Gregmal

MSGN a hair under 15 and DD at 52.7

Ive been chatting with a lot of folks and most of the time the lens of investment is one of a value investor. I continue to be amazed by the abundance of traditional businesses that are "cheap" but troubled. Look at some of the threads here for example. DD, AMC, XOM, GHC, certain types of real estate...dont get hung up on the specific examples. The contrast between these businesses and the ones RuleNumberOne likes to talk about is incredible. But beyond that, it got me thinking. All the classic value investors and books about such things talk about cycles and buying when things are out of favor and then achieving these heroic returns from being a contrarian. The TBTF trade was really the last classic example of this that worked. But otherwise, everything now, for at least the last half decade if not a bit longer, IMO has just stayed out of favor and continued its decline. Almost as if cycles dont exist and just transitioned to permanent secular declines. Commodity names have sucked forever now. Miners too. Many different types of real estate. Financials, Insurance, media, healthcare, energy, auto....quite a lot here. In a market many describe as in a bubble, and a few percent off all time highs, the list of traditional businesses at shitty valuations and often described by rational investors as having "too much hair" is incredible. So I guess the million dollar question is, do these ever become cyclical again(IE as in trade at premium valuations), or have we for some reason, maybe Fed induced, caused there to be a hitch in the way investments and businesses are valued? More or less rendering these things permanently challenged and essentially just part of some which ice cube can melt the slowest contest?

Sold all(but a minor tracking position) the remainder of my BX.

The only thing that can justify the price movements is perhaps concluding that the market is now starting to realize rates will be forever low and thus rerating equities accordingly. Of course, this still kind of begs the question, do equities need to be expensive just because bonds are astronomically priced? The answer is probably yes, and its a powerful thing having pretty much all governments being buyers of debt to infinity. I guess as investors, we can only hope they never stop.

Did some repositioning. Finished exiting GM stock and transferred into slightly larger share equivalent $30 calls. Closed my GM puts as well. Its either gonna go or its not. My stop loss built in with the strike, and after about a half decade, if it doesnt perk up Im fine having been wrong and calling it a day here. Exited 30% of BX and replaced it with BRK.B and SPG. Reduced some margin in the process.

I've leased maybe a half dozen offices in varying locations from NYC to the suburbs of it, over the past decade. Never have I shared space and cant imagine how for some businesses, this type of layout isn't a complete nonstarter from the get go. But, I do think it is indicative of some companies last ditch efforts to attract the millennial crowd and herd them into an office. But it will likely be short lived. Which leads me to my conclusion, that in the world of RE investment, certain things are safe, and certain ones arent(duh). Residential to me cant be virtualized(again, duh). Retail as we've discussed ad naseum, is being forced to change and can be very much at risk. Industrial, I think is the second safest space after residential. But IMO, what is most at risk, way more so than even retail, is office space. Theres just no need for it on a lot of levels and when you combine this with the future generations and their "lets explore bc I have ADD" mentality, companies will continue to shift out of traditional office. Much like with retail, sure you will still have some big trophy office campuses. But the days of just throwing up cubicles and guiding thousands of employees, like cattle, into an office, is not the way of the future. WeWorks "idea" wasn't revolutionary, it was reactionary.

I dont think its worth drawing ANY conclusions at this point simply because the sample sizes for any of them would be unreliable. But with any early phase experiment, paying attention to these things is important. There may be correlations, there may not be. Some, that are not there today, may eventually show up, and vice versa.

Again perky and behaving like a safe haven asset.

Basically, theres a huge concentration of subs with Comcast and Altice/Optimum. Both of which have potential renewal issues. Much has been discussed on the MSGN thread previously, and now on top of that, you have the fact that the company was just willing to repurchase 25% of the shares at 16.75 and still have a sizable buyback in place, plus the resources to do much more. My investment confidence however still doesnt really involve sub counts or decline rates, although admittedly, that will drive this thing short term. But on an absolutely basis, the rights to televise Knicks and Ranger games is worth something, and theres no way its worth less than what the Cincinnati Reds or whomever else are worth. To someone like Amazon the acquisition is a rounding error but could be reasonably impactful to certain of their own ventures. Or, it can be reacquired by the MSG stub which is was spun out from. A lot of ways to win. In the meantime all the FCF will go toward repurchases and debt reduction.

bought back some msgn

Id start by looking in the Baupost portfolio. Theres been no more prominent an underperforming bitch and moaner over the last half decade than Klarman.

Yup, go to the 10K and control F "peer group".

Another thing I think worth pointing out is that people seem to severely overrate the difficulty of finding “multibaggers”. Assuming you are able to establish certain “quality control” criteria, I think folks would be surprised by frequency that their holdings did 2x or more over the course of a 5-10 year holding period, should you just leave them the heck alone; especially if can time your purchases with some sort of macro based pullback.

