KJP
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Posts posted by KJP
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I have a commuting habit where I read valuelines, try to guess price and if stock is a lot lower than I record it. These are stocks I thought were cheap on an earnings basis:
Sally Beauty
DXC Technology
Tupperware
E-trade financial
Hanes
CIBC
Seagate
capri holdings
How long have you been doing that and have you tracked how your list has performed?
I also compile lists from various sources of companies that appear on first look to be cheap. I've never systematically tracked the performance of those companies so I cannot compare it to my actual portfolio returns. It wouldn't shock me if all further research/thinking that I do adds nothing to my returns (or even hurts them).
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You are aware QRTEA pays up to 5% of sales to the distributor, correct?
If the distributor were to own QRTEA, this 5% expense is eliminated (worth +20% to QRTEA EBITDA @ full conversion).
Assume the distributor is currently getting $100 million from QRTEA. That $100 million shows up as an expense for QRTEA and as revenue for the distributor.
If the distributor were to buy QRTEA, and for internal accounting purposes the distribution payments were eliminated, then the QRTEA division's results would look better by $100 million because it would be allocated $100 million less in expenses, but the distribution division's results would look worse by the same $100 million, because it would be allocated $100 million less in revenue. Combining the entities does not change the economics of both and no value has been created. That is why vertical integration often doesn't make sense.
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I'm suggesting that it be "thrown in" to bundles DISCA is planning to launch, which target women. No "cost" to the consumer.
QRTEA's business model is to get on as many distribution platforms as possible, so they'd love to be "thrown in" to any DTC bundle that would take them. DISCA doesn't need to buy QRTEA to do that.
To the extent you're suggesting that QVC and HSN would be exclusive to a DISCA-based DTC bundle, that would likely kill the business by vastly shrinking distribution of those channels.
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Are you suggesting that QVC and HSN would be better off if they charged fees for viewers to watch them? Isn't there a reason QVC and HSN currently have to pay cable companies to carry them, as opposed to getting paid by the cable companies for their content?
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If I can jump in with a question, why should investors ignore real estate depreciation ? (When they use FFO as replacement to net income)
Buildings and parking lots also get old, crumble and need design changes to keep them looking attractive and serve changing needs...
FFO probably already includes maintenance costs for the properties right?
The accounting depreciation for the properties don’t reflect the reality. ( unlike Oil and Gas companies who also use FFO like a joke)
AFFO is supposed to include management's estimate of maintenance cap ex and typically straight-lines rents.
As for why real estate investors should ignore depreciation, I don't think they should. But they should also understand that unlike most other assets, properly maintained real estate can appreciate in value over time. Under US GAAP, that appreciation in value in not recorded. So, at the end of the day, what information is GAAP depreciation really giving you?
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With interest rate almost certainly going to continue falling, I wonder if REITs will continue to go up. So I start to get interested.
Mind sharing what the most important metrics to look at for a REIT?
If they keep paying out 90% of their earnings, how do they make new acquisitions of properties?
Debt and dilution +1031s
In addition, the 90% rule applies to taxable income. Depending on the REIT, non-cash depreciation charges can create a tax shield that allows some cash to be retained without violating the rule that 90% of taxable income must be distributed to keep pass-through tax status.
As a practical matter, however, many REITs are marketed as yield vehicles and thus distribute based on FFO or AFFO, rather than taxable income. Those REITs are in the same position as an MLP that distributes all of its DCF -- as Gregmal explained, they can only acquire assets via new capital (either debt or equity) or asset swaps (1031 exchanges).
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I know this is an oversimplification of a difficult task in creating individualised syllabuses but I don't believe that cramming algebra down a kids throat when they are clearly more interested in liberal arts (and vice versa) will motivate anyone.
I think the issue of cramming algebra to kids who are not interested in it is relatively minor in the education picture (although still important).
The much bigger issue is teaching kids who have little to no background/motivation/parental supervision/parental role models/peer support/supporting environment/etc. skills that would allow them to make something productive from their lives. Possibly to ambivalent or even hostile kids. This is very hard to do and it's not surprising that even best intentions and programs don't work (like Bill Gates discovered).
I think it depends on where you are at, which school district, and sometimes even the school.
As was highlighted in the article link by LC, there are NUMEROUS children (and families & culture) who do not value education. Some might say that they are even hostile towards education.
So why force them to do something they don't want/appreciate? Society is spending billions & Billions & BILLIONS on this.
Why not make education voluntary? Promote it, work with community leaders, run PSA announcements like "Mr. T says Don't be a FOOL, STAY IN SCHOOL!".
Let ANYBODY who wants an education in the system. Work to educate them to the best of their capability to learn.
