KJP

You appear to like small, high-insider owner, asset-rich/cash-rich, companies that may not be great businesses. If that's right, these may interest you: Saga Communications Unit Corp. FRP Holdings IES Holdings Monarch Cement Legacy Housing Corp. LICT Corp. Tower Properties EACO Corp. A similar but larger company: IAC Corp.

Unit Corporation

I do not think this is the case with respect to banks borrowing from the Fed. See Section 7.8 to Operating Circular No. 10, which I believe applies to discount window borrowing and may apply to BTFP: https://www.frbservices.org/binaries/content/assets/crsocms/resources/rules-regulations/071613-operating-circular-10.pdf

Wynne Godley and his disciples have developed a similar analysis.

Of the liquid assets I manage myself (so no house, no owned business, no 529, no externally managed) 40% - Cash & treasuries [This is an artifact of certain recent inflows and sales, rather than a market timing call] 6-8% IAC FRP Holdings 4-6% Black Stone Minerals IES Holdings Cable bundle (Charter, LIberty Broadband, Comcast) 2-3% Macfarlane Group Nickel 28 Capital SNC-Lavalin Leatt Corp. BTI Turning Point Brands Clipper Realty IDT Sub 2% (includes a mix of legacy positions and semi-special situations) Enterprise Products Partners Saga Communications [semi-special situation that no longer is] Citizens Bancshares M&F Bancorp Cato Corp [approaching negative enterprise value] Nuveen Intermediate Duration Municipal Fund [liquidation] SIO Gene Therapies [liquidation]

Leatt Corp.

Interesting market reaction to First Citizens winning what presumably was a competitive auction. Apparently there is no winner's curse when it comes to the FDIC.

This is much different than how I understood your original hypothetical. At the end of the day, if Treasury has to spend $2 trillion backstopping failed banks, then I see the potential inflationary consequences. But there are many steps, assumptions, and hypotheticals between (i) a change in the relative preference between deposits and Treasuries, and (ii) mass bank failures that require huge US government/Treasury backstop spending. That is what I was trying to get at.

By the way, I do agree with this fundamental point. Regulators and politicians will choose inflation over many things, including the risk of depression.

How the does transaction print more money? Won't my own bank's reserve balance go down by the equivalent amount since I've withdrawn cash to buy the Treasury?

What would be the mechanics of this? If I withdraw money from my savings account to buy a Treasury, what does the seller do with the proceeds? Likewise, would banks be insolvent if mass Treasury buying (increased demand relative to bank deposits) drove down yields (and drove up the prices) of the securities on banks' balance sheets? I realize Treasury markets are very deep, but can they absorb $5 trillion of additional demand with moving yields down and prices up? And can they given the apparently two-tiered Treasury market (only Treasuries owned as of 3/12/23 can be pledged at 100% of face under the Fed's new lending facility).

Relatedly: https://www.reuters.com/article/global-banks-fdic-mbca-idUSL1N35Q0ME Two in the thick of it admit big outflows early in the week but claim deposits stabilized by the end of the week: https://www.pacwestbancorp.com/news-market-data/news/news-details/2023/Pacific-Western-Bank-Issues-End-of-Week-Update/default.aspx https://investors.westernalliancebancorporation.com/news-releases/news/news-details/2023/Western-Alliance-Bank-Provides-End-of-Week-Update/default.aspx The fact that these two feel the need to give frequent updates on their solvency isn't a good sign.

I suspect you are right that Signature's business lines played a big part in its downfall, but were there also other potential issues? If the deposit withdrawals were big enough, wouldn't Signature have had to start turning to its loan book to raise cash either directly or as collateral, rather than rely on just the securities portfolio? Based on Item 2(b) of page 24 of that call report, there were more MTM losses lurking in that loan book. Moreover, by accepting those loans at par as collateral, Fed/Treasury may have set a precedent that they did not want to set and weren't going to set on behalf of a bank like Signature. It may seem implausible that a $25 billion securities portfolio would be insufficient, but I also suspect the scale and speed of a modern "digital" bank run could be unprecedented, potentially resulting in failures of banks that would have survived in the past. I also suspect you are right that there are hundreds (thousands?) of banks that are insolvent if you MTM the whole asset base as I have suggested, but absent a run on them they will earn/amortize their way out of it.

