ValuePadawan

CDLX in size, now my largest position,

I guess I was wondering if the management team was off their rockers and as I didn't know much about these type of transactions and didn't know how common they are I didn't want to throw stones at a particular management. Perhaps I should have mentioned the name though. I'm assuming this is going to be some type of acquisition or big investment in the platform. What do you think the proceeds will be for?

Any confrontation would surely bog down both armies in the Himalayas and end up with some sort of peace agreement. This pushes India closer to Japan the USA and Australia. Not in China's interest and a big mistake for China in my opinion. China keeps picking fights with everyone the US is trying to court.

Thanks ander! I don't usually follow growthier names so I was unfamiliar with such transactions I wanted to make sure it wasn't something unprecedented.

So a company I follow released a statement the other day that stated that they are issuing 200M of convertible notes and " In connection with the pricing of the notes, Company A intends to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions will cover, subject to customary adjustments, the number of shares of Company A's common stock that will initially underlie the notes. The capped call transactions are expected to offset the potential dilution to Company A's common stock as a result of any conversion of the notes, with such reduction subject to a cap." In another section it states, "Company A intends to use the remainder of the net proceeds for working capital or other general corporate purposes, which may include potential acquisitions and strategic transactions." So they offer convertible notes with the possibility of dilution then use a portion of the proceeds to buy calls which will negate the dilution and the remaining money can be used as needed? Do I have this correct? Seems like a strange and risky way to raise money in a pinch but maybe this is a common form of financial engineering and I live under a rock. If I have something wrong please let me know as I'm not particularly knowledgable with derivatives, calls, puts etc. Cheers have a nice day

I'm seeing WTI at $1 a barrel am I hallucinating or has the world gone mad?

Smells like insider trading to me but for a whole nation. Step 1 Pump as much oil as possible dropping oil prices and oil stocks Step 2 Cut production and get the upside when the stocks rebound

I don't understand why the gov't can't just take small equity stakes in companies that will be struggling in the short term but will be successful in the long term. The equity would be without voting rights totally passive and rolled into a sovereign wealth fund for the people to profit off of when the world gets back to normal. Good companies get liquidity. The public gets the value of providing capital when it is badly needed. Win-win

They are in energy ETFs which people are selling hand over fist? Throwing the baby out with the bathwater? Pure speculation because I honestly don't know. Yea Im not too proud to admit, me neither. No clue. I ve just found it prudent to ignore the urge to be full blown value investor and revert to "price is what you pay, value is what you get" in the face of price action that continually, and for long extended periods of time, has flown smack in the face of what conventional wisdom tells you. Look at some energy stocks a half decade ago, auto stocks basically the entire decade, even some of the financials....when you're supposedly gushing cash but the market rewards you nil, or negatively, something is off. If there arent effective levers or shareholder actions to take to correct this, tread carefully. The saying, much like with the autos, was that theyre in the penalty box for good reason, but in much healthier shape and will hold up better through the next cycle.... yea... about that.... So with tankers, uhhh, tread carefully I guess. Thanks I will I made this a small bet as I see high reward but higher risk than I am usually comfortable with however with some being at NAV I don't see much downside. Heads I win tails I don't lose.

They are in energy ETFs which people are selling hand over fist? Throwing the baby out with the bathwater? Pure speculation because I honestly don't know. sorry, not trying to pick on you, but are you sure that's correct? https://etfdailynews.com/stock/DHT/ https://etfdailynews.com/stock/TNK/ I don't see the major energy etfs on those lists. Those were just guesses hence why I said pure speculation I just don't know why this hasn't been priced in yet and don't worry I don't feel picked on I actually appreciate when people can help me destroy my ideas, it helps me find my blind spots!

They are in energy ETFs which people are selling hand over fist? Throwing the baby out with the bathwater? Pure speculation because I honestly don't know.