HOWEVER, the student has a duty to be reasonably well behaved, show up the vast majority of the time, attempt to do the work to the best of their ability, and so on. If they mis-behave or don't want to be there, that is fine.
If a child mis-behaves, they are EITHER out of the system OR if the parent consents, they will be disciplined and if the behavior is bad enough, they are sent to remedial classes where they will dealt with appropriately.
If the child & parents don't care, why should we? Why should burn precious capital in a futile gesture? Perhaps most importantly of all, why should we allow trouble makers to sabotage OTHER children's education?
Change is desperately needed!
What about the children who are mis-behaving because their home life is a catastrophe and their parents don't care about them or their education? What responsibility, if any, does society at large (via its government) have towards those children? Should public schools be, in part, an effort to try to help those children overcome the handicap of parents who don't care? Or should we just wash our hands of them?
I'm no education expert, but I agree that more money probably won't help teach someone who doesn't want to learn.
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Subs declining obviously isn't great, but this isn't the decline of sports as we know it. The teams suck and had a summer that can only be described as embarrassing. But MSG Networks owns the content and really just needs to find a way to monetize it differently, before cable/cord cutting becomes too much of a problem. Right now it isn't a problem IMO. Sports betting will only further keep the gravy train moving.
But for now its trading with something like a 20%+ FCF yield with $45M in interest expenses to likely be eliminated or significantly reduced in the next 3 years. Big buybacks and dividends are also expected at 2X EBITDA, which should also be in the not too distant future.
Given that Dolan controls this and will do what it takes not to destroy his own company, I see zero chance at this being a 0 ever, and zero chance the distribution rights disappear in 15 years or whatever unless it is of significant benefit to another Dolan entity, which I also happen to own.
I agree sports aren't dying anytime soon. In fact, the NBA seems to be getting more popular.
What I don't know is whether bundling has caused non-sports viewers to subsidize sports viewers, and, if so, whether continued unbundling/cord-cutting will unwind some of that. But to your point, if MSGN can't continue to get increasing per-sub fees from traditional cable cos, maybe they can make just as much (or more) selling higher priced, but lower volume, DTC subscriptions and perhaps selling some subset of rights to the likes of Amazon, Hulu, YouTube, etc. My understanding is that basketball is also by far the most international of the big four US sports, so it should interest companies with global distribution in a way that the NFL, MLB, and NHL likely do not.
Also, I agree that owning MSG likely presents a hedge against the true worst case scenario for MSGN, but I think there are several more years before you need to worry about that.
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^ I passed on this because it is a cigarbutt ( albeit with a lot of life left) in a sense that it will be worth far less once the contract with MSG ( the sister co) is up. It rather deal with the foibles of MSG, as sports team valuations have tail winds.
Dolan still controls both entities. He won't just let the contract run out and wipe out billions in value.
Just added more at 14.75.
Company has been plowing cash into debt pay down, now standing around $700M net of cash. You've got $200M FCF and even with sub decline a fairly decent chunk of it will continue to get offset by decrease in interest expenses.
6.5% decrease in subscriber is staggering
Same thought I had. I know they have been able to continue to increase per-sub fees, but the volume decline is big.
If you take a perhaps overly harsh view and assume that the business has no value beyond the life of the current contracts with MSG, so the business value is simply a DCF over the life of the existing contracts, what sub declines and per-sub fee increases are implied by the current enterprise value?
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Hello,
I have been spending a bit of time trying to get more familiar with intangible asset amortization for different businesses.
There have been a few examples where I have come across where the largest contributor to total amortization charges is something like “customer relationships” for example if you look at Cognizant or Sherwin Williams – in what cases do you think it is appropriate to exclude this as a go forward economic cost? I don't really see it as an ongoing cash cost for either business but it does seem to weight on near term profitability. Any related reference pieces or comments on this from a broader perspective would be appreciated as well.
It depends on what you're trying to do. If you want to look at the economics of the existing business going forward, then amortization related to "customer relationships" and similar intangibles arising from purchase accounting should likely be excluded, because the costs associated replacing old customer relationships with new ones is already being accounted for in SG&A. The issue that can be difficult to determine in real time is whether the company is spending enough to maintain steady state (or grow) or is instead using acquisitions to mask declines in the legacy business. But I believe it is better to try to answer that question directly, rather than try to account for it vaguely and indirectly by declining to exclude some or all of purchase accounting related amortization in your go-forward operating earnings calculation.
On the other hand, if you want to see how well management allocates capital over long periods of time or how what the actual returns have been on acquisitions, then I would continue to subtract amortization from your operating earnings calculation, but I would also add all amortized amounts back onto the balance sheet, which will give you a better sense of the actual amount of capital invested in the business than book equity, which will be reduced over time via purchase accounting amortization.
