lnofeisone
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Posts posted by lnofeisone
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CLMT
(Qualitative) Fundamentals:
-reasonably strong core business
-it's an MLP and nobody wants to own it
Catalysts:
-sale of refinery (which isn't exactly a done deal but has been clearly signaled to be up for sale) + ongoing business will contribute to further debt paydown
-stock is down significantly and will need to re-establish a shareholder base
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Antero Midstream Corp - Pays $1.23 per share and trades at $5.85 for a juicy 21% yield. They just gave some concession to Antero Resources. AR is hedged for 2020 and 2021. So no BK till 2022. Should get 9 quarters which amounts to $2.77 which is 47% of your cost. AM is basically the bond in AR. AR bonds trade at 8.4-11% yield. So you pick up 11% more in yield. AM bonds are trading at 7.6 to 8.2% yield.
I've been slowly picking up AM shares for tax harvesting. My secondary thesis for selecting AM is the fact $1.23 distribution doesn't show up in some financial filters (e.g., SeekingAlpha hasn't caught up yet but) and looks like updates will show up come January.
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What are your best EM and retail ideas?
I'm more of a funds person to be honest.
But going back to the earlier idea of contrarianism, I was reminded of Russia recently. Cheap and hated (if not quite as much as a couple of years ago). I've never felt too comfortable with the governance.
While it's the 'one that everyone owns', I'd have thought that Sberbank would have a pretty decent chance of doing well over time.
If you want retail, then I suppose X5 would be one to look at.
At the more obvious end, I find FEET (Fundsmith EM IT) becoming gradually more interesting, whether for owning or inspiration. The portfolio's been tightened up, and is full of super impressive EM consumer companies. They've just been too crazily expensive I think, even for their impressive stats. They seem to be slowly getting a bit cheaper. I wouldn't expect them ever to be 'cheap' (except in a 2008 situation) as they're just too high quality and profitable, but if they become semi-reasonably priced, they should be no-brainers for the long-term.
Will revisit FEET, thanks.
I also discovered SEDY this week - emerging markets dividend ETF, but what it really opened my eyes to is some optically very cheap Russian companies. Tempted by a small position.
I've had DVYE (the US version of SEDY) on my radar for a while. In my notes I scribbled "no Sberbank?" and curious if anyone knows why wouldn't they hold it given the other holdings. Also, VTB (another russian bank) has (small) exposure to Africa.
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Sold OLN 16.5 puts expiring next week.
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Wrote OLN puts.
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Does anyone know how the $50 payout to Celgene is categorized as far as taxes? I assume it is not a dividend, is it return of capital?
It's a capital gain/loss.
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I do agree with you that there may be forced selling after the spin, but the Elliott plan also calls for the conversion to C-corp at the same time so perhaps some forced selling can be offset by new shareholders who currently cannot buy into a MLP.
Conversion to a C Corp means a huge tax bill for LP’s especially those that held the units long term and have a low tax basis (distributions adjust the cost basis downwards). Same thing happened when Kinder merged then LP into KMI.
I agree this would be more technical than fundamental, it we might get a huge puke, when these initiative comes to pass and LP owners freak out.
Agree that MPC holders that don't want/can't hold MLP (as a corporate structure) would sell MPLX if Elliot's plan goes through. However, MLPX can choose to be treated as a C corp for tax purposes without all the headaches of MLP to C corp conversion.
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MPLX NOV 27 puts.
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In short:
The business solves a problem for its customers (vets)
The end market is attractive (pet care) given its recession-resistance
The valuation looks increasingly attractive given a price for the entire enterprise of $2.3 billion and unlevered free cash from the legacy Henry Schein business of about $150 million, giving us a 6.7% unlevered free cash yield on just Henry Schein. This effectively values Vets First Choice, which is why everyone was so excited about the stock in the first place, at zero.
I've purchased twice now, once around $13 per share and again yesterday below $11.
It's a small position for me given the leverage and somewhat limited free cash flow. In a downturn, they will generate cash from inventory liquidation, but still the free cash could be ugly and people who don't understand the business now really won't want to own it in a downturn. So, I've left some room to average down further because I think I could get a chance to.
Helpful and I'll continue watching. Thank you.
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CVET
Curious what made you go long. I learned about it by way of me taking my dog to the vet and everything form the appointment to meds was seamless. Really unsure of the price and chart.
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I couldn't help myself, I just wrote some BAC 27.5-stirke, October 11 expiration puts for $0.30 per share. I did it in my IRA so they are cash-secured.
Boilermaker - just curious if you can share your strategy around picking the strike price vs. premium collected (which in my calculations consists of things such as time value, volatility, etc.) vs. probability of assignment (here I have my betas, deltas, vegas).
Favorite Stock for 2020
in General Discussion
Posted
CLMT consist of refinery and specialty chemicals. Specialty chemicals are much more stable in terms of revenue, margins, and volumes shipped. Refinery earnings can be very volatile (slide 4 of their annual presentation http://calumetspecialty.investorroom.com/Events). Looking through earnings reports they clearly break out margins on specialty but show nothing about fuels. The reason is the volatility of earnings/losses. CLMT is moving away from fuels by selling their refineries.
The numbers you are referencing (I'm guessing here because I don't know what you used to get them and they different [albeit, slightly] from what I have) combine both segments. Sale of the Montana refinery shouldn't be too big of a hit on the earnings but should put a dent in debt thus improving the ROIC. Operating margins should go up as well.
I'd also highlight cashflow component to see (what I perceive) a cheaply priced business with few potential catalysts.
Cheers