Gregmal

Pretty sound stuff there.

BOSTON, March 3 (Reuters) - Billionaire hedge fund investor William Ackman on Tuesday said he has moved to protect the firm's $6.6 billion portfolio, which includes restaurant chain and hotel stocks, as the spread of the coronavirus has sparked prolonged panic selling in markets. Ackman said he expects the outbreak, which has been detected in roughly 80 countries, to weigh on growth in the United States and abroad and affect both stock and credit markets. Over the last 10 days, "we have taken steps to protect the portfolio from downward market volatility," wrote Ackman, who oversees Pershing Square Capital Management. He declined to say exactly what steps he took. Ackman spoke out on the same day that the Federal Reserve announced an emergency interest rate cut. Ackman's statement, an unusual move for someone who seldom discusses portfolio movements publicly, underscores investors' fears that the coronavirus will have serious implications for economic growth. "We believe that efforts to contain the coronavirus are likely to have a substantial negative impact on the U.S. and global economies, and on equity and credit markets," the statement said. Ackman said hedging was preferable to selling off his portfolio of companies whose businesses are otherwise strong and include Chipotle Mexican Grill (CMG), Hilton Worldwide (HLT) , home improvement chain Lowe's (LOW), Burger King operator Restaurant Brands International and Berkshire Hathaway (BRK/A), among others. The hedge fund sold out of its position in Starbucks (SBUX) earlier in the year. In the first two months of the year, the firm's Pershing Square Holdings portfolio fell 7.1%, after having gained 58.1% last year, which made it one of the industry's best-performing hedge funds. The market drop has taken a bite out of the size of Ackman's funds, according to a report which put assets under management at $6.6 billion at the end of February compared with $7.5 billion at the end of December. 12% one month decline in AUM there for Billy Boy

Todays drop was actually because of the 22 tornadovirus deaths in Tennessee. Immediately moving the mortality rate into the upper echelons of virus folklore and making the coronavirus look like child's play.

The bold items, #3 would have to be subsidized then by the government. Which means almost immediately lab testing would become a new favorite hobby of guys from Staten Island with a lot of vowels in their last names. #4 would also be nearly impossible because of abuses as well. If anything Ive thought maybe forcing the employer to pay it with the amounts ultimately eligible for a tax credit could be more efficient.

Greg, i think it was a ‘cover your ass’ cut. On a daily basis Trump has been hammering away at the Fed to do a 50 point cut. The ball is now back in the President’s court. The big news to me is the 10 year treasury. It is in freefall and went below 1%. Indeed, the manipulative power of Twitter and a big mouth. I think he just donated his $100k salary to the cause, so pretty sure he thinks the balls back out of his court lol.

More MSG, MSGN Added to Wingstop short as well.

I did too until the 10% bump on an assumed one off gain. How come my stocks never get 10% gains on one off bs? j/k

In two days nothing in terms of the prognosis and transmission numbers has really deviated from what everyone already assumed. The only thing that has really changed is now we have a 50 point cut. Which on one hand, many said "do right away". On the other, it certainly feeds into the narrative that things are dire. One of those damned if you do, damned if you dont scenarios. Better safe than sorry I guess was the thought process.

They certainly aint fucking around.

And for all the America bashing(Dalal), please explain how it could have been handled any worse than China? They knew about it and covered it up to promote economic activity and travel for the New Year. Deliberately let people get exposed. Possibly fabricated the entire fish market story, and then locked down the entire place for a couple weeks. Total numbers? 3k/85k. Oh they're lying. Multiply by 10. So even after China style negligence multiplied by 10 you have numbers that rival!.....dun, dun, dun.... The common flu annual totals! Do you think those figures are ultimately the totals here? About 5-8% of people get the flu every year. Less than 1% of Wuhan got coronavirus. But throw a big, bad name on the thing, and spam blast it all over Twitter and every media outlet, and yea you might have some residual effects and people running around scared. People are now treating a new case total gaining 25% similar to a company gaining/losing 25%, when in reality it is probably more equivalent to 25 shares trading after hours.