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A bailout is completely ridiculous and would have a negative effect on the future of education and generations. It's a band-aid solution at best.
A bailout is also a huge slap in the face to people who were responsible like myself. I went to college for Petroleum Engineering (2yrs). End of my sophomore year I realized the industry was starting to show signs of slowing. I figured hey, I don't want to be 60k in debt and not have a potential job lined up. So I dropped out and took a year off. To the scoff of my college friends and others I took a job as a lowly UPS driver and busted my butt on 12 hours days. I made pretty good money (I was lucky). I decided to finish school in another program at an online university. I don't believe that the university you go to really matters unless it's an IVY. Well I continued to bust my butt getting up at 4:30 in the morning to study, head to work, get home around 8 and then study a few more hours in the evening. Practically had no weekend etc. But when all was said an done I graduated basically debt free, had a good savings account and a job to hold me over until I found a job. Ended up only taking 2 months to find one that paid the same with way better hours. I'm in better shape than all my friend who WILLINGLY chose to take out enormous loans. I would say financially I'm 4-7 years ahead of most people I graduated with.
So a bailout? No, screw that. I payed my way and I'm not paying for anyone elses poor decisions. I'm paying out of pocket for masters right now. I agree with some others on here that one of the most harmful things this education system has done to young American students is tell them "you must go to college." This bailout will do nothing but devalue higher and lower education further. In my opinion this generation needs to learn from their mistakes (whether it was their fault of not). If a bailout is given do you think these parents are more or less likely to push their kids into college at any cost? S many of these "white collar" jobs could be done by smart high school graduates with some basic training. But as it stands now the Bachelors degree seems to be the new GED and the Masters is quickly becoming the new Bachelors. That trend needs to be reversed.
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Solution?
First and foremost I don't believe the govt should be in the business of loans. But being that it exists the system clearly needs reformed.
Put stipulations on loans.
1.) Loans should only be given out to HS graduates who have good GPA's.
2.) Bureau of Labor should do studies every so often to see the supply and demand of jobs. Loans should only be given out to students majoring in say top 10 needed careers (RN).
3.) This dependency on govt loans needs to be reduced. I say ween the total number of loans given over a 10 year period until you hit 0. (maybe a it extreme)
4.) State schools shouldn't offer "worthless degrees." If you want a basket weaving degree then you can pay your own way with a private loan at a liberal arts university.
5.) Reform High School and add apprenticeships. Say Katie is good at math and has in interest in engineering. Well maybe starting junior year let her work at a local engineering firm for a few hours. This gives experience and lets employers find possible future employment. Perhaps if this is done some companies would come up with contracts saying "we will pay for your college education if you commit 5 years of post grad employment to us."
Not only that it would help create better trained HS students. It could potential reduce this ridiculous barrier (Bachelors Degree) for many of these jobs and bring back merit to a GED.
(I understand this might not factor in employment laws etc.)
You don't needs a college degree to make a good livings. As it stands now poverty is less than 1% across any ethnicity if you follow these simple rules.
1.) Graduate HS
2.) Don't have a child before graduating HS
3.) Upon graduating HS take any full-time job you can get (can be minimum wage).
Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large.
Wouldn't this create a massive discrepancy between private and public institutions? I mean public schools receive state legislator and federal funding. So having them guarantee the loans would still technically come back on tax payers right? I know the majority of their funding is probably derived from tuition but there is certainly a tax element. Whereas private universities receive no state/federal funding. Then you have the issue of capping tuition costs. How would you do this with the inevitable demand of either tuition increases to pay these guaranteed loans? Either that or they ask for more money from state and federal funding. I'm not saying your wrong but it seems like the money is coming from the same pool so to speak.
I agree with the regulators part. I wasn't thinking of having them determine what degrees are worthless. More along the lines of recognizing supply and demand in the general workforce.
I suspect tuition would go down, not up. Universities currently have incentives to continually raise tuition to fund internal salaries, various projects, etc. -- the typical bureaucratic incentives. They have been able to raise headline tuition more than inflation because of subsidies arising from federally issued or guaranteed loans. If that subsidy were taken away and the risk of loss were placed on universities, I believe they would find ways to cut tuition costs (and the attendant risk of loss on their guarantees) significantly.
The public/private distinction is an issue, and public schools might continue to enjoy a taxpayer subsidy to some extent. But they are also the universities with the lower tuition costs to begin with, and legislators could make any university debt non-recourse to the state, preventing any taxpayer subsidy. I believe this is already the case for most public university systems in the U.S. -- although they are considered arms of the state for many purposes, their debt is not backed by the full faith and credit of the state that sponsors them.
https://www.cnbc.com/2018/06/25/why-your-first-job-out-of-college-really-really-matters.html
My concern would be that incentive's colleges to get jobs for graduates would create a more pay to play employment model. As the article above says 40% of college grads take jobs that don't require a degree. How would universities handle the inevitable lawsuits? Or is that not what you are saying in terms of accountability?