It’s not really anything more sophisticated than a “throw a wide net, catch a lot of different stuff” approach with some salesmanship incorporated. Criteria for selection all fit the same pattern. Large TAM, high growth rate, large short interest, fairly new approach to tackling some “need”. A lot of picks and shovel plays too. It’s not hard to understand or screen your own “rule breakers”. For every Netflix there are a half dozen Westport innovations. For every Sierra Wireless, someone with half a brain, on their own can find an Inseego or Skyworks.

They are apparently building a 1000 bed hospital from scratch in 6 days. I found that to be impressive. Any chance those guys will come work for any of my real estate development ventures?

Trimmed some more BX. These things are unstoppable right now it seems. EDIT, sold a small sliver of my GOOG shares too. Felt dirty doing so...which may indicate an emotional attachment to them(not a good thing), but am almost certainly convinced that there will be points to rebuy them lower and since its paying down margin, a better safe than sorry decision.

Yea I think there are tons of misconceptions and false narrative around margin. For instance if I had 120% of the portfolio in BRK(or substitute any name of your liking) and then further margining that position bought a mixture of put options and hedges I have zero risk of being wiped out. Now take the same example and just diversify out, or engage positions that have little to no correlation or even behave inversely. Its quite simple while at the same time a little bit complex. But at the end of the day if you are a good shooter the objective should be to take as many uncontested shots as possible. Just make sure you dont get caught up chasing around your ball when you miss.

Anyone stalking shitty biotech companies that are temporarily soaring on the coronavirus news? Here's a few I'm watching. NVAX, BCRX, INO, NNVC and NBRV. I am in no way condoning shorting these(although I probably will myself). There are many dynamics both fundamental in particularly technical that could make them horrible shorts if you time it wrong....but theres definitely sucker money flooding these things, many of them have already rung the register and done an offering on the first sign of an uptick, and there will certainly be a retreat back to where they were prior. Curious if anyone is playing this temporary "theme" and how?

Appaloosa, absolutely, like 1000% certainly, does use leverage, as do most major funds. Especially those who run credit funds and get involved in distressed asset investing(which is Appaloosa's bread and butter) Even the simple structure funds like Perhsing Square deal in swaps/OTC derivatives, which is another form of leverage.

Nothing solid. Its simple but do what you're comfortable with. Some people cant stomach any margin. So it would be silly for them to use it because that fear would weigh on your decision making process. One thing I like to pay attention to are look through leverage/debt ratios, and also types of debt. You also need to look at valuations(duh). I mean Berkshire has virtually zero debt and a massive cash pile with a reasonable, REAL EARNINGS supported valuation. I think one would be just fine with it levered at lets say 1.5x. Personally could probably sleep at 2-3x. BRK at 2x leverage is still probably safer than having 10% of your portfolio in GM or Ford, or something like that. So it all varies.

Yup, almost always. If you can manage the risks involved in what you are investing in, its silly not to if you can borrow at 5% or less. Especially with real estate investments.

The very tough part is being right. In the new 100 bagger book, the author discusses Monster energy, which was written up as a short on VIC prior to becoming a 100 bagger. In hindsight its much easier to see the path to 100-baggerdom, but how often would we invest in things growing rapidly and turn out to be wrong. If it's priced in and you are wrong, then your investment results can turn out very poor. One thing Greenblatt talks about is that he doesn't swing for the home runs. Is swinging for the multi-bagger opportunities the easiest path to success as an investor? Charlie Munger likes it that way, but how many of us can compete at that level? Theres balance and you need to approach these things differently based on your strategy. I have several different "areas of allocation" if you want to label it. A certain core is very boring and dry and in principle designed to just compound at reasonable rates with little risk of loss. Then there are moon shots. Then there is other stuff. If your objective is finding 100 baggers, you probably are best suited to take a Motley Fool approach were you own a little bit of basically everything thats interesting but have zero concentration(in terms of allocated cost basis) and then literally never sell. A $1M portfolio might have 250 positions and they all are started with a few thousand bucks. The premise being that you can only lose 100% of an investment but can easily make much more. Its a Wall Street fantasy/selling story that one can take a value approach and then just randomly see the light and put 20% of the portfolio into a future 10 bagger and hold the entire way through. Even Carl Icahn's Netflix bet, which was the closest Ive seen to something like that, in dollar terms, wasn't a huge allocation and he sold it way too soon. I won't mention Cathie Wood because some folks in the investing community dont think the dollars she invests count as much as other dollars or something. But she's on to something as well if you simply want to look at results.

NOOOOO! Cherzeca keep politics out of it! Now the thread must be moved!

PCYO

Added to short positions on PLUG, WING, and a little SPCE. The poo poo basket.