LOL Russia. 3 cases. 2 cured. They must be rigging the virus. Im still waiting for someone to connect why the likely or even less likely and more severe scenario warrants, lets say, Google losing $100B in value? One quarter of really ugly numbers? Two? A year? How ugly should those be? Lets say it goes on for a full year and figures contract 35%! Surely a rational investor would pay, lets say 20x trough earnings for a company like Google. Is the doomsday scenario 11% downside? How scary. No one seems to be quantifying anything in any terms that translate to anything of significance for investments. And no one has really answered the question, what if we only end up with numbers that resemble the flu? Does that kill the markets? I mentioned early last week how people I was speaking with were telling me restaurants in Chinatown were seeing traffic down 40%. And that people in other parts of the country have noticed nil. So obviously the effects will ripple into some areas of life. Others probably not. You want to give me Madison Square Garden at a $5B EV because of a year of the flu? OK.... give it to me. All day. If nothing else, thing is perfect long/short territory. You'll likely have such volatility for a short while that you dont even need to be a good investor just cover shorts when market goes down and flip longs when it goes up and gradually taper short exposure as this plays out.

https://seekingalpha.com/news/3547839-berkshire-beefs-up-delta-stake

Todays snap back does make things a little more interesting. I did some minor repositioning today, mainly of stuff I bought late last week. So we lose 12%, get back 5%. Is 7% the right number for "moderate pullback + corona"? Not really sure but I do agree volatility is likely here to stay and we may be collared.

MSG

So sure, some people genuinely might want to know data set ABC. However quite a few others, with agendas, ask for ABC. When they dont get it, they cry about withholding info and conspiracy theories. On the other hand if they do get it, it never ends there, it turns to "then what about this?" or "why is that done this way". Many of these "questions" have little objective but to stir the pot and create counterproductive narratives. Just like Mr. Einhorns "why did you stop tracking that on the 10k" question on the Herbalife call.

I agree with the sentiment on Trump. One of my biggest "look out below" apprehensions relates to something similar to last week where this guy goes out there and tries so hard to send the right message, that he becomes completely unreliable and then combines that with further desperate and see through attempts to do the same; ultimately rendering pretty much everything coming from them useless and unreliable. There, in that case, could be bottomless drops as nothing will reassure anyone of anything. However I believe we are a long ways away from that and contrary to the reports, I dont think he and his administration have done anything better or worse than most else have. I think conspiracy theories can arise from both lack or information, and from having too much information. Often it is easier with too much before dots can be created and linked that otherwise wouldn't exist. Its in fact, a common tactic used by activist short sellers.

Sometimes you have to manage a situation and it isn't one thing or the other. Much like we saw in 2008-09(just as an example). If you feed the people looking to stir up problems, you will likely cause greater harm than good. If the government misleads people into thinking they are safe when they are not, you cause more harm then good. There is a fine line. It'll never be perfect.

Um... I for one would like to know how the virus is spreading (or not), for my own and my family's health, if for no other reason. How is this controversial? Its not controversial. There are other website that tracks this stuff and plenty of information on cases being updated regularly. There is a difference between that, and say purposely peddling propaganda and fear mongering for no reason other than clicks or hatred of the president. One is useful, the other, serves no purpose. As I pointed out earlier, several of the big left media outlets have entirely reconfigured their websites to play in to these things. How does the "total tested" column have anything to do with your family's safety lol? If you think its an issue, take precaution. If you dont, do whatever floats your boat. Heck, they could test 50% of the population and tomorrow its meaningless because of spread and transmission. The "coverup" part is whats laughable, and you can clearly see the agenda if you spend 3 minutes looking around that fellows page.

Well, for one, thats just one of the minuscule differences between America and China. Chinese say, "sit your ass down, for the good of the country, we are handling this, how we see fit, if you dont like it, tough". In America, we over analysis the fuck out of every single little data point and demand things like total number of tests administered just to further perpetuate headlines and conspiracy theories. As we already saw, is it really in anyone but the medias interest to peddle fear and chaos? As we just saw last week, way too many folks watching too much Walking Dead.