I'm not sure what lawsuits you're referring to. Lawsuits on the guarantees?
I may have completely misunderstood what you were saying. What I thought you were saying was that if students upon graduation could not find a job would be able to sue the college and put the loan back on them to be paid. What did you mean by accountability/guarantee?
No. I'm suggesting that universities be required to guarantee federally issued school debt. If the student defaults, the government can sue the university on the guarantee, and the university would retain the right to seek indemnity from the defaulting student, as on a typical debt guarantee.
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A bailout is completely ridiculous and would have a negative effect on the future of education and generations. It's a band-aid solution at best.
A bailout is also a huge slap in the face to people who were responsible like myself. I went to college for Petroleum Engineering (2yrs). End of my sophomore year I realized the industry was starting to show signs of slowing. I figured hey, I don't want to be 60k in debt and not have a potential job lined up. So I dropped out and took a year off. To the scoff of my college friends and others I took a job as a lowly UPS driver and busted my butt on 12 hours days. I made pretty good money (I was lucky). I decided to finish school in another program at an online university. I don't believe that the university you go to really matters unless it's an IVY. Well I continued to bust my butt getting up at 4:30 in the morning to study, head to work, get home around 8 and then study a few more hours in the evening. Practically had no weekend etc. But when all was said an done I graduated basically debt free, had a good savings account and a job to hold me over until I found a job. Ended up only taking 2 months to find one that paid the same with way better hours. I'm in better shape than all my friend who WILLINGLY chose to take out enormous loans. I would say financially I'm 4-7 years ahead of most people I graduated with.
So a bailout? No, screw that. I payed my way and I'm not paying for anyone elses poor decisions. I'm paying out of pocket for masters right now. I agree with some others on here that one of the most harmful things this education system has done to young American students is tell them "you must go to college." This bailout will do nothing but devalue higher and lower education further. In my opinion this generation needs to learn from their mistakes (whether it was their fault of not). If a bailout is given do you think these parents are more or less likely to push their kids into college at any cost? S many of these "white collar" jobs could be done by smart high school graduates with some basic training. But as it stands now the Bachelors degree seems to be the new GED and the Masters is quickly becoming the new Bachelors. That trend needs to be reversed.
__________________________________
Solution?
First and foremost I don't believe the govt should be in the business of loans. But being that it exists the system clearly needs reformed.
Put stipulations on loans.
1.) Loans should only be given out to HS graduates who have good GPA's.
2.) Bureau of Labor should do studies every so often to see the supply and demand of jobs. Loans should only be given out to students majoring in say top 10 needed careers (RN).
3.) This dependency on govt loans needs to be reduced. I say ween the total number of loans given over a 10 year period until you hit 0. (maybe a it extreme)
4.) State schools shouldn't offer "worthless degrees." If you want a basket weaving degree then you can pay your own way with a private loan at a liberal arts university.
5.) Reform High School and add apprenticeships. Say Katie is good at math and has in interest in engineering. Well maybe starting junior year let her work at a local engineering firm for a few hours. This gives experience and lets employers find possible future employment. Perhaps if this is done some companies would come up with contracts saying "we will pay for your college education if you commit 5 years of post grad employment to us."
Not only that it would help create better trained HS students. It could potential reduce this ridiculous barrier (Bachelors Degree) for many of these jobs and bring back merit to a GED.
(I understand this might not factor in employment laws etc.)
You don't needs a college degree to make a good livings. As it stands now poverty is less than 1% across any ethnicity if you follow these simple rules.
1.) Graduate HS
2.) Don't have a child before graduating HS
3.) Upon graduating HS take any full-time job you can get (can be minimum wage).
Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large.
Wouldn't this create a massive discrepancy between private and public institutions? I mean public schools receive state legislator and federal funding. So having them guarantee the loans would still technically come back on tax payers right? I know the majority of their funding is probably derived from tuition but there is certainly a tax element. Whereas private universities receive no state/federal funding. Then you have the issue of capping tuition costs. How would you do this with the inevitable demand of either tuition increases to pay these guaranteed loans? Either that or they ask for more money from state and federal funding. I'm not saying your wrong but it seems like the money is coming from the same pool so to speak.
I agree with the regulators part. I wasn't thinking of having them determine what degrees are worthless. More along the lines of recognizing supply and demand in the general workforce.
