Gregmal

One of the most underrated traits in some of the better investors I know is simply being humble enough to admit they dont know and dont need to know every detail or risk. Some things just fit into generalized boxes and can be left at that.

Once upon a time there was discussion about margins at Pepsi.... Operating profit grew 76% and operating margin improved 6.1 percentage points. https://investors.pepsico.com/docs/default-source/investors/q2-2023/q2-2023-form-10q_nm3t7xov1rohgaf2.pdf Obviously a company of this size is near impossible to pinpoint everything involved in the causes, however its clear 2022 was a year of one off hurdles not just with inflation related costs but also the war. Its also interesting how in the headline releases, a lot of these companies purposely dont seem to mention margins much at all....would indeed be a bad look to show pricing power improving margins. Nonetheless we wonder how margins could possibly expand after 2022....answer was? Very simple.

Will try lol.

Swapped some SPHR into CPNG leaps last few days.

Anyone got a good stick a fork in it meme? This was only June. Wait til July and August prints come in. Once we start seeing the moderation in housing which started last August...still wondering why we rallied?

Yea we’ve talked privately but publicly, congrats! That’s the type of optionality that is unmatched by any other asset class.

I can’t quite think of any other asset class where people routinely argue “it’s not worth what it’s worth because of this and that and this and that”….quite like land. A long carried over byproduct of the GFC trauma IMO and something that’s soon gonna change.

I’ve always thought it a little funny just how much some of these guys like 50 value being safe. Personal security teams going 2 dozen deep lol. They sing about violence and some about anti police stuff and then you see it’s all just an act for the suckers. I don’t know what crazy world safety isn’t seen as desirable in a community. Yet here we are. Some senior citizen randomly murdered in Queens today while walking to Mosque….but I heart NY!

Idk there’s more than I count in the niche NY value oriented hedge fund crowd. Ever see those VIC polls about how many cheap stocks you see and it’s never more than like 10% that say plenty? There’s like some stealth brag shit attached to many of these guys who see it as indicative of being super rigorous on the due diligence and having ultra high thresholds to invest, when really, it’s pretty easy. Much more common to see than say someone who’s unapologetically like yea Im completely invested and what you see is what you get. Mutual funds and ETF managers are obviously very different and yea, always invested for obvious reasons. I just stick to my circle of competence and it’s never been an issue. I’ve always wanted to get into foreign stocks. Europe and Japan for years I gave a little attention hoping to learn. But it became a distraction. Just never had a hard time finding something that puts points on the board.

That’s definitely true for a lot of people and especially money managers. Holding an abnormal amount of cash is a way to be edgy and make a statement to everyone about how smart you are. Because it’s not just like “oh you’re 35% cash, nice!”…its said because they know it’ll often trigger a response about “why?”…. and that’s when they get running on their super duper look how smart I am ramblings. It’s ultra simple, cash is what you do if you have no ideas. I have never had an issue finding ideas and many times find both bullish and bearish ideas and hold both. Cash is basically….I don’t wanna look. Similarly a friend I know who manages mid 9 figures was boasting about how he(of course mentioning “just like Warren Buffett”) “looks through maybe hundreds of ideas and turns them down for every ONE he finds”….and we have the type of bro relationship where I could just straight face look at him and be like …dude you’ve been holding cash for 7 years and returns are publicly available and…don’t even hold a candle to an index fund lol.

Buffett runs a business. He’s always used leverage to produce returns. Margin before Berkshire and after he’s found ways to use the business to enhance his investing. The idea of having cash amongst investors really just comes down to your ability to find good investments. It’s not exactly indicative of anything else. Seth Klarman has held huge amounts of cash for a decade. Is that because there just haven’t been good opportunities the last decade? Lol There’s always opportunity for those willing to work hard and look for it.

Only cash I ever sit on are the few dollars I keep in my wallet for when the kids need ice cream at those cash only places.

Same as prior just bigger. About 80% between JOE, MSG universe, and Nintendo. Long live screen and gaming addiction, prosperity of the 1%, and Florida tailwinds.

