nspo

How long until he cries on CNBC and talks his book again?

NTDOY

INMD, OTCM

Picked up a starter in NTGR. A Deep-dive thesis included. https://edgarallenroef1c.substack.com/p/netgear-deep-dive?r=68eha&utm_campaign=post&utm_medium=web&utm_source=copy

It's weird that I was just searching old PCYO thread today... I'll take that as a sign Bought some PCYO, NTDOY

CVS getting some love here. I also added a tiny bit. I initiated a starter position. Still finishing up my research. Looks compelling at current valuation with mid/high single digit growth.

NTDOY, CVS

Congrats on the play! I think I'm going to make a citizens arrest on anyone mentioning OSTK from here on out ;D... I had a decent amount of calls that expired in March... Guess I should've rolled those puppies huh?? I feel like vomiting when I look at the price...

Tepper, Klarman, N. Lou. I can't stand Ackman, the guy seems like an absolute D-bag. Lack of humility is a no-go for me.

Obviously a value guy here but have to give some of his thoughts deep consideration. Knowing who's on the other side of the trade (passive) and where those flows are likely to head/what makes them tick. Being a big follower of Klarman he speaks on the other side of passive weaknesses. Where you can take advantage of indiscriminate selling due to specific mandates at the fund level. Buy from passives (uneconomic selling ie dividend cuts) and selling to passives above intrinsic (buyer at any price) sounds like nirvana to me 8)

It's interesting to hear someone make the case for upside volatility. Something of a rarity because of everyone's interest in world-ending black swans. It pays to take a balanced view sometimes, right? He's definitely one of the high-IQ types with tons of worldly wisdom. FYI, I asked him a few questions via Twitter DM and he responded almost immediately.

This is insanely good! Wow. Thanks so much for sharing.

C, AGM, LYG

Ha, yes maybe I'll go spend a small fortune on a socket set 8). AMA is an idea I saw on here posted by Spek I believe. It's an Australian auto body company that's rolling up a lot of the industry (cursory research). https://metisurance.com/ LKQ is interesting, just wonder how many people are going to junkyards right now. They do ship parts as well but still some hair on it. I might have to start a separate thread on all auto-related DIY/aftermarket. The dealerships (Cambria) are taking a beating as well. Best

Cigarbutt, do you see ways to play the decline in used car prices from the long side? I haven't jumped in yet but things like LKQ and AMA look interesting from a value perspective. Not sure if there's much correlation but worth a thought. Thanks

Anytime! Are you seeing any standouts on your end aside from FB??

Yeah, I probably shouldn't have left that so vague. -I loaded up the truck on FB at around $150. By my estimate, it was trading at 13-14x forward fcf, still has a large runway with very sticky products (maybe next $1t business?). -I'm waiting for a fill on OTCM which lists pink sheet and over the counter stocks/information provider. They're trading at my estimate of roughly 15x fcf, large addressable market, and growing like a weed. -Bery shouldn't get too dinged by this debacle, pretty secure end-users and nice history of rolling up the space, trading at a big yield and IMO better quality than a lot of businesses out there. -Fonar is a MRI company that both manages and acquires MRI facilities and sells machines. Not sure how to judge the benefits of their upright machines vs. comps but figure that with a near 20% fcf yield cash-adjusted, growing, good ROE's and $30m net cash that they will weather the storm. The management arm has nice recurring cash flows that are signed under contracts with radiologists. BTW, I didn't necessarily mean that the big moats are coupled with the high yields if I didn't make that clear initially.

With how overheated we were coming into this it looks like some names could continue to sell-off. A lot of more expensive names haven't even reached levels previously deemed attractive (<20x fcf back in 2018). However, some things are egregiously mispriced. On my end, I'm seeing the return of active investing. Big moats and a bunch of small caps trading at uber high fcf yields are being thrown out with the bathwater. (famous last words!)

For me, like many others, Bery is a great choice. I tend to read Packers work (Bonhoeffer) and agree on his current views. In such a low rate environment there's huge incentives for equity investors to take advantage of companies that arbitrage the ROE/debt spread. Looking at the rollups/stubs is where the big fish are swimming. That said, ADT is another interesting play that I think will triple on fairly conservative assumptions over the next several years. Naturally recurring revenues, locally dominant, rolling up the competition, and trading over 12% fcf yield on pre-covid numbers. The current epidemic should have very little effect on their earnings streams.

I greatly appreciate all the advice! I know I left out some key information but will keep adding it to the thread as I receive it. (including financial snapshots) - Occupancy stands at 76%. Seems like the industry pre-covid was somewhere between 85-90% - The owner is in his 80's and has mentioned that he "lives within 4 miles and goes to collect cash once a month". That should tell you his involvement as an owner/operator, ha. - He spends under $100 (in dollars, not thousands) ANNUALLY on total advertising expense and has mentioned to me that "advertising doesn't help, we've been here 20+ years so everyone knows us. This to me seems is the stereotypical "on his way out" mentality. - There's been an increase in competition within 3 miles of the facility. A REIT has been built up with an unknown amount of supply (doing more research). His argument to the competition was: "customers go there and then come to us since we're so close. We then beat them on the price every time. This is because his nut is much smaller than the $10m-$15m to build a new, indoor facility. - After looking through industry standards it seems like the average profit margins are in the 11% range. That said, on roughly $540k of NI in FY18' it seems his margins are inflated for some reason. Obviously 11% is an "average" and it can vary but the discrepancy seems rather large. Could point to the fact that my family is undercharging on rent. - The reason that the margin has gone up from roughly 14% to 25%, based on my research is that my family has given him a break on the rent to the tune of 50k. (knee jerk reaction, I know!). The true economics of the business hasn't changed much. - There's room for another 120 units to be added to the facility, indoors. - There are 2-3 workers with a total annual salary of about $70k (management software addition could lower this). - I don't believe he's providing any insurance on personal goods held in units. This could be another $15k-$30k value add, based on $10-$25 a month for values up to $2.5k - He has no retail operation for locks, tape, boxes, etc. (~$5k) - He doesn't provide truck rental ($5k-15k) Therefore, if I'm not mistaken it seems that a conservative value-add to the existing operation is in the ballpark of $50k. With the addition of dynamic pricing software, this number could go up an additional 10-15%.

Guys, looking for some insight here. My family and I own a 38k+ sq ft warehouse in the Northeast. That said, the environment has given us the opportunity to buy out our current tenant. This tenant operates a self-storage facility that's been rather successful for the last 20+ years. There are ~400 units, 70/30 split between 10x10's and 5x5's, pricing is from $65-$200 a unit/month, and current occupancy rests at 76%. These figures lead to roughly $120k in NI. While still in preliminary discussions, he's looking for about $250k for the business. My questions are: What's the PMV of such a deal (excluding land value, strictly the business)? How are storage facilities usually priced (based on NOI, FFO, FCF etc.)? And do the economics of this deal look appealing? Please add any experiences/advice. Thanks!

BIDU

Thanks for the info LC & matte. That said, does anyone see some obvious asymmetric payouts available with low costs of borrow?

This is the sharpest decline I've seen. I just wonder how much of the flow is coming from algos selling for non-economic reasons? Anyone with quant background here? Spek has a great point, paralysis by analysis is a real thing. I'm just applying the 5 year test to everything I buy. That's the only way you can remain poised in this environment.