Gregmal

Theres so many variables that its pointless to get bogged down on just one or two. As I mentioned previously, with the UBI, er, child tax credit, and current labor shortage, even poor people now can easily afford $1200 a month rent. The prices, as detailed in the APTS thread, current prices, dont even begin to reflect the real market prices and won't til you get a full 12-18 months of rolls. A high end luxury Tampa/Orlando unit two years ago was $1200-1500. You'll never see rents at those levels again for a tier 1 city/suburb. If you're an institution underwriting 10% annual rent increases for 5-10 years you're a moron. But I ve never really found the institutions all that smart or worth listening to anyway. But voila, today and for the past 15+ months, you can go into the market and buy companies that own these sorts of prime assets, for 50/60/70% of their private market value.

I’m pretty sure @ERICOPOLY already posted something on it, but anyone care to bring up what average rents were in 1974 vs 1982? Building more just helps alleviate the fact that right now plenty of people can’t get ANYTHING. Even those who really want it and CAN afford it. Why are JOE homes going ballistic in terms of price? I though it was all just barren swamp out there(guess what, it kind of is! And it still don’t matter) and that the second someone wanted to live there builders would flood the market? Nope. The anti housing people are starting to sound like the people that wanted to fight the fed in 2013. As always, the scoreboard will ultimately settle who’s right over the next 1/3/5.

Yea shares have been strange lately. Definitely feel like theres a seller putting a lid on them here. Was picking up 3000-5000 share lots the other week and whereas normally you'd clear out the current bid/ask, was getting a lot of iceberg asks. Speculatively, if someone wants to unload in size on a semi illiquid name, I'll step out and let them drive down the price and then hit the options as they come in. Its always fascinated me here how with CLPR you can watch 10,000-20,000 total shares trade slowly over an entire session, but for modest premiums you can pick up the same sized(or much larger) positions via the options in one quick swoop. Gonna be interesting as we get closer to March to see if anything comes about when its clear those shares have to be delivered. I've got most of the outstanding 5s and well, some dudes I know....own a lot of the 7.5s

1.39-1.42

https://www.cnbc.com/2021/10/19/single-family-rents-are-surging-and-investors-are-flooding-the-market.html Another day, another piece. Its almost insane to think about making a claim about oversupply and/or lack of demand. But the most important element lays in the last paragraph. First time home buying still aint getting to the table. The bigger the piece of the market the institutional capital owns, the more pricing power they have(plenty of first hand experience and stories on that....25 year olds scoffing at rent raises in Tampa, telling their landlords to fuck off, and then......getting nothing anywhere else). Rents going up supports higher home prices. Higher home prices support higher rent prices....what a great and virtuous cycle!

Man, its almost like that "front run the institutions" investment thesis was too simple/obvious? Aint no VIC membership worthy valuation short/cigar butt turdball book report.... thats for sure!

also grabbed another 300 CLPR March 7.5 calls

Been picking at SPCE Jan 2023 $10 puts

The thing I dont see a lot of folks processing is that we're on the precipice of a major shift, if it has not already occurred. Cash is worthless and bonds are done with the decades long bull run. Hard assets are now in line for a run on par with what we saw out of tech the past decade. How do we know? Because just like with tech, we see the crowds screaming bubble after ONE year! You need folks in denial for the markets to really get going... And then again in 2012. And oh so most definitely after 2013...that had to be the top. Home prices rising 20% year over year after largely nil for a 5-10 year stretch doesnt mean jack. By process of elimination cash and bonds will be phased out by sensible investors. Leaving equities and hard assets. Equities have enjoyed the run, hard assets, not so much. The last crutch to destroy is the notion that a 3-5% mortgage will kill housing. By the time thats done being destroyed as a narrative you'll probably want to be selling your housing stocks to the folks who after thinking that for a decade now want to buy....but we're a long ways from that. As Ive said a million times, why wouldnt our housing market follow some similar trajectory to Canada, especially now that the underwriting process isnt Wild West style like in 2000-2006.

How much of the supply has been vacuumed up by institutions like BX, Blackrock, REITs, etc since 2010? People still want to own homes and there is a record shortage of them available. Buffett also said we were in for a Great Depression in 2020….. The institutionalization of housing in many ways is very similar to the BTC bull thesis in that the capital available will inevitably dwarf the product available. Plenty of people gave us great technical sounding, academic arguments on BTC at 10k, 20k, 30k….and Buffett also had an opinion. Sometimes things are just simple. Home prices and rental prices are going to play a game of who can rip hardest and in part bootstrap each other higher one level at a time. The biggest component everyone misses is just how much demand is currently sidelined. It’s silly to just assume everyone who’s looking has bought and there’s going to be this precipitous fall down.

Succession 3 episode 1 was good. I was also incredibly surprised with how good Billions finale was. I have generally found Billions stale and cliche as well, but season 5 ending was incredibly savage. Quite sad what happened to Lewis in real life.