So what’s your point? We had people calling for substantial double digit declines last year. Are you thinking that you are the only market participant with this data and on to the next “Big Short”? Or is the market perhaps aware of this and looking past it? What’s the angle and actionable trade here?

Haha what’s nice is that when you’re a winner even the soup kitchens have Michelin stars.

Asking most brainwashed westerners about China is equivalent to asking your wife if your girlfriend is pretty….

“Janet Yellen concerned about Chinas new export controls”….. Think Janet is equally “concerned” about any of the US policy directed towards China or Russia? Even Canadian tariffs? Nah bro. https://www.cnbc.com/2023/07/07/yellen-says-shes-concerned-about-chinas-new-export-controls.html

Yea I don’t really have many rules but instead framework. But if I did have a rule it would be the one shot rule on OTM options. One shot, no adding. By starting slightly in the money you’re saving your shot and giving yourself some room to be off on the timing and multiple ways to make money.

Closed this out. Was a doozy but it’s lapped.

Yup. And that’s why 3-5% inflation is pretty cool. These sort of companies can pass that on and then some, all day. As long as it’s there, people expect it. The vodka sodas don’t go from $40 to $42. They go to $45. Year after $50. Club seats go up 5% but have almost zero incremental maintenance cost so that 5% is pure profit. Same sorta thing is what makes the 30 year fixed so great. Taxes and insurance can increase, but with those inflationary increases, the outstanding principle gets devalued further. Rental income spikes the whole number, more than negating the other, smaller component increases.

I think the general idea you’re onto is exactly how one wants to view this. The best part is that no one is forced to own Aapl at 30x. Also, no one is forced to short it either. But once you realize that stocks represent businesses and not just paper, the attractiveness of selective exposure to certain types is greatly amplified. Cash is and has been junk. Bonds are not much better. A business that can adapt to the environment and pass on inflation/currency issues to the consumer is very much what you want to own. Those $40 vodka sodas will still sell when they’re $45. So do the $30k court side seats to Spike Lee.

If nothing else, wouldnt somewhat of a contrarian approach be to get long-ish the non supercap tech and even short the index? Bet that beats bonds over the next 6-12 months as well.

Interesting. This seems inconsistent with the prior claim that I should Google Seth Klarman and take notes on how he buys the bottom of every market dip and sells at the top and cleans up on every 10-20% fluctuation...but what do I know...its just what a friend told me. Should ask him if he knows what "mooning forever" means.

Yea IWM it’s kind of all the above. I don’t even know if it’s right but saw a PE of 12 on it as well. But it’s more torquey to economic sensitivity and less propped up by quality. Average company has harder time getting financing than a S&P component as well. The flip is it’s still off way more than the other indexes but a lotta time you wanna pay attention to strength. Mainly though where things are setup after H1 I think we could easily see a no big deal 2H where the market loses 5-10% just because 1H got so many people chasing their tails. Last 2 weeks of June IMO were some of the most obvious performance chasing into the quarter end I’ve ever seen. So we could even just give a little bit of that back for no reason and this will do 50% in short order. Most important part of the hedge, and it’s really just that, is the strike though. One thing I hate with options is that when you go out of the money you can’t average down because it’s more and more likely to be worthless when it goes against you. Which sucks because OTM options are really where you hit your home runs. So you have to find the line and straddle it. At $190 we are slightly in the money. If the index moves 10% against me….shit, I’ll be a happy camper on the longer side. But it’ll be still close enough to then swing at it again as an OTM option and probably only cost a few bucks. Vs if I go for say a $170 strike right now and the trade goes against me to $210….have very little room or margin for error needing a decline that big. Done stuff like this often after big H1s over the years and just generally taking ~10% of the the gains on the year and positioning them so that if we give a lot of it back the hedge will warp into a 20-30% position and liquidity source is just kind of a good prop IMO. So the $190s currently about $9-10. If you get a 20% pullback they’ll 4x. Even a 10% pullback is a double. If the market doesn’t go anywhere period for the rest of the year I’m still a few bucks in the money and I lose like 4%.