maplevalue
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Posts posted by maplevalue
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I enjoy the 20 minute strength workouts available through the Peloton app. Helps with motivation when you can just follow along to an instructor.
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https://www.bridgewater.com/research-and-insights/most-global-economies-remain-in-disequilibrium-requiring-policy-action
Interesting article from Bridgewater; reiterating that China stands out as having capacity to ease policy (i.e. increase asset prices). -
Am I thinking about the implications of this right, two possible scenarios?
1. coup -> regime change somewhat quickly -> Ukraine war ends soon -> supply chains normalize, energy prices come down?
2. coup attempt -> things can get messy -> heightened uncertainty -> even more disrupted supply chains?
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Interesting article: https://www.wsj.com/articles/chinas-ev-juggernaut-is-a-warning-for-the-west-1389f718?mod=Searchresults_pos6&page=1
"How is China in contention to lead the world’s most lucrative and prestigious consumer goods market, one long dominated by American, European, Japanese and South Korean nameplates? The answer is a unique combination of industrial policy, protectionism and homegrown competitive dynamism. Western policy makers and business leaders are better prepared for the first two than the third. "
"When Western auto executives flew in for April’s Shanghai auto show, “they saw a sea of green plates, a sea of Chinese brands,” said Le, referring to the green license plates assigned to clean-energy vehicles in China. “They hear the sounds of the door closing, sit inside and look at the quality of the materials, the fabric or the plastic on the console, that’s the other holy s— moment—they’ve caught up to us.”
"Still, the threat to Western auto market share posed by Chinese EVs is one for which Western policy makers have no obvious answer. “You can shut off your own market and to a certain extent that will shield production for your domestic needs,” said Sebastian. “The question really is, what are you going to do for the global south, countries that are still very happily trading with China?”
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4 minutes ago, Thrifty3000 said:
Seems to me we're getting closer to the point where it makes sense to cash in the TRS gains and use the proceeds to buy back the $1 billion Odyssey position from OMERS. Not sure if we ever nailed down the interest rate FFH is paying OMERS for that deal, but it sounded like an $80 or $90 million annual interest expense. Given FFH's expected earnings power it sounds to me like a risk-weighted break even point might be in the neighborhood of $800 to $1,000 USD per FFH share. (Of course this depends on the TRS interest rate and, more importantly, on how FFH sees its growth prospects. The more growth expected the higher they'll let the TRS run.)
In fact, I think the point at which they cash out the TRS will be a pretty strong signal for how FFH sees its growth prospects. If they were to cash out the TRS now I'd think it's a signal they expect normal earnings to remain flat beyond the 3 year horizon. However, if the shares run up to $1,000 USD and they still hold the TRS then that seems like pretty strong conviction favoring growth.
IMO the most likely scenario is when they close out the TRS they end up buying back the stock (i.e. there will be no 'cashing in of the TRS gains'). I think of it as FFH owns that amount of stock represented by the TRS, but it just sits on the balance sheet of a bank for now.
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Congrats to all, thanks to @Viking for showing us the way
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11 hours ago, nwoodman said:
Nintendo 7974.T. Close to fully priced but their execution is blowing me away. Totally irrational but it has similar vibes to me as buying Apple in 2014.
This is how I think about NTDOY. With the additional point being that one day I wouldn't be surprised if Apple tries to buy NTDOY.
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On 1/17/2022 at 1:20 PM, maplevalue said:
i) Future taxation - In Canada I just cannot see how real estate does not get taxed more heavily in the future, especially at the high end (what could be more politically appealing in a left leaning country like Canada than a mansion tax!). Governments are massively in debt and have to pay for baby boomer healthcare somehow. One of the things higher prices have done is increase the proportion of renters in society, particularly in the GTA, so the political opposition to increased property taxes is probably less than in the past.
Candidate who is likely to become Mayor of Toronto announces an extra 1% land transfer tax on homes over $3mm (https://www.oliviachow.ca/more_support_for_people_who_need_it_most).
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Thanks for sharing this with us. I put this in the pile of financial imbalances that built up over a time period of very low interest rates. Rates have not even gone up that much and some big cracks starting to appear!