Kids were watching V for Vendetta again. Just something about the story line that resonates. Governments using a virus as an excuse to steal freedoms from their people and ultimately trap them within the system. Good storyline!

Theres also the fact that institutions, being the smart money, did what smart money typically does...they effectively missed both industrial and MF. Especially foreign money. The move up in the past few years really just got the appetite going. If you asked a European investment firm what they knew about US MF housing 5 years ago they'd scratch their heads. A lot of that is cultural. Nonetheless, when its likely the safest amongst the safe RE type investments you can make, and inflation protected, you better believe a long, hard rerate is coming. Except....there's really not much supply. These morons will be paying up, for a long time.

I dont think being super bullish in 2013 was the right move. The housing market really didnt do anything until 2020. The institutions can underwrite whatever they want but theres a very fixed supply of existing MF and SF housing and massive constraints for a long time until that can be built out. Best case if you start today is ~2-3 years assuming you have a great contractor and elite leasing team. Thats all that matters if you're in an area that people want to be. Ive got equal concerns about all the office overhanging NYC type markets being converted to MF as well...but whats that gonna take? 5-10 years to build?

A few cases of Eagle Rare 10 year. Preparing for the impending bourbon crisis.

Yea I certainly wouldn’t go too wild on any of the specific companies. But that’s kinda the point of just settling on some long dated calls and then letting it be. Very little money upfront and solid long duration upside optionality. 90% of my exposure is between the futures options and index calls.

Yea it’s unique and nuanced. I don’t have an opinion on iron ore other than higher for longer so CLF works. I think crude rips and I hate oil and gas companies so I just want the sure thing. But if you know a company well gibbons is right. I don’t. I’ve gotten some RIG, NOV, SLB leaps and a few others. There’s a varying spectrum of probability and outcome, but also correct is you don’t want to pick the idiots who hedged out the whole book and some future production and then….whoops.

Todays earnings kind of another reminder for the "cant find anything to invest in crowd"....whats the reason for not investing in banks?(besides being scared of one's shadow)...if nothing changes, they still earn gobs of money, allocate capital wisely, and trade at 10-15x. If the risks of relevance emerge(IE inflation) they clean up. Doesnt sound like a tough choice to be long any of the BAC/JPM/WFC/C/TFC bunch should one have a stunted list of investment options.

Ive been politely(and sometimes not so politely) been suggesting this to folks for a long time. Put your fuckin geek sheets and Excel tabs away and focus on the bigger picture. If a 10-20% valuation differential matters to your investment thesis you're wasting your time. I always get a kick out of the smart guy book reports that ultimate lay out a thesis that more or less says, "if a, b, c, d, e, AND f, occur...you've got 25% upside"...so dumb and such a waste.

AAL puts.

Yea I don't want and wouldnt recommend getting too much exposure to individual companies. I have leaps on a few, but this is where Kuppy nails it. Too often folks look at a situation and immediately gravitate to "gee I'll buy a 2% position in XOM/OXY/etc common stock!"......yawn and yuck. The key is finding the most efficient way to put on the trade and make money. You can have tons of scenarios as we've all seen where oil goes nuts and the companies fuck up. So just being long the futures or even better call options on the futures is the best way to play it, or so Ive found.

Thats fine and all but prices are largely driven by future expectations. Is it going to be easier, or harder to increase output going forward? Is demand going up or down? Then add in easy money and the locust nature of speculators to an already out of whack supply/demand equation and you get....well, what we've seen in everything from Gamestop to Uranium. Tangentially, I recall back in the early part of the decade how easy it was to start up an O&G venture. We'd get PPMs all the time as well as offers to go out and see all these "deals" that were in the works. Now, as others have said, even the majors are going to have trouble getting reasonable terms to refi existing debt. I mean on one side we have Cathy Wood saying oil should head back to $40 because we're about to get deflation, and then on the other side you have guys like Tepper and Kuppy lickin their chops at this setup. In between we have the policy makers playing the "lie to me slowly" game. No inflation. Transitory inflation. Gonna be a little longer than we thought. Gonna be a lot longer than we thought but still temporary. Uh oh, we lost control! Everything one needs to see to make highly assymetric bets is right in front of us. Its pretty awesome.

The price movements and covid caused bottlenecks are what make this stuff sooooo easy to trade. Its all so predictable and has been for way too long that at points I wonder if it really is this easy. But when you have folks like the ESG clowns investing irrationally, that removes a certain layer of efficiency from the market.

Prem is just playing 4D chess. He’s hidden from the market his experience and expertise in tech. He’s even purposely made some bad investments just to throw off anyone hot on his trail with respect to his secret tech talents. Obviously BB is the next Apple. Don’t doubt, or pout. Have faith….FFH is the next Naspers. Between Digit and BB pretty soon you’ll be able to buy BB shares at a 20% discount to market through simply purchasing FFH shares and better yet you’ll get everything else at FFH for free.