industry. That said, the price action today does seem extreme. The amount of (very underwater) stock the Chairman of the Board has purchased in the open market since the CBS transaction is insane. Leverage is high, but as recently as April they issued bonds at 6,5% due 2027 and got more favorable terms on their term loan. Those bonds traded ABOVE par today, so there's a big discrepancy between bond investors and equity investors - I'm betting the equity guys are acting hysterical. Also picked up some Gray Television (shoutout to Packer). Trading 15/share while generating 4 dollar per share in FCF - and guiding for higher next year. Those bonds are also trading like it's smooth sailing.

Entercom (market puking like it's Burford!)

New position in St. James Place and more Spectrum Brands (sold a bit of Autonation)

I think you forgot Druckenmiller in that lineup of all time stars you posted, but yeah, obviously there will be exceptions. Just extremely difficult to tell whether it's luck or skill. Buffett sitting on plus 100B of cash has been a drag on performance (and still is - I think he has a really hard time shrinking his capital base), and I'm not sure Marks has been hitting it out of the ballpark either recently (I like his writings but from a practical point of view a lot of this macro thoughts are pretty useless I think). Further, as for Buffett - his investment universe is very limited (and he's limiting himself - recent letter by Wedgewood I thought was quiet good). As for people without 100B I think there's plenty of stocks today that look much, much more promising than say 10 year treasuries or cash. I believe a somewhat clever investor once said that more money has been lost worrying about the next recession than in recessions themselves.

Wow, that is frickin crazy. And then you still have tons of people that spend time on macro and trying to time the market.

More Spectrum Brands, as well as more Berry Global recently @around 48

Back in ALSK. Made some decent money on it before but sold when the CEO instituted a poison pill. Now he's booted and the stock hasn't really reacted. It's cheap on a standalone basis but I'd expect a sale before the end of the year.

1) Yes, the negative rent reduces our outstanding loan balance - even with the first ten years being "interest only". I think they struggle somewhat with the implications of paying to lend me money so they reduce debt outstanding instead. 2) Yes, in practice I do pay a bit after all costs and taxes. So the interest is what it is (-0,43 pct. now), but then the mortgage servicer charges some 80 basis points for servicing the loans which is variable depending on loan type (lower on fixed rate loan than floating), LTV etc. My mortgage servicer is Nykredit which is membership owned, so if you have your mortgage loan through them (which is actually a bond, then you get a discount on the servicing (like 15 basis points of discount I think). And then they pay you 250 DKK each quarter as well. :) It's pennies but so is the payments on the mortgage. No wonder banks are struggling.

Home prices in Denmark is very divided. I live in a flat in Copenhagen which has basically doubled since 2011, and it's more expensive in Copenhagen than it was in 2007, but prices have actually come down in the last year - anectodally around 10 pct. But that's due to Danish politics (stricter lending requirement, down payment of 5 pct., expected increase in property taxes on apartments). Other parts of the city are still way below 2007 levels. Rates being where they are the housing market here doesn't look expensive. I ran the math the other day since a combination of falling RE prices plus falling rates got me interested, and if I put down 20 pct. LTV cash and borrow 80 pct. at 1 pct. 30 year loan (amortizing) I could probably get a 8-10 pct. (levered) return from paying down the loan since the cost of renting is "way" higher than the cost of buying. Now I don't wanna go long RE atm (and I am somewhat already with our own flat) - espescially with all hassle involved - but the math is interesting since the Danish RE system is a bit unique. So you can be wayyy technically insolvent and the debt still isn't possible to call for the lenders (it's a bond) as long as you pay on time. So the risk is you can't find someone who'll rent your place or rents drop massively, but all trends point to increased urbanization.

No idea what to make of it, but my 30 year mortrage runs at minus 0,43 pct. at the moment (floating rate, changes a couple of times a year) with the first 10 years being non-amortizing, but since the rate is negative I actually do pay down the loan. Means there's quiet a bit more to invest each month (coming from 3 pct. amortizing fixed 30 year), but strange times indeed. Couple of weeks ago banks here in Denmark opened a new mortgage bond fixed 30 year at 1 pct. And Austria are looking to sell a 100 year bond that pays 1,2 pct. annually. Strange times indeed. I could see the attraction in loaning at 1 pct. for 30 years, but the risk/reward from the other side looks pretty poor I'd think. Since I'm not very interest rate sensitive I'll stick to ultrashort duration (which has been a winner for a looong time), but if rates actually DO go up a 1 pct. loan would be big.

This. I'm pretty close to the situation and do think the setup looks interesting (but I'm not allowed to invest), but it's difficult to handicap. Whether the equity is cheap depends on the size of an eventual fine. And then, like with Wells, costs are gonna be high for years due to increased compliance etc. etc. Another thing, which might be overlooked here, is that most Nordics banks are structurally struggling at the moment since interest rates have come down again - and are expected to stay down for a long time - and still consumers aren't really spending. And so far they haven't been very good at passing increased costs on to their customers so profitability might be weak for a long time. Which basically means most banks look very cheap on a p/TBV basis. But that's clearly a function of a low expected ROE.