What's the 6-month brent contango right now? you can calculate the breakeven daily rate for a VLCC in order to make any money on storage (add some margin for the trader, insurance etc). The numbers made sense last week, but they don't make sense today anywhere near where day rates were a couple of days ago. day rates are likely coming down hard unless the contango move back up to where they were before trump opened his mouth. Trump mentioned a 10 million cut and prices went up 30% on pure speculation https://www.bloomberg.com/news/articles/2020-04-03/opec-to-hold-virtual-meeting-monday-as-trump-pushes-for-cut I'm fully expecting oil prices to drop when the world realizes even if a 10 million cut happens it doesn't matter when 30 million less are being consumed. When oil prices go back down the contango gets steep again and tanker make money hand over fist at least through q3.

Even if a deal was reached tomorrow and I highly doubt it. There are still hundreds of VLCCs on their way to deliver oil to places around the world for at least a month because thats how long those deliveries take. Not to mention all the tankers docked storing oil waiting for higher prices. The Russian's oil comes from extremely swampy areas of Siberia where if you shut-in those wells there is a high risk of well damage, then they have to wait for the winter freeze to come before they can re-drill. Last year when Russia "cut production" it was actually just some seasonal maintenance which means the bulk of cuts will have to come from the U.S and OPEC. A lot of US producers are 60% hedged for this year and with credit being free they have some breathing room and unless OPEC wants to lose massive market share they must keep pumping. The Saudis are filling every ship they can and docking them off the coast of all the places Russian pipelines deliver to trying to create such a surge in those local markets that the Russians won't be able to get their oil out of the pipes leading to a back-up and the Russians forced to shut their wells or risk just dousing Siberia in lakes of crude. If the Russians have to shut their wells and re-drill them all, the Saudis could knock out Russian oil infrastructure for a couple years while they re drill it all. If a cut was instituted OPEC would be taking the brunt of it, maybe some non-OPEC players would join in (Alberta, Azerbaijan etc) and they would have to cut at least 15 Million barrels to even start to normalize the glut in the world. I rate that possibility as very low and expect this glut to persist for quite a while. During a lockdown or quarantine or whatever you want to call it road traffic drops by 2/3 and road transportation is 2/3 of oil use in the major economies. So lets say oil demand drops during that period by 30%. Italy started their quarantine on March 9 and they are finally getting control of their situation. They have said it will last until at least April 13th. Lets say the Major oil consuming nations of the world spend a month with a 30% demand drop of oil. That's 70 million barrels of demand for 30 days while producing 100 million barrels a day. Thats a surplus of 900 million barrels. Incidentally B of A thinks the world has 900 million barrels of land storage, Goldman thinks there is about a billion so the number is probably in that ballpark. So we should be fine then right? Wrong. While the initial quarantine could create excess of around a billion barrels of oil, countries do not go back to 100% oil demand overnight. It will probably take at least another month before oil gets back to normal and that could be another 30 days with 10-15 million barrel surplus. That's anywhere from 300-450 million barrels that will have to be stored on tankers and in railcars and anywhere people can find storage. Using VLCC and ULCC tankers for storage could take 100-200 tankers out of a fleet of around 770. Tanker charter rates have already jumped to anywhere from $250,000-$300,000 a day. Tankers make money when rates are over $25,000/day so they are making a boatload of money right now (sorry for the pun I couldn't help it). With a surplus of 1.3-1.4 billion barrels how long will that take to burn through? If Opec the Russians and the Americans all cut a total of 10 million barrels and demand goes to 100million a day with supply at 90 million it would take 130 days to get throught the stockpile thats at least four months of low oil prices and charter rates being extraordinarily high. I think the tankers are going to be printing presses this year. The CEO of Frontline made a bet in a conversation ( ) with a shipping analyst that if charter rates in the third quarter stay above the January charter rates the analyst has to buy the Frontline management dinner. But if the analyst was right and charter rates fall back down to regular levels in the third quarter the CEO would walk from Oslo to Bergen which is nearly 500km! Sounds like he has no intention of losing that bet. Disclosure I own some tanker companies.

Little bit of Allied Irish Bank group and Svenska Handelsbanken

Another update by Prof. Salathé on the current knowledge of the disease.

