Gregmal

Orphaned non dividend paying, newly rebranded class A multifamily REIT with some remaining office and land assets waiting to be liquidated. Decent likelihood of a sale. It’s the old Mack-Cali. NAV probably $30. Worst case sale low $20s. Downside is that they think they are a growth reit and keep making acquisitions at 4 cap rates. But as long as they’re buying class A it’s not the end of the world.

Added to VRE, MSGE, Nintendo, UBER

Pick your starting points however you’d like. I am a firm believer that cash is overrated in a world where one is able to have liquidity. Especially if you have an earnings stream/income. Cherry picking start stop points is generally dangerous because it can produce whatever result you want. Remember Hussman or whatever during COVID? “Ay made like 3000% in a month!”, and it’s like dude you’ve sucked a big one for a decade shut up. Of course having been in different situations as well, I’ll say that when running other peoples money, cash may be more necessary because you can’t always rely on having additional buying power. But for my own personal money, I’ve never seen a reason to hold much of it because there is overwhelming evidence, spanning decades, that cash is inferior to pretty much anything. What is $1 of cash vs $1 of index vs $1 of land starting in 1940, 1960, 1980 and 2000 worth today?

Eh Greg’s top position did 40% ytd and got bought out. Second biggest is PSTH which is modestly higher. Greg was on the short tech trade back when you banned him in Jan ‘21 where everyone swore “you just couldn’t short this market”, and yes, Greg was on the futures and options for oil and gas summer 2021 when everyone said $100 oil wasn’t possible and was sitting around with their thumbs up their butts worrying about Deltacron or Omicron or whatever stupid variant caught everyone’s attention at the time. True story!

Inflation last year was significantly worse than the inflation we ve seen this year(unless you believe the CPI junk), the market did OK and some individual stocks did wonderful. If the approach is that no downward volatility is acceptable then it’s going to be hard to ever invest. And I’m not looking for a debate on inflation but keep in mind oil was negative in March 2020 and housing prices 30% lower and CPI, which is the measure of choice for the sheeple; will tell you March 2022 was worse than 2021! Not in the real world.

Same as the question to the other guy…from any given point we can draw whatever conclusion we want to. Why is January 1 the starting point? If you think inflation is a problem then holding cash is fundamentally opposed to that idea. The only basis otherwise is if you believe in the efficient market hypothesis. In which case there is no point to anything. There are currently plenty of businesses that have not been impacted one iota that have sold off. If your business is not impacted and is growing value, is there a point to worrying about the daily stock market quotes? Or conversely, if the only thing that matters is the daily market quotes, what’s the point in owning anything?

How can you believe inflation is the big threat to the market and be holding cash?

Yea crypto is huge in Miami, for better or worse. The chart says it all though and it’s why those still holding out hope of the CA/NY vs FL blue state resurgence just don’t get it at all. Money talks.

What’s tougher with businesses vs asset based companies is that businesses have a higher risk of impairment for many reasons. That’s why BRK is nice because it’s diversified and has a track record. But largely, share issuance, taking on debt, mergers, or just bad decisions in terms of deciding which ventures to pursue. IE FB and metaverse. Sears is a great example. The business changed and destroyed the assets. FRP or Alico? Try to destroy that? Even if you tried, it’s so slow moving and would occur over time in which case you’d have a period of time to exit without getting hurt. Or the liquidation theory. a company with good assets, says BGs Clipper….dude I’d fully welcome a liquidity crisis in 2027 because it would force asset sales and at 50c on the dollar I win. A business in need of liquidity is fucked on so many levels.

If we are not more done than not, IE Q3 produces a downdraft in excess of say 20-25%, then Kyle Bass may be right for like the 3rd time in his career. I think should this occur, the opportunity set would be once in a lifetime. These are all short term, solvable issues and if it means low teens multiples on the highest of quality stuff money can buy, and 50% discounts to current private market on RE, we should be excited.

The answer is simple, find energy/oil companies who are profitable at $60 a barrel trading in the single digits and residential RE related stuff trading at 30%+ discounts to NAV. Fill out with a few financials trading at or around book. You’re setup up to do well in both scenarios.

