Dinar
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Posts posted by Dinar
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The importance of countries is not measured by GDP, it is measured by what happens to the world if the country starts acting differently.
North Korean GDP is immaterial, but it can nuke Seoul, Peking, Tokyo and Los Angeles, and hence the world pays attention.
Russia exports 7MM barrels of oil per day, if it stops, the world's oil price goes to $200+ and the world goes into a deep recession if not a depression. Similar if not the worse story with nickel, titanium, etc... Possibly grain, although I am less certain on that.
History is full of examples when an immaterial economic power - the Mongols, Tamerlane, Arabs in 622 AD, took over half of the world, including much wealthier countries.
Russia is an a very bad situation, that however does not mean that either Ukraine or the West are in a good situation.
Russia by virtue of being a rich dictatorship that does not care about means, has options that we in the West do not consider. What happens if Russia offers North Korean $20bn per each year that 500K North Korean soldiers fight in Ukraine?
All I hear on this board is how vulnerable Russia is, and it is. However, good chess players neither ignore the weaknesses of their own positions (vulnerability of electric grid, oil dependence, etc..) nor the options that the opponent has.
If the war lasts another twelve months, will American taxpayers be willing to spend another $1000 per family on the war? Will the Europeans during a cold and brutal winter continue to support Ukraine? Will the West run out of ammunition?
Both sides - Russia and Ukraine/West are very vulnerable. Sure, if Putin died tomorrow, and a Russian Lee Kuan Yew came to power who wanted Russia to be like Finland/Sweden/Poland/Lithuania/France/Germany, I and the world would rejoice. However, wishing will not make it a reality.
We have to deal with the reality, and not what we would like the world to be. That starts with acknowledging the situation, the weaknesses and strengths of both our position, and Russian position. Any rational analysis will show