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Probably look at something in small caps where the opportunity is too small for the big quant funds (ie where most of the quant talent is) to bother taking advantage of.
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Slightly different topic, but one of the things I have found interesting lately is we have seen more op-eds from some of the leading newspapers in Canada questioning the wisdom of the government's immigration policy. This would have been unheard of a few years ago. What really caught my eye was this column from the left-leaning Toronto Star.
Dear immigrants: Coming to Canada? Here’s what you’re really in for
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The 2022 Fall Economic Statement announced the federal government’s intention to introduce a two per cent tax on share buybacks by public corporations in Canada, with details to follow in Budget 2023. Budget 2023 announces that the proposed tax would apply as of January 1, 2024 to the annual net value of repurchases of equity by public corporations and certain publicly traded trusts and partnerships in Canada. A business would not be subject to the tax in a year if its gross repurchases of equity were less than $1 million. It is estimated that this measure would increase federal revenues by $2.5 billion over five years, starting in 2023-24. Importantly, this would also encourage firms to re-invest in their workers and businesses.
From the just released 2023 Canada budget.
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In my experience doing proprietary trading on the sell side, any given year the vast majority of my P&L was driven by a very small amount of trades (usually 3-5) which were either sized relatively large, or I was able to let run through my initial target. Finding the trades you could size up was key, and in order to do this you need a good understanding of the downside. All this is to say I would be more comfortable with a concentrated portfolio.
One technique I have seen is people look at their concentration based on the book value of their positions. I think this makes a lot of sense.
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How times change. Maybe this leads investing in Greece back into the mainstream
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March 7 (Reuters) - Greece is close to regaining its investment-grade credit rating in 2023, after 12 years of relegation to junk status, the Financial Times reported on Tuesday.
"We think that 2023 is the year will get the investment grade," Greek central bank chief Yannis Stournaras said in an interview with the paper, urging the country's next government to maintain fiscal prudence.
Stournaras told FT he was "confident" that credit rating agencies would upgrade Greek bonds within months should lawmakers signal their intent to maintain reforms and take advantage of a "window of opportunity" to significantly lower the country's debt burden.”
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Canada’s largest apartment landlord is reporting record rent turnovers in its latest quarter.
In a press release on Wednesday, Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) reported a record 24.3 per cent average rent increase on turnover in the fourth quarter. This beat the company’s previous rent turnover peak of 14.2 per cent in 2019.
Rent turnover refers to the price that companies are increasing rent by for the next tenant, after the previous individual moves out.
CAPREIT owns or has interests in “approximately 67,000 residential apartment suites, townhomes and manufactured home community sites well-located across Canada and the Netherlands”, according to the release.
...Several Canadians have chosen to rent, as elevated home prices and high interest rates keep many individuals priced out of the housing market.
But the higher demand for rental properties has pushed up prices and many experts don’t see it slowing down anytime soon.
According to a report by Canada Mortgage and Housing Corporation, after a tenant moves out of a two-bedroom apartment, the average rent increases 18.2 per cent.
Another report released by Urbanation.Inc said as high immigration levels and home affordability issues continue, there will be “strong upward pressure on rents.”
“While a record high anticipated for combined condominium and purpose-built rental apartment completions in 2023 will bring more availability to the market, it will be met with strong demand as immigration continues to rise and homeownership affordability remains low, supporting further rent increases,” it said in the report.
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37 minutes ago, tnathan said:
What is the easiest way to get leverage on a bond trade? Such as, if I wanted to make a bet that short term treasury yields will be <3% within 2 years, is there a smart way of doing this using options on short term treasury etfs?
Eurodollar futures if you can access them will let get this type of exposure.
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1 hour ago, Viking said:
In Canada anyone with a mortgage or line of credit is now (or will be shortly) paying much, much more in interest expense. $100/month more doesn’t matter. $1,000/month more does matter. $2,000/month matters even more. This is an after-tax increase in expenses. At the same time food costs are way up. Insurance costs are way up. Flight costs are way up. Vehicle costs are way up (if you can even find one). Etc, etc. Wages? Up a little.