Spek, that is kind of where I think the truth lies here. Most of us, and pretty much every media outlet, are chasing the wrong story and mistakenly equating the sell off to the virus. I think its mixed. I agree that perhaps "coronavirus" masked "warranted 5-10% pullback". Now because of the coronavirus=market selloff conflation, we've got a little extra juice behind the selling which is exacerbated by fear. Which simply leads us back to where everything begins and ends when investing, buy good quality companies at reasonable valuations. On a separate note, I just touched base with a lifelong friend. Lives in Pittsburgh and married a FOB Chinese girl who's entire family lives in Luoyang China. His direct words "her family and basically their entire community was on mandatory lockdown for a couple weeks. Everything was fine and they just got the go ahead to get back to work a couple weeks ago. Business as usual now". More anecdotal stuff, take it as you wish.

Ventured out into the wild today. The wife and I took the kids to Prudential Center to see the Jurassic Kingdom Dinosaur Show. I literally would have bet 10-15% of my portfolio on seeing dozens of folks wearing masks. Or signs of something. Shockingly, there was absolutely nothing. Full house. Not one single mask, which is odd because around the NJ/NYC area, you always see the random couple folks with masks, even when theres nothing going on. If I die in a couple days I'll let you guys know. Definitely time to short then. The idea that people are in Disney phase doesnt really seem to make sense to me. We live in an electronic world. Every single person has a cellphone/computer/tablet. Everyone is glued to their devices. Every place you turn this week, there is coverage, and an overwhelming amount. Does this mean this cant change? Of course not. It very easily could. But to act as if people just haven't gotten wind of it and when they do, the behaviors will change, at least to this point, isn't true, IMHO. Next up, on the subject of news flow and continued positive tests. Sure, I get it. But at the same time, how much of this is baked in? Do we(although I joke about it) really believe that the market just shed 12% because we have 70 cases here in the US and that the next 100 or 1000 incrementally take off a similar or greater amount? Or has this precipitous decline factored in some of the things folks like Viking have mentioned here about futures waves of further cases? How much? Where is the equilibrium point and where is the pendulum now? Also, I do think, after reviewing a lot of stuff this weekend, the stuff similar to what Liberty has posted is indeed, on a FACT BASED perspective, the most relevant and rational. Further, if it is true China knew about this in December and canned it so as not to disrupt the New Year and festivals, dont we have to look at the timelines? Mass exposure occurred first week of January. Chinese cases erupted 2-3 weeks later. The big whammy was all the folks who travelled through there and went back home. Maybe they left weeks 2-3 and now spread first/second week of February. If this is reasonable, the arent we kind of at the turning point of when these things should go ballistic? Massive surges? Except these massive surges are hundred and in a few cases, thousands of folks... "Oh but they arent testing everywhere" is at first sound. But eventually people and symptoms get to see the light of day in most countries. Surely, if there are thousands, or tens of thousands, we'd be starting to hear about them soon? Or, maybe the evidence Liberty linked is possibly a little more accurate than all the fear driven news feeds. Brings me to my next point. Both good and bad, there is SOOOO much misinformation going around its absurd. People arent drinking Corona beer. People are buying masks. People are supposedly afraid of catching it yet at the same time running to Costcos which are busier than during Thanksgiving week! Million dollar question to me, if this, on a results basis, is less than or equal to the regular or flu, is this warranted? What are the odds it gets there. Given this broke out in December and you literally had a government make the decision to let tens, maybe even hundreds of thousands of folks congregate and celebrate and gather, for the entire week! incubate the fuck out of this thing, and then go on their way, AND THEN take action, with the resulting fall out in the central location being 75k illnesses and 3k deaths? Do we really see any other nation approaching these numbers, with a multi week head start in terms of knowledge, and all this time to prepare? Again, I dont think so. Now joking...havent companies like Boeing already determined the cost of a life is like $200K? So right now we should be at like $600M but instead we've lost 6 trillion or whatever and tomorrow stacking up for another 1,000 points down because like two dozen people died over the weekend and the US added 6 cases....please. Fear, panic, chaos. Thats what this is. Is it warranted. Eventually we'll find out. To me, 2018 was significantly scarier because there was no real reason for the crash. I spoke to my brother who is a doctor. He basically said, use common sense. Wash your hands, use sanitizer, avoid close contact with strangers and especially sick people. From an internal perspective, the approach is basically similar to the flu. Funny also, a friend who does a lot of work in genetics basically said the same thing that was said earlier in the thread; no one with a promising career in biotech wants to work on antibiotics or vaccines...the financial incentives just dont make sense. But eventually someone will hang a big enough carrot whenever a large enough problem arises, and wouldn't you know, they figure stuff out.