I suspect tuition would go down, not up. Universities currently have incentives to continually raise tuition to fund internal salaries, various projects, etc. -- the typical bureaucratic incentives. They have been able to raise headline tuition more than inflation because of subsidies arising from federally issued or guaranteed loans. If that subsidy were taken away and the risk of loss were placed on universities, I believe they would find ways to cut tuition costs (and the attendant risk of loss on their guarantees) significantly.
The public/private distinction is an issue, and public schools might continue to enjoy a taxpayer subsidy to some extent. But they are also the universities with the lower tuition costs to begin with, and legislators could make any university debt non-recourse to the state, preventing any taxpayer subsidy. I believe this is already the case for most public university systems in the U.S. -- although they are considered arms of the state for many purposes, their debt is not backed by the full faith and credit of the state that sponsors them.
https://www.cnbc.com/2018/06/25/why-your-first-job-out-of-college-really-really-matters.html
My concern would be that incentive's colleges to get jobs for graduates would create a more pay to play employment model. As the article above says 40% of college grads take jobs that don't require a degree. How would universities handle the inevitable lawsuits? Or is that not what you are saying in terms of accountability?
I'm not sure what lawsuits you're referring to. Lawsuits on the guarantees?
-
A bailout is completely ridiculous and would have a negative effect on the future of education and generations. It's a band-aid solution at best.
A bailout is also a huge slap in the face to people who were responsible like myself. I went to college for Petroleum Engineering (2yrs). End of my sophomore year I realized the industry was starting to show signs of slowing. I figured hey, I don't want to be 60k in debt and not have a potential job lined up. So I dropped out and took a year off. To the scoff of my college friends and others I took a job as a lowly UPS driver and busted my butt on 12 hours days. I made pretty good money (I was lucky). I decided to finish school in another program at an online university. I don't believe that the university you go to really matters unless it's an IVY. Well I continued to bust my butt getting up at 4:30 in the morning to study, head to work, get home around 8 and then study a few more hours in the evening. Practically had no weekend etc. But when all was said an done I graduated basically debt free, had a good savings account and a job to hold me over until I found a job. Ended up only taking 2 months to find one that paid the same with way better hours. I'm in better shape than all my friend who WILLINGLY chose to take out enormous loans. I would say financially I'm 4-7 years ahead of most people I graduated with.
So a bailout? No, screw that. I payed my way and I'm not paying for anyone elses poor decisions. I'm paying out of pocket for masters right now. I agree with some others on here that one of the most harmful things this education system has done to young American students is tell them "you must go to college." This bailout will do nothing but devalue higher and lower education further. In my opinion this generation needs to learn from their mistakes (whether it was their fault of not). If a bailout is given do you think these parents are more or less likely to push their kids into college at any cost? S many of these "white collar" jobs could be done by smart high school graduates with some basic training. But as it stands now the Bachelors degree seems to be the new GED and the Masters is quickly becoming the new Bachelors. That trend needs to be reversed.
__________________________________
Solution?
First and foremost I don't believe the govt should be in the business of loans. But being that it exists the system clearly needs reformed.
Put stipulations on loans.
1.) Loans should only be given out to HS graduates who have good GPA's.
2.) Bureau of Labor should do studies every so often to see the supply and demand of jobs. Loans should only be given out to students majoring in say top 10 needed careers (RN).
3.) This dependency on govt loans needs to be reduced. I say ween the total number of loans given over a 10 year period until you hit 0. (maybe a it extreme)
4.) State schools shouldn't offer "worthless degrees." If you want a basket weaving degree then you can pay your own way with a private loan at a liberal arts university.
5.) Reform High School and add apprenticeships. Say Katie is good at math and has in interest in engineering. Well maybe starting junior year let her work at a local engineering firm for a few hours. This gives experience and lets employers find possible future employment. Perhaps if this is done some companies would come up with contracts saying "we will pay for your college education if you commit 5 years of post grad employment to us."
Not only that it would help create better trained HS students. It could potential reduce this ridiculous barrier (Bachelors Degree) for many of these jobs and bring back merit to a GED.
(I understand this might not factor in employment laws etc.)
You don't needs a college degree to make a good livings. As it stands now poverty is less than 1% across any ethnicity if you follow these simple rules.
1.) Graduate HS
2.) Don't have a child before graduating HS
3.) Upon graduating HS take any full-time job you can get (can be minimum wage).
Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large.
Wouldn't this create a massive discrepancy between private and public institutions? I mean public schools receive state legislator and federal funding. So having them guarantee the loans would still technically come back on tax payers right? I know the majority of their funding is probably derived from tuition but there is certainly a tax element. Whereas private universities receive no state/federal funding. Then you have the issue of capping tuition costs. How would you do this with the inevitable demand of either tuition increases to pay these guaranteed loans? Either that or they ask for more money from state and federal funding. I'm not saying your wrong but it seems like the money is coming from the same pool so to speak.
