ratiman

The supplier is going to quote different prices based on how quickly Apple pays. TANSTAFL

A big company like Apple will often have negative working capital because it slow-pays suppliers. But why would it do this? Apple's cost of capital is very low. The suppliers cost of capital is very high, often because it has one customer, Apple. By forcing the suppliers to finance working capital, Apple's working capital is being financed at the supplier's COC, not Apple's. Isn't that less efficient? Shouldn't Apple be financing the working capital and in exchange negotiate better prices from the suppliers?

FWIW I looked into this and the cost of getting out of a lease is generally much higher than this. Getting out of leases is really expensive.

Starbucks was in ~350 Teavana leases and got out at a cost of $30M. That was a fraction of the total leases. You can't get out of $200M of mortgage debt by passing the lender $30M. Seems like a big difference but I am an accounting noob.

Cubes are coming back, which means more sqft per employee, but more will work from home, which means less sqft needed ???? The suburban office parks will probably do OK because often there is no elevator and workers drive alone in their cars.

FWIW my prediction is that we'll try to do it the right way (tracking, testing etc), fail miserably, and then the destruction will be so great we'll just go "Fuck it" and go back to work anyway and tell grandma to stay home and order groceries online.

Call My Agent is a good Netflix show about a talent agency.

open insider

Something like 5% of global production will be permanently shut-in and oil declines by 5%+ per year so there are some serious shortages ahead, plus there haven't been any big fields discovered in a long time. Canada with it's non-shale production should be in a good position to provide that supply if it can manage to survive. I know that sounds stupid after a six year bear market in oil but it's not going to last forever.

Google and Facebook don't have significant operating leverage? Datacenters aren't cheap and the cost doesn't decline with revenue, plus the expensive moon shot programs. AirBNB just announced cutting like $800M in marketing, I have to think most of that comes right out of the bottom line of GOOG and FB. If they have operating leverage on the upside, they should have it on the downside.

Canadian energy is at ridiculous levels here. This is a good presentation by a Canadian analyst who has been saying "don't buy yet" and he's finally saying it's time to buy. In general he likes Canadian natgas and dislikes the oil sands stocks, although he does recommend Suncor for the dividend. https://schachterenergyreport.ca/2020/03/black-gold-november-14-2019-webinar-2/ (The video is from March 19) He likes CPG, VET, WCP, BIR, GTE, BNP, CQE, CR, PONY, PRQ, SGY, TXP, BNE, CEU, DO (US), HWO, POU, PD, TOT, YGR Among dividend payers he likes cne, imo, su, tou. Among infrastructure dividend payers b, ppl, trp.

This is going to a cash squeeze recession. Tthere are going to be a ton of otherwise healthy businesses / assets that simply run out of working capital or immediate cash and face a very difficult cash squeeze (many of these will be private companies). Buyers with a good balance sheet should do very well. I think you'll be better off holding the acquirers instead of the companies short of cash. So maybe a company that has a history of acquisitions and a good balance sheet. Radiant Logistics has a history of acquisitions and just increased its credit facility to $150M.

Interesting. That sounds like they have cash flow problems, which might be the case if their spouse just lost a job. How many people will miss their April rent payment? We don't know yet.

I don't want to bias the voting (please vote) but I see a lot of people talking about buying. I just visited the BiggerPockets real estate investment forums and people are still looking to buy new, negative cash flow properties at the current prices, which haven't moved at all. All I see on here and on Twitter is BUY BUY BUY. Remember when TPG invested in WaMu right before it went under? That's what it feels like right now.

Please participate in the poll.

Tysons Corner Quality Inn is usually below $80 and it's a block from spring hill station which is straight shot to Trump at Fed triangle. I've stayed there dozens of times, no problem.

We are in the middle of a massive bull market. We may do a shakeout here before Trump is inaugurated, but once the new housing market takes off with millennial demand plus all the forces of deflation we are all familiar with, we'll have a combination of demand and deflation that will send the S&P to 3500 in the next few years.

My old relatives used to love talking stocks. They would watch Louis Rukeyser and brag about how great their Coca Cola and McDonalds was doing. This was in the days of the Beardstown Ladies. Internet investing and the wide swings have cleared most of those investors out, plus the indexing mantra. The same thing happened in poker, huge rush of people entered and lost money and never came back.

There was an article recently by a guy named Jason Voss saying basically that most investors don't do research. https://blogs.cfainstitute.org/investor/2016/06/07/alpha-wounds-lack-of-independent-judgment/ If that's true, and a lot of banks that used to provide small cap research are no longer in business, then is there reason to believe that small caps are better researched now? I've never visited small cap club, but I have trouble believing it's filling the gap.

My father had his car stolen from his driveway. Somebody came in the middle of the night with a tow truck. This was the response of the police.

randomep called this early and UNF2007 was also skeptical and as a doctor had some knowledge about it.

Most of those stocks are associated with a famous investor, so maybe the lesson is "don't follow a famous investor into a stock."

:o :o :o Craig Effron: Let me correct a misperception. Most funds don't author many of their own ideas, and we’re one of them. We have an idea or two that we generate ourselves, especially in credit, but most are in The Wall Street Journal, or they come up in discussions at dinner with friends of mine. The idea that we’re sitting in a room, and then are suddenly all like “I got it! Let's buy XYZ.” That's not how it works. Bill Ackman is a different guy. Bill does do that and he's unique. John Griffin does that as well, especially in Japan. Generally, though, we all talk to each other and share ideas. Ideas are not generated out of thin air. They come to me from Barron’s, The Wall Street Journal, Financial Times, idea dinners, brokers, etc. That's how they come.

some reasons: a) Medallion cherry picks strategies. If a strategy does well, it gets in Medallion. If it doesn't do well, it doesn't. So Medallion results don't factor in losses from failed strategies. Those losses may be borne by other investors/funds. So Medallion is the "Admirals account" b) as was well-documented in a Senate report, Rentech was essentially running a market making operation, using Deutsche Bank and Barclays as the fronts. Rentech would use 20x leverage when legal limit was 7.6x. Rentech had none of the costs of running a broker dealer, however. It was a form of regulatory arbitrage. c) there are no examples I'm aware of in which Rentech employees started successful new funds. That suggests that the strategies were less important than the business model. d) where are the Rentech billionaires outside of Simons? Is he the only one? Again, that suggests the strategies were secondary to the fraudulent business model. e) if Simons and his geniuses were so brilliant, why did they need 20x leverage? f) why does Simons always get such good press? Does noone wonder how a man got a $15B fortune? Did no reporter actually read the Senate report, which laid out all of his tax fraud? Read Matt Levine of Bloomberg for a sad example of a reporter rolling over and licking Simons ass

Thanks for the link to the podcasts. Here is a sentence that I think nicely frames the problem with the focus on brand: "Whether you're talking about CPG companies like McDonalds or Nike, computer companies like Dell, or service companies like FedEx, brand is often the powerful differentiator that enables companies to attract, habituate, profit, and protect." That seems wrong. Dell had no brand. For a brief moment it had monopoly profits due to a new distribution model. FedEx might at one point have relied on a brand, but now it has a duopoly with UPS. The only powerful brand of the four is Nike. The Gardners argument is circular. Companies succeed because they have strong brands. And we know they have strong brands because they succeed. But in many cases the brand is secondary to other factors.