KPO

Thanks LC. I’m most concerned with #1 for the exact reasons you outlined. No position yet for this reason. ATVI I’m fine to hold if the transaction with MSFT falls apart…..IRBT not so much. Any other good candidates? With CNR & TEN closing I’d like to refill my merger arb bucket.

Anyone looking at IRBT? 27% upside if it closes at the $61 announced cash price. Breakup fee is around $3.40/ share. I don’t see a valid case for this being blocked by regulators since Amazon isn’t a direct competitor currently, however if it doesn’t go through for whatever reason I could see a steep decline based on the terrible results they reported last quarter. This is kind of the opposite of ATVI, which should hold up reasonably well if the deal is blocked by the FTC, but AMZN probably has a better path to closing it than MSFT. Thoughts?

I tend to think the underappreciated aspect of oil is in its uses in things like the roads we drive on (how is asphalt made?!?) the tires on all cars (especially heavy EVs) and the oil based plastics that make up a significant portion of auto interiors (including EVs). Also, more generally you can’t build many products or develop chemicals, including most fertilizers, without fossil fuels. The runway is more than the ~10 years the ESG crowd thinks fossil fuels will exist.

Things normal people buy directly or indirectly ended up being better inflation hedges this time around, so oil, fertilizer and housing. Gold as an inflation hedge never resonated with me. Copper actually makes more sense if I’m pressed to pick a metal commodity, but this is mostly due to secular trends from EV demand and usage per vehicle.

ATVI yesterday, JOE starter today

This is correct. Look at SCI’s stock performance compared to the S&P 500 the last 18 months.

Great article that pretty succinctly captures my view of ESG’s impact on the energy sector. Thanks for posting. Btw, did you notice that David Sokol was a co-author?

All of the TPZ I bought in the depths of COVID at 22-25% NAV discounts

I’m not familiar with this company, so I’ll make some general comments on preferred stocks and hopefully my ramblings will be helpful. I’ve bought a few recently and I generally try to: 1) buy preferred stocks in companies I know and like the capital structure, 2) have a view on the direction of rates, since they’re quasi-bonds (a view which is probably wrong in my case, but my view is the fed is unlikely to have more than 150bps of increases in them, mostly due to the simultaneous reversal of QE), and 3) identify companies that are takeout candidates and/or likely to call the preferred securities at par in the future, which is really a function of rates and overall business strength. There are a few hospitality REITs that are interesting because they’re trading under replacement value, are sub-scale with good assets (so likely take out candidates) and have dropped enough that yields are attractive. I’d say the same for the Atlas preferred’s. BTW, this is a good site to give you some facts on the securities, including when they can be called at par: https://www.quantumonline.com

Agreed. The product offers a lot of value, but the debt taken on as a result of Covid seems to me that it might require a run through bankruptcy for two of the three largest competitors. It’s possible the reorganized balance sheets of the two I see going through bankruptcy drags the third down due to an inability to be price competitive with reorganized competition. I may be wrong, but the scenarios I’ve run on the big three isn’t pretty. After looking at these I pivoted to another Covid impacted sector that’s a duopoly, the large passenger aircraft manufacturers. This seems a better bet to me.

This and the US highway system couldn’t support the additional load, wear and tear, etc.

One option that allows you to participate in two secular trends (near shoring & EVs) that trades at a large NAV discount is Grupo Mexico. They own the largest railroad in Mexico, a couple short line railroads in the US (TX & FL), ~90% of Southern Copper, and some other copper (US) and energy assets (mostly in Mexico).

More MSGE

POAHY & BA at the close

ALCO at the end of trading. I suspect I’ll be buying more in the coming days. That said, with the fed draining the liquidity pond through the acceleration of bond sales to reverse quantitative easing, I suspect there will be a lot of interesting options over the next month or two. Either way, land rarely loses value over multi year periods, so even if they lose a significant amount of this year’s orange crop there is sustaining land value at the current quote.

TEN

MSGE

I’ve never had issues like this with Fidelity and they have very attractive money market rates while holding cash. What’s the angle on using Vanguard in the first place? Can’t imagine they have Schwab or Fidelity scale in the brokerage part of their business.

ALCO

PCYO at the close. Small caps are disproportionately on the receiving end of the market decline, as usual. I suspect the Fed’s balance sheet reduction is the main driver of the water lowering for all assets. Should be interesting to see how long this goes on.

MSGE & FRFHF

MSGS

Perusing some old filings and thinking about the CVX position that Berkshire has somewhat quietly built the last few years, which is 2X the OXY position, has me wondering if being the largest shareholder in a combined CVX/OXY is the end game. The Permian synergies and long term strategic value of controlling the largest domestic block of oil & natural gas would be an interesting final move for Buffett. https://www.sec.gov/Archives/edgar/data/773910/000095015719000475/form425.htm https://chevroncorp.gcs-web.com/static-files/728b8ce6-1c60-4643-9e58-2d64f28e134e

More ALCO under $32 and Atlas preferred (H and I)

ALCO