I agree with the regulators part. I wasn't thinking of having them determine what degrees are worthless. More along the lines of recognizing supply and demand in the general workforce.
I suspect tuition would go down, not up. Universities currently have incentives to continually raise tuition to fund internal salaries, various projects, etc. -- the typical bureaucratic incentives. They have been able to raise headline tuition more than inflation because of subsidies arising from federally issued or guaranteed loans. If that subsidy were taken away and the risk of loss were placed on universities, I believe they would find ways to cut tuition costs (and the attendant risk of loss on their guarantees) significantly.
The public/private distinction is an issue, and public schools might continue to enjoy a taxpayer subsidy to some extent. But they are also the universities with the lower tuition costs to begin with, and legislators could make any university debt non-recourse to the state, preventing any taxpayer subsidy. I believe this is already the case for most public university systems in the U.S. -- although they are considered arms of the state for many purposes, their debt is not backed by the full faith and credit of the state that sponsors them.
-
A bailout is completely ridiculous and would have a negative effect on the future of education and generations. It's a band-aid solution at best.
A bailout is also a huge slap in the face to people who were responsible like myself. I went to college for Petroleum Engineering (2yrs). End of my sophomore year I realized the industry was starting to show signs of slowing. I figured hey, I don't want to be 60k in debt and not have a potential job lined up. So I dropped out and took a year off. To the scoff of my college friends and others I took a job as a lowly UPS driver and busted my butt on 12 hours days. I made pretty good money (I was lucky). I decided to finish school in another program at an online university. I don't believe that the university you go to really matters unless it's an IVY. Well I continued to bust my butt getting up at 4:30 in the morning to study, head to work, get home around 8 and then study a few more hours in the evening. Practically had no weekend etc. But when all was said an done I graduated basically debt free, had a good savings account and a job to hold me over until I found a job. Ended up only taking 2 months to find one that paid the same with way better hours. I'm in better shape than all my friend who WILLINGLY chose to take out enormous loans. I would say financially I'm 4-7 years ahead of most people I graduated with.
So a bailout? No, screw that. I payed my way and I'm not paying for anyone elses poor decisions. I'm paying out of pocket for masters right now. I agree with some others on here that one of the most harmful things this education system has done to young American students is tell them "you must go to college." This bailout will do nothing but devalue higher and lower education further. In my opinion this generation needs to learn from their mistakes (whether it was their fault of not). If a bailout is given do you think these parents are more or less likely to push their kids into college at any cost? S many of these "white collar" jobs could be done by smart high school graduates with some basic training. But as it stands now the Bachelors degree seems to be the new GED and the Masters is quickly becoming the new Bachelors. That trend needs to be reversed.
__________________________________
Solution?
First and foremost I don't believe the govt should be in the business of loans. But being that it exists the system clearly needs reformed.
Put stipulations on loans.
1.) Loans should only be given out to HS graduates who have good GPA's.
2.) Bureau of Labor should do studies every so often to see the supply and demand of jobs. Loans should only be given out to students majoring in say top 10 needed careers (RN).
3.) This dependency on govt loans needs to be reduced. I say ween the total number of loans given over a 10 year period until you hit 0. (maybe a it extreme)
4.) State schools shouldn't offer "worthless degrees." If you want a basket weaving degree then you can pay your own way with a private loan at a liberal arts university.
5.) Reform High School and add apprenticeships. Say Katie is good at math and has in interest in engineering. Well maybe starting junior year let her work at a local engineering firm for a few hours. This gives experience and lets employers find possible future employment. Perhaps if this is done some companies would come up with contracts saying "we will pay for your college education if you commit 5 years of post grad employment to us."
Not only that it would help create better trained HS students. It could potential reduce this ridiculous barrier (Bachelors Degree) for many of these jobs and bring back merit to a GED.
(I understand this might not factor in employment laws etc.)
You don't needs a college degree to make a good livings. As it stands now poverty is less than 1% across any ethnicity if you follow these simple rules.
1.) Graduate HS
2.) Don't have a child before graduating HS
3.) Upon graduating HS take any full-time job you can get (can be minimum wage).
Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large.
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EDIT: Also sold last of my JOE; again, thanks December!
Did you buy JOE in December? If so, you did great. I'm still a holder.
Been selling off a little of HHC. Still like the company and the assets, but I see some cheaper stuff out there and I'm overweight in real estate (also own SRG and TPHS).
Same deal for me, just somewhat different names. Too much cheap real estate. If I can easily determine a real estate company is sitting on assets(or debt) that won't turn the equity into a 0, just wait for a big enough pullback or margin of safety and then buy it on margin. The downside is not all of those can be long term holdings.