Thanks Cigarbutt I'll look into it!

Yes all the above are I portent, but if I ad to pick a few it would be 1) favorable macro / local economy 2) favorite market structure , ideally and oligopoly with a few banks holding large market share. (U.K. and Ireland are examples of this) 3) competent management based on ROA achieved, NPL. Examples are Lloyd’s (UK) and possible the AIB Group in Ireland mentioned in these bards occasionally. Ireland is interesting because it is an oligopoly ( 2 banks control the banking business ) and I think the macro looks better than the rest of the EU. The UK has an independent interest rate policy as they kept their currency so they may avert the negative EU interest rates, which could become a “meat grinder” for financials (banks and insurance companies). Then on the other hand the macro in the UK has higher risk due to pot. Brexit disruption. Ok I'll keep an eye on those as well. I'm long a little bit of AIB actually for all the reasons you laid out above but another European bank I've been digging around on is Svenska Handelsbanken which has less market share than AIB at 22-23% while AIB in Ireland is closer to 31% market share. Another nice thing about Svenska is Sweden has its own currency and while the krona is quasi-pegged to the euro they have more ability to stray from the ECB's policies than anyone using the euro for sure. They also don't have any issues like Lloyds may have with Brexit so it could be an interesting alternative. If you want a quick summary of Swedens banking sector this may be helpful [https://www.swedishbankers.se/media/3854/competition-in-swedish-banking-sector.pdf] Full disclosure I got these ideas from reading an interview with John Hempton at Bronte Capital so he deserves full credit for sniffing them out.

Spekulatius, I always enjoy reading your comments and I'm curious if you are negative on all European banks due to the macro environment? Or do you have a checklist of attributes you look for when researching banks that most banks in Europe can't check off? If you do have a formal or informal list of attributes you look for what does it include?(low NPLs, favourable demographics, business friendly country, low taxes, stable regulatory framework, barriers to entry, competent ceo, bank culture??)

Finally dipped my toe in on Allied Irish Banks. Long term hold.

You really caught my attention with this bet on Crispr I'm going to look into it for sure!

ValuePadawan, once you've seen a securities lawyer, please do update this post - would like to know outcome of discussion. Thanks So I spoke with a lawyer and they recommended since it is just investing for the one family member, I draw up a simple contract outlining performance fees to be calculated once a year and charge them an advisory fee based on that. Seems like the simplest idea won out and I'm going to get that done in the coming weeks and start managing some of their money.

The link you provided only shows up to 2014 as its default adjust it to 2020 and sit down before you do. I always understood the important thing to look at was GNP not GDP. That being said the GNP still is higher than it was in the dot com bubble but I think it's better apples to apples. https://fred.stlouisfed.org/graph/?g=oQt Don't forget to adjust the time scale to now.

In addition a company which absolutely mints money and has an enormous moat is Chr Hansen. Growth will be slower for sure but in my opinion it is safe like a bond but has equity returns. Only issue is when I discovered the company it seems everyone else already knew this and its selling at 9x revenue so I think I'll wait for a panic when its selling closer to 3x because its a business I just want to own someday.

You also get 6.27% of Equity Group Holdings which operates in eastern and central Africa and 79.5% of BancABC Botswana. Just following demographic trends you get the mental models of population growth, plus increased banking penetration as a lower % of people have bank accounts than most developing countries, plus gdp per capita growth. If they can have competent sober management through Fairfax Africa they should be able to ride that wave for 50 years. Indeed. Do you own it? A tiny position, African banking is not something I would ever bet the farm on as the possibility for loss is there due to political and economic upheaval being ever-present but as the spectrum of possible outcomes skews also extremely high due to the growth potential I believe for me it is worth it. Its going to be stratospheric in 20 years or be dead and buried, time will tell but buying at half of NAV gives me margin of safety to take this thin gamble.

I like Mintzmyer I like his sector analysis but he seems to have a bit of man with a hammer syndrome and when he talks about Seaspan he doesn't see the value in the new direction the management team is taking.