What does it all mean for an investor? Not sure. It will likely take years to fully play out. But given the magnitude of the impact, there will be big winners and losers. And that is the fun part about investing… skate to where the puck is going…
On the point of it "likely take years to fully play out", you are very right on that from a Canadian perspective since 75% of variable rate homeowners payments are fixed (i.e. payment same, interest/principal split changes, or amortization extended; https://www.bankofcanada.ca/2022/11/staff-analytical-notes-2022-19/). It just delays the pain, but one day these borrowers will have to pay!
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On 2/7/2023 at 8:13 PM, tnathan said:
Put on a pair trade - short arkk (via SARK) and then bought DIA...Unless we really have a crazy run here I think this works out well. Does anyone disagree? Open to feedback!
Today is a day where one would really think your trade should be working (strong economic data -> high rates -> bad for long duration ARKK stuff) but price action is doing the opposite of what we would expect based on this. May be indicating the tech stuff just got too oversold. (I recently bought SMT which very similar to ARKK...trying to bottom feed).
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Took me awhile because had to import things to Quicken across many accounts (which is a bit of a pain).
2022: -12.8% IRR
Roughly in line with S&P which looking back was quite a remarkable feat given coming into the year was 1/3 growthy EM stocks which got marked down by 1/3 during the year. Thank you Fairfax Financial (a position which I very fortunately added to in early November).
I continue to tilt very heavily non US (relative to the index which is ~60% US) for the diversification.
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Watched Tokyo Vice. Great show with some great acting although I didn’t care much for the final episode.
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Is it not interesting how the "high inflation is now a secular phenomena" theme emerged precisely after a bout of inflation which was quite clearly caused by shutting down most of the economy while sending out cheques to people to not work.
I feel like it's very easy for economists to construct a narrative around high inflation when they can point to the current YoY rate and shout "deglobalization" "demographics" "a new commodity supercycle"...much harder for them to go out and understand the tremendous, and in my opinion underappreciated, efficiency gains from technology happening (for goodness sake Moderna had designed the COVID vaccine by March 2020!).
Inflation is a very very very very difficult thing to understand/forecast. Which is why I am coloured skeptical of the new consensus that has emerged around it.
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Two adds to existing positions recently:
Morguard NA Residential REIT - one of cheapest REITs out there who are buying back shares for first time since 2016
Scottish Mortgage Trust - a small 'we are past peak inflation' position
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Memory is a little hazy of the exact details of how these work, but I am starting to think the most likely explanation is these large volumes are related to taxation around the dividend.
From what I understand in Canada (and I believe more generally) there are certain entities that pay less tax on dividend payments (a public pension plan would be one such entity I believe). However, many other investors (retail included) are subject to taxes on dividends. I think this might have to do with where the entity resides (I think the tax rate on dividends from Canadian companies is different for Canadians versus international investors).
What I believe can happen is you have buy-sell-back agreements where a investor subject to tax sells shares today and simultaneously enters into an agreement to buy them back at a future date. Beneficial ownership passes to the nontaxable entity over the dividend date, pays less tax, and then the shares revert back to the taxable investor afterwards. Tax advantaged investor makes a fee, bank facilitating the trade makes a fee, taxable investor avoids some tax.
There was a case in the UK that was related to this type of trading around the dividend date (but in a far more fraudulent manner https://www.reuters.com/business/finance/uk-watchdog-narrows-dividend-stripping-investigation-2022-12-15/).
I don't know exactly how everything would be structured, but possibly in this buy-sell-back arrangement something has to be reported to the exchange, and hence the massive volume numbers.
Zelman on housing
in General Discussion
Posted
Truly hard to tell what will happen since the effect of higher rates has not really been felt yet. Gut tells me all levels of government will do whatever it takes for housing to not fall, so could have a period of time where prices flattish, but the cost of a mortgage is crazy high as rates stay elevated.
Widely followed analyst Ben Rabidoux noted in a tweet sometime in the past year that he received a tip from someone in cabinet that propping up the real estate market was behind some of the recent immigration changes (cannot recall which one).