By far the most level headed logical approach to this situation. Castanza, "Level headed" ? - Please look at the "/6" and read it again. Basically all countermeasures to contain this thing are now enabled. It's BS. Level headed as in not inducing panic. The facts we have are the facts we have. Speculation to the extreme doesn’t solve anything. I’m not saying this guy is 100% correct in his analysis. One thing I have learned in financial markets is that you want to panic before everyone else does. ??? Lol fair enough. But I would say being prepared is different than panicking. Well IDK, maybe I’m missing something, but one of the strongest, most resilient markets any of us have ever seen just fell 12% in 5 days. Seems to me like everyone panicked at the same time.

Viking, I dont disagree all in all. I am not "raging bull" bullish but rather probably what Id describe as cautiously optimistic that this is a market opportunity and economic overreaction in terms of how things just got hit. Often times, I like to play devils advocate or throw out contrarian perspectives because it helps even out +/-'s and its helpful to view responses and their validity against them. The news flow the past week has been horrendously negative and massively on the side of fear and irrationality. Even the WHO guy basically just said, people arent being rational: https://www.cnbc.com/2020/03/01/who-chief-on-coronavirus-global-markets-should-calm-down-see-reality.html I read a MS piece on range of outcomes https://www.yahoo.com/finance/news/3-scenarios-for-how-covid-19-plays-out-morgan-stanley-184343790.html All in all those of us that tread cautiously over the past few months are probably in decent shape. As you've said, the real question is when to hop. I think some of that "when" may be now. GOOG just shed $200 a share and trades at like 16x ex cash. Another 10% off? Im a buyer all day. BRK we dont even need to discuss. Cheap at 230? How bout $200 now? Stuff like that. The news flow or headline risk I just view as opportunity. I was thinking earlier this week, "hey, I haven't heard from Marc Faber or Nouriel Roubini lately, I wonder what those jackasses are up to". This weekend I found plenty of articles blasting Roubinis calls now for "30-40% declines" and its just like, well, thats how the sausage is made. When things are good you've got Bill Miller and Cathie Wood getting the mic, and when they are bad its guys like Roubini and Dennis Gartman. The trick Ive learned is to try to realize how this works and associate, at least based upon past outcomes, what side you want to be on when such figures and news flow is most prevalent.

A little more anecdotal stuff My sister and a bunch of friends had recently planned a trip to Spain. This weekend, she contacted me asking if her trip got cancelled if should would be able to fly up and visit me here in NJ. Curiously I asked why it was cancelled. She said it wasn't actually cancelled but her friends were debating moving it back a month or two from the original mid March date. Why? Not because they were scared of getting the virus, but because they didn't want to risk dealing with any quarantine. Most of them, if the consensus is to cancel and reschedule a couple months out, have decided to make alternative domestic travel plans that week. Following this, I tell my wife she may be visiting, and the response immediately was, "if she goes to Spain she cant come here".... I internally LOL'd. Both sides of the coin there. One, not a worry, the other, just likes to worry. But nonetheless real to both of them. Definitely an impact on peoples lives, but at the same time, people still arent going to just sit around and do nothing. They adapt. I made a point to track attendance at some sporting events this weekend. Nothing in the numbers yet that tells me people arent going out.

Two takeaways 1) How can this be? Driving and fuel consumption during past crisis periods indicate that people still got on with their lives! They just find other ways to get around 2) The travel industry definitely got hit a lot worse with 9/11 and then SARS a back to back double whammy. And still recovered. Triple whammy if you want to include the market bubble bursting in 2000.