The above will fix most of the supply chain stuff. In a capitalist world, once the imbalance is solved, it’s very hard to fuck up again. Outside of a 1/100 year event, imagine everything that has to go wrong for folks to be paying double or triple for used cars and 25% premiums to MSRP? I’d even go as far as to say that’s a once in a lifetime event. Labor market cooling off IMO would be bad, but once that occurs then the mouthpieces can stop talking about wage inflation. I’ve probably talked to 5 dozen people in the last few weeks who have expressed concern about Q2 earnings. It’s certainly close to consensus and frankly at -20-30% on the indexes and more on most individual names, I think it’s closer to baked in than not baked in.

Every inflation input I’ve seen people fussing over has fizzled out, with the exception of housing. Housing should ease with more time as building products create more inevitable. Otherwise, it’s just a time solved problem. Beginning of the year half this board legit thought car prices were staying high forever. Or the commodities wouldn’t come down. Then they did. Then we got the war and war related stuff spiked. Then that would last forever; the poster child being wheat. Then that came down too. I almost feel like if we punished people for being wrong you’d get a much more accurate representation of what reality is. I’ve been a broken record on housing, but we ve been hearing about the coming crash all decade, we heard about the train wreck is progress after COVID, and even the last 3-6 months we ve been told the implosion as happening just as every month a new record for average sales price occurs. If a 10% pullback happens, we’re these folks worth listening to? Nope. Further, the consumer and average household doesn’t really have a lot of debt. I don’t know why that notion is floating around as much as it is. Most if they own homes have tons of equity.

Since I’ve started paying attention to the markets, now over 15 years ago, folks have always been claiming that the Fed is backed into a corner. Except, they never really are. Also don’t forget, what the Fed can’t do, politicians can. I’m all for avoiding obvious bubbles, and being ready to pounce on a big move up or down, but the assumption that everything is a bubble can’t really be true if you believe in the notion that capitalism and global supply/demand exist. I hear everyday how housing is a bubble. Been hearing it for basically the whole decade. Then a good asset goes on the block and there’s 20-30 buyers most are cash buyers and the sale prices sets another record.

The problem with this sort of thinking, is that the types that generally do have these hunches, are consistently having them. Over the past half decade just off the top of my head, the same group was worried about....2016/17...Trump. 2018/19..the punch bowl, 2020-21 Covid, 2022 the Fed/rates. Its just always something with them and if I missed my top 5-10 investments over this timespan it would have been hugely to my determinant. As some have stated, theres always something going on, you just need to find it. Shutting off the creativity or adventure seek valve over the fear flavor of the year is counterproductive to this. Every day you should wake up wanting to make investments but also having the discipline to sort them. Some variant of dollar cost average or time disciplined purchases is also so underrated. I just finished up with my APTS stuff and chuckled printing out the transaction log for my accountant. Taxes are a bitch. Over a 12 month period from January 2021-January 2022 there were 178 different purchase transactions between stock and options. Berkshire early 2021 I bought the same dollar amount every day from Jan 1 until end of February. Find something, and then just stick with it and execute. Paying attention to the other side is important but too scrupulously just causes undue hesitation. An investor and friend of mine earlier this week asked what to make of MF REITs selling off like 20-25% this year. And again I asked "why is it, that things that have absolutely ripped face the past few year, pullback, pullback mind you, the same amount as basically everything else in the market, and we need to conclude it s proof of something that should prevent you from investing?", especially when the real market, the private market, didnt move anywhere near there and the only evidence one has to make that case is small timers buying class C assets claiming theyre getting better deals LOL? I dont really like BTC, but the argument and point is best highlighted there. Ignore that its Bitcoin. The negative clowns have been hating on it since $1,000-$5,000. Its now come back from $60,000 to $20,000....THAT?!? is proof they were "right all along"??? You wouldnt know it from how they cheerlead, but again, perspective is everything. If you cant get excited about an investment or sector, just move on to another one til you do.

Another thing I’ve heard is helpful is just sidepocketing $50-100k in a small savings account. One of the most obvious things people seem to overlook when investing is that they don’t actually need the money they’re investing. It’s excess. So again it shouldn’t matter what it does short term if your horizon for it is not short term. A year or two worth of living expenses will greatly remove your need to fret about what the stock portfolio does tomorrow.