Would you care to expand on this? While I only spent about 5 minutes looking at it earlier this week, my first impression was that it is a more-or-less fairly valued. What's the special sauce here? Why is it a high quality business? What make the capital allocation so good? Sorry for the late reply, I missed your post. I think the special sauce is management which has a major stake in the business and have proven to be opportunistic and savy doing M&A (there's an old writeup on VIC with some good info on the CEO and his past track record). High quality business might be a stretch, but the numbers do suggest that (high ROE/ROIC), throwing off cash. I like how it's a boring business in what's probably a low/no growth industry and consider it somewhat of a poor mans Cimpress (even though you could easily argue that these guys are much better operators...). It doesn't look cheap on a P/E basis, but it's a different story when you look at EV/Ebitda og Ev/Ebitda and include the large cash portion on the BS. Usually you might wanna give the cash a large haircut (since in a lot of HK/Japanese/Korean companies it's not getting distributed) but Lion Rock has a sizeable dividend.

I've looked at some of them and went with Lion Rock Group which is a pretty significant position for me. While not as cheap on a NCAV basis etc. as some of the above, it's cheap AND growing value nicely. It's a high quality business in a boring and tough industry but with high quality management. Capital allocation is stellar, and management has a lot of skin in the game.

Did the same today and also sold some puts on MO. Added to MO as well Why MO over the other tobacco companies if you don't mind?

Hi. I've been looking a bit into that. Seems very interesting. Have you seen a decent writeup anywhere or mind to share a couple of points? What's obvious is the deposit growth, which is incredible. The culture is based on the Commerce Bank model, that Vernon Hill "invented" in America. The culture is real - I can tell you that. Both customers and employees love this company. You have 56 "stores" going to 100-130, roughly in 5-6 years. The "store model" is totally repeatable - and UK will eventually support, perhaps, 200 stores. There are structural reasons for the growth - by that I mean - the UK banking sector is being forced to shrink (I mean the legacy banks) as the UK regulators and the public's interests have not been served. (RBS is still 65% owned by gov). So some assets are being dispersed, the market is opening up, and legacy branches have closed at a fast rate due to cost cutting and poor locations. So there are significant industry tailwinds for the growth of "challenger" banks. Metro is the best of them all. It's the fastest growing bank I have ever seen in my life. Looks like Metro Bank is blowing up. Risk weighting for mortgages off - they had RWA for commercial mortgages at 50% rather than 100%. Did they forgot to read the manual for bank accounting in the UK? Looks doomed to me, or at least has to raise capital. On then surface, it still looks adequately capitalized, but I stay away from financials that can’t get their accounting right - a lot of them become doughnuts. https://finance.yahoo.com/news/british-lender-metro-banks-2018-072746266.html I'm not savy enough to figure out this Company (and luckily stayed away even though the story looked compelling), but their trading update really rubs me the wrong way. For someone as simple as me I'd think everything was fine and dandy even though they had a lil' slip up with some loan designations... Check it out for yourself. https://www.metrobankonline.co.uk/globalassets/documents/investor_documents/metro_bank_trading_update.pdf

This. I don't understand why one needs to know much more than that. I think a personal investor has a big advantage because one can ignore short term thinking and accept volatility as a gift and opportunity, while it's a real (job) risk for PM's. But I really don't think any smalltime investors have an advantage in interpreting PMI data out of ChIna and what have you, so when even pro's seem to get it wrong more often than right, why even try? The odds look really bad. As for buying when there's blood in the streets - there's always a bloody street somewhere. I mean, even mega caps often swing 40 pct from top to bottom during the year, so surely there is opportunies (now I'm not saying they're easy). As for Howard Marks, I think he's pretty wise. What I've taken away from him is that playing leveraged small cap probably isn't the best time right now, but as always it depends on price.

I don't know. I think times are pretty good. Better than in a long time. Sure you're not just putting too much emphasis on recent data? I mean, when was Italy not a mess? And who cares about the UK? I think it's a futile game. Why even bother when you can buy good businesses with plus 10% FCF yields and treasuries are at 2,5%? If shit hits most good companies emerge stronger from a crisis - hopefully with less shares outstanding. I'm all in. 8) (famous last words?)

Maybe you're right, maybe you're not. Historically, I suppose miles driven have trended up quiet a bit as well, and look where that has gotten us... I really don't know, which is why I can't get myself to buy what has historically been terrible - TERRIBLE - businesses despite them looking cheap on a P/E basis. I understand OEM profitability is boosted by the switch from sedans to trucks, but what happens if/when oil prices rise? Haven't we seen that play out before? I believe there was a time where everyone wanted to build small vehicles... Now late in a cycle all people talk about is trucks... I like Fiats' brands, but doesn't that dash to trucks increase competition and possibly hurt margins? And what if oil hits 120 USD/barrel and we get a recession - will trucks still be in vogue? Another thing, which I mentioned in the FCAU thread and didn't see anyone address. What happens to working capital in a downturn? I believe it's negative some 20B (at Fiat)? Again, I don't know the answer, but I really wouldn't value these businesses on their P/E but try to gauge how much cash they'll generate to their owners. And I'm not smart enough to come up with a reasonable answer.