I have learned that lesson via companies like Keck Seng, where compounding over long periods is hard if management overpays for assets.
Right now, I still hold HHC, but I'm more interested in adding to Griffin Industrial and FRP Holdings. Griffin seems clearly undervalued to NAV, NAV appears to be growing, and you can see a 3-5 plan (maybe sooner) on how that gap would close, particularly if interest rates stay low. FRP's NAV, on the other hand, is tougher to estimate, but you get to invest alongside the Bakers at the same prices (or lower) that they are buying back shares. You could do much worse than simply giving the Bakers your money via FRP and watch them act prudently and harvest assets at the right time, as they've done many times in the past. And if you want to see what a great asset looks, just look at what they don't sell -- royalties on rock piles.
One real-estate related company that I've haven't seen discussed on here is Canterbury Park Holdings. That may interest some on here, but it's much more of a single asset real estate play, and the attached race track operating business is having issues.
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MSGN is pretty simple. Very simple and straight forward contract pricing with easy to project cash flows. They have, and continue to pay down debt, and buyback stock. You have about a $2.3B EV which is quite reasonable considering this is the only public RSN and easily the best one out there. The Knicks sucking also puts a bottom on the attractiveness of both, as it really can only get better from here. My rule of thumb with MSGN is its worth about $30 in a sale. At $25 its fairly valued as a public company, but under $22 it's an easy piece of paper to start building a position in. Under $20 its a steal.
MSGN is the entity the bears the most direct risk from continued sub declines, correct? Specifically, distributors pay MSGN a fee per subscriber, while MSGN pays MSG a fixed (and escalating) fee for the Knicks/Rangers media rights. On the other hand, MSGN seems to be the most immediate beneficiary of increasingly legalized sports betting.
With respect to MSG, how do you feel about the Spheres?
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Well, Spekulatius,
to me, you're not [in any way] related to this.
In short, it's about double indentity here on CoBF.
Please explain yourself, Og, here.
Explain what? That he's using a pseudonym on an anonymous message board?
So, is this a meeting place or a community?
Transactional or relational?
Anonymity is a double-edged sword which comes with its own sense of responsibility.
For me, an investment is a partnership and maybe that's too personal.
Why does it have to be the same for everyone? What prevents "relational" interactions among some and "transactional" interactions among others on the same message board (or, for that matter, the same workplace or city block)?
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Well, Spekulatius,
to me, you're not [in any way] related to this.
In short, it's about double indentity here on CoBF.
Please explain yourself, Og, here.
Explain what? That he's using a pseudonym on an anonymous message board?
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Have cash to take advantage of market dislocations. It looks to me like the easy money has been made from the 10 year bull market in stocks and 30 year bull market in bonds. If Druckenmiller is right and liquidity matters (and is contracting) we should see continued volatility in stocks and bonds (perhaps similar to 2018). Having cash to take advantage of fire sale prices would be ideal.
To keep this strategy working it will also be important to rebuild cash reserves on strength. Rinse and repeat.
In your view, is anything at a "fire sale" price right now? If so, which companies?
After Christmas I purchased BAM, AAPL, JPM, FDX and a smaller amount of GS
I would love to add GOOG (below $1,000), DIS (below $103) and BRK (below $195). Facebook and Fairfax are also on my watch list.
Thanks for the thoughts. The examples are very helpful in understanding what you mean by "fire sale" prices, which can vary alot depending on who you ask.
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Up ~15.3% for the year according to my brokerage statements (in EUR. ~10% in USD terms). That number is probably a bit too conservative because I like to collect tax credits, tax deductibles, CVR's, liquidation trusts, escrow payments and other non-traded assets that my brokers assign no value to. That stuff should add additional ~1.2% or something (based on last traded price) but I'll include those results when realized. Past few years:
2017: 22.7%
2016: 36.6%
2015: 11.9%
2014: 17.5%
2013: 24.1%
2012: 22.0%
I'm reasonably happy with how things worked out this year. My portfolio tends to be diversified (I guess I have ~50 positions now) with relatively high turnover so evidence is mounting up that I'm adding a bit of alpha. I think my portfolio is on the conservative side: diversified, an average ~15% cash balance and my core holdings tend to be boring asset plays. I like that composition: the market pays me to hold boring stuff and I play around with special situations to add (hopefully) a bit of alpha and to avoid getting bored myself. Compounding at 30% p.a. would be nice but I'm doing this full-time with my own money and would be perfectly happy with 10% p.a. and low volatility rather than aiming for the stars. My hope is that my portfolio is relatively market neutral and the past few months seem to indicate that that is the case: my portfolio only dropped ~3% or something and I managed to deploy a bit more cash. Pleased with that. No stress. Would be happy to see the market drop another 20%.
