KJP

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.

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.

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?

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?

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).

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.

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.

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?

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.

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.

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?

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.

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.

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.

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?

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)?

Explain what? That he's using a pseudonym on an anonymous message board?

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.

Great record and great post. +1. Writser: Really great work. How many hours/week do you spend on your investments?

+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).

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.

Hopefully not. Pushback and coherent critiques are the most useful posts on this board.

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.

In your view, is anything at a "fire sale" price right now? If so, which companies?

In the US, interest payments are tax deductible, though the tax overhaul imposed limits on the amount of deductible interest. Miller & Modigliani hypothesized that because of the tax shield created by interest deductibility, it should be possible to increase the enterprise value of the firm simply by doing a levered recap. [in theory, New enterprise value = Old enterprise value + Value of tax shields - Increased likelihood of costs associated with insolvency.] There's been alot of academic work trying to see if the theory is true in practice. See, e.g., https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/319/valuation_of_debt_tax_shield.pdf [EDIT: See also Schwab's comment on the whether the "dividend" is a taxable event.] There is also a principal-agent issue. The levered recap significant increases the potential returns on equity if things go well, and the likelihood of a complete wipeout of the equity. A PE firm gets alot of the upside when things turn out well via carried interest [the "20" in "2 and 20"], but it is the LPs that bear most of the losses when things go poorly. Those return profiles can incentivize high leverage at the portfolio-company level, even if it is not in the best interest of LPs.