They’re in the process of monetizing them. Same for a bunch of their land bank. At the current valuation you don’t need a 6 cap on the office for it to work. Debt is going to continue to be paid down and company simplified. We ve seen this story before. It’s just totally unloved and off the radar. Basically an orphan stock. No dividend reit with shitty screening metrics and a dumb name.

Yea the PRs make me wanna vomit. But those new waterfront properties…..

The biggest thing I think every investor should realize is that it’s terrible to invest from a position of fear or weakness. Being constantly bearish is counter productive. But I also think symptomatic of not really getting the hands dirty on the deeper fundamental stuff. Think about the thought of buying a home. Or managing a store, or running a business. You do so with an eagerness and excitement for the future. It’s definitely possible to invest the same way. You buy a great asset and are excited about owning it and that trumps what the stock does next week. Too many people obsess over the daily quotes and only have an affinity for the p in p/l which of course feeds right into the transaction inducing Wall Street machine. If you are 20/30/40 you should looking to acquire assets. Berkshire I agree is probably the best one to just own and stfu. FRPH and ALCO are two others I just buy and on one end I get a fat dividend while they sell oranges to Tropicana and land to developers. And FRPH develops trophies while holding a war chest for the down times. Internalizing what you own is a huge mental edge. Ultimately, good market, bad market, whatever….the more noise you can eliminate from the process then better.

Yup. It’s a boa constrictor type fundamental situation. I think VRE here too is extremely interesting now well below tangible book. I need to catch up on the day to day there but I also believe their standstill with an activist ends soon. That’s a double from here if it sells, at least. Housing is the only market in the world where you can have all time high pricing month after month, yet still have some clueless “pros”, analysts, twitterers, and hedge fund guys claim it’s imploding LOL.

Meanwhile public market participants largely shit their pants

Just some general thoughts to balance that which may or may not help you. 1) A lot of people I know think this but then you ask for a show of hands as to who was margined out long the whole way and no one thought this was such an obvious thing that they felt compelled to take advantage of it. It’s largely only a feeling that gets emboldened when the markets go down. Also, what is a “meteoric” rise? Why is the bottom in 2009 the starting point? Why not 1999/2001/2007/2012? 2) again, what is sharp rise? You mean recovery? Sure some stuff definitely got out of hand. I kind of view that whole thing differently. The markets had no business going down the way they did in February/March 2020. It was driven by a lot of charlatans screaming fire in a crowded room. Much of the market is basically back to pre COVID levels. Not a big deal from either bullish or bearish perspective IMO 3) Personally I think rates going up or down are irrelevant to this inflation issue. It’s not a Fed solvable issue and folks keep moving the goalposts. Cars and commodities where the problem and they come back to earth and then they just so “oh but now this”. It’s like don’t worry “now this” will follow the same path. But just generally speaking I don’t totally disagree with your thoughts on 3, but the bigger question is, who’s incentives align with shit being bad, markets falling big, economy going to hell? Virtually no one’s, so you’d not only kind of have to be fighting all the bankers and politicians and most powerful people in the world, you’d also kind of have to think normal people tolerate it at the polls. I don’t think being on either end of the extreme, positive or negative is healthy per say, but there’s definitely a preference to keep shit out of the gutter.

It’s all possible but wasn’t the argument for inflation commodity price volatility? And wasn’t not too long ago the reason for justifying all the aggressive Fed action that the bulk of the labor force was too dumb to take advantage of the job market? Now they’re going to get a brain and push hard? Plus, there’s plenty of ways to play a boon to the consumer. Im not looking to do much other than pick off low hanging fruit, but both the commodity prices and labor strength are actionable. If shit picks up labor wise, rents and housing prices go nuclear.

The other thing that makes it compelling here is that if inflation persists, it’s pretty much a given it will be commodity market related. With so much of the space trading at 1-4x earnings, you can almost hedge just by owning some of them. Or options because the thing with commodity cycles is that they go batshit sometimes so LEAPs could really pay off. Similar to what I’ve been doing with oil.