In terms of special situations LIME Energy was the coolest thing that happened this year. Obscure OTC merger where you had to figure out the exact merger consideration by going through a bunch of filings and making some educated guesses. I looked at it with a few other forum members (was an illiquid idea) and managed to buy a big position at $4.80 average. The deal closed a few weeks later at $6.36, very close to our estimates. Easiest money of the year. That was awesome. SIGM, CKTM, RENN, RSYS and RMGN were another few situation that worked out great. Although a few situation didn't work out I managed to avoid big losses. Overall I'm content with my position selection and -sizing this year. No big blowups like last year. For 2019 I expect the UWN and BDMS mergers to close soon and it will be interesting to see what will happen with Mitek and Northstar Realty Europe and how the Vulcan and Western One liquidations will work out, amongst others.
In terms of core positions not much happened. PD-RX is finally paying out all the excess cash and has been a great stock to own during the year. My largest single holding, Conduril, finally managed to clean up its balance sheet but the situation in Angola has been deteriorating. Remains to be seen how that works out. Deswell ran up nicely during the year and I sold my position (might be getting interesting again). Retail holdings still busy with its liquidation. Remains to be seen how they dispose their Bangladesh assets. Boring companies in Hong Kong are still cheap and stocks in Japan are still cheap too. Italian real estate funds are still liquidating. Asta funding is still dirt cheap but management is still questionable. I was a bit disappointed by Conrad Industries and Pardee Resources this year. There's not a single position I'm super excited about but all of the above are boring, cheap and well-capitalized.
The one thing I'm least happy with for 2018 is that I think I'm sometimes too focused on the balance sheet and that I have a hard time valuing GARP stocks or names that are cheap on a EV/EBITDA basis. Hemacare, Xpel, Cambium learning, Aimia preferreds, Viemed and Rumbleon were among names that I thought looked very interesting at some point this year but at no point could I get comfortable enough with my own valuations. So either I didn't buy them at all or I bought them and sold a few months later for a small gain, missing the big picture. I feel like my returns can be improved if I have a better grasp of how to value names such as the above and if I have the patience to hold them for a few years. These GARP-y things also tend to be more volatile so I think there's potential in this space even if your valuation work isn't top notch. Something to work on in 2019.
And the best part of the year (at least with regards to investing): I hope that this year I'll outperform my investing hero AlphaVulture for the first time ever!
Also the crypto collapse and the year-end stock market meltdown were very entertaining to follow during the year. Crashes make me feel warm and fuzzy inside. Free outperformance :P .
Great record and great post.
+1.
Writser: Really great work. How many hours/week do you spend on your investments?
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+11% USD, pre-tax
Last three years (USD, pre-tax):
2018: 11%
2017: 10%
2016: 22%
Last year I had alot of small to medium size winners and two big losers. This year was the reverse. Two big winners (Cambium Learning Group and Xpel) and almost everything else was down, several substantially so (Fortress Paper, Innovative Food Holdings, Keck Seng, Flybe, EZ Corp).
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My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)
Hopefully not. Pushback and coherent critiques are the most useful posts on this board.
I know there seems to be some kind of quasi-feud with some here vs other forums, but the main reason I find VIC much more productive is because people are dicks and cut your throat analysis/logic wise. Which for me at least, is the greatest gift because it challenges my thesis. Here, let's face it, a lot of people don't contribute shit, some basically just add meaningless tidbits of already out there analysis, and some indeed give pushback. I like the later. Look at the MDXG or FB threads...People take offense to pushback or differing opinions. They even get mad at disagreement. LOL ok, enjoy your thesis drift while I make money. Cheers...
I agree there's a lot of useless posts here, but there is a fair amount of useful stuff and some real gems. I don't think you can expect more from an anonymous, free and open-to-all internet forum.
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My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)
Hopefully not. Pushback and coherent critiques are the most useful posts on this board.
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Stitch Fix (thesis below).
http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sfix-stitch-fix/
I was intrigued by that write up when I read it, but my own personal experience with the service is that the curation is poor and the clothes overpriced. I've asked a few other people and they've generally had the same experience.
IMPACT OF FREE TRADING?
in General Discussion
Posted
Brokerages can eliminate commissions because they make money in other ways, e.g., selling order flow, interest on float, and ancillary services like margin lending. This is similar to car dealerships that accept little to no profit on new car sales in order to sell new car buyers on very profitable ancillary services, e.g., financing and service.
Other than management fees, how does an asset manager/hedge fund lawfully make money? What are the ancillary revenue streams that they would be protecting by lowering asset management fees?