On the other hand, credit has been quite benign. You may now get a period where credit worsens and NIM gets squeezed by low-yielding legacy assets. Or not. I'm a banking amateur (and even that may be giving myself too much credit).

Yes, that certainly seems to be the case. What is your view on something like Western Alliance? Too much of a gamble?

Are regional banks investments you like to hold long term, or do you try to swing in and out to take advantage of the volatility? I ask because I've generally avoided banks due to the (perceived by me at least) inherent leverage and black box nature of their balance sheets and the 10-year returns on many of the regional banks (MTB, USB, TFC) look quite poor.

Bought just under $12 and sold around $25. It was tricky getting in and out with all the halts. Western Alliance doesn't look like it was doing anything crazy, so it doesn't look like the kind of bank regulators would want to let go. That was my entire thesis for buying this morning after 30 minutes or so of research. In other words, I really know almost nothing about the bank. Moreover, I believe the vast majority of its assets (actual loans, rather than Treasuries or insured MBS) are not eligible collateral for the new Fed lending facility.

Sold this afternoon. Probably more juice left but so be it.

Western Alliance, which is probably the kiss of death for the bank.

What would the second chart below look like if you also marked to market the loan books of each of those banks?

He now has a mostly subscriber-only Substack: https://stockpicking.substack.com/ He's also on Twitter.

Here's BSM's management's take: Monroe Helm Okay. One another maybe when you were setting your most recent distribution increase, did you take -- how seriously did you consider an environment where we might have $2 to $2.50 gas for some extended period of time? Tom Carter Well, I think we believe and took into account that '23 and '24 and maybe some into '25 that will be challenging for natural gas markets. Everyone I mean as we've all looked out over the last 5 years, I think it's a general consensus in the industry that until some of these newer LNG export facilities come online, there's going to be a lull in growth of natural gas because it's the production has gone up and the prices that were in existence last year really saw some increases in activity. We think it's going to be a period of time where we don't see that much growth but we're well hedged and we have agreements that we don't think our operators are going to be highly volatile in their well count.

You would probably like the formatting of this site: https://roic.ai/classic/AAPL Perhaps someone more clever than me could explain how you could extract pages like that in bulk and print them out so you could page through them.

Some things don't change much. That data series appears to go back almost 50 years to January 1976. Here are the bottom 10 states in labor force participation then and now: Jan 1976 [For context, national was 61.3%] West Virginia - 51.7% Florida - 54.6% [Dec. 2022: 59.6% -- surprising to me given the number of retirees] Louisiana - 55.7% Alabama - 55.9% Arkansas - 56.3% Mississippi - 57.5% New York - 57.6% [60.1%] Pennsylvania - 57.6% [61.6%] Tennessee - 58% Arizona - 58.5% [61.4%] Dec 2022 [National was 62.3%] Mississippi - 54.1% West Virginia - 54.2% New Mexico - 55.8% [Jan 1976: 59.3%] South Carolina - 55.9% [64.3% -- huge decline. Loss of textile manufacturing with insufficient new industry or increase in retirees?] Arkansas - 56.2% Alabama - 56.8% Kentucky - 57.2% [59.5%] Maine - 57.5% [60.6%] Tennessee - 58.5% Louisiana - 58.5% West Virginia, Mississippi, Alabama, Louisiana, Arkansas, and Tennessee make both lists, and New Mexico and Kentucky nearly did. So whatever the underlying causes are for relatively low labor force participation in those states, they appear to go back a long time.

They have admitted that switching all of the Meredith publications to their digital platform didn't go as smoothly as they hoped, and they're obviously getting hit on advertising revenue. But even if you put a fairly low multiple on Dotdash-Meredith, IAC still looks quite cheap to me and if anyone is ever interested in this type of company, I think now is the time to buy it when it's selling for significantly less than the sum of its parts, rather than at a premium to them. [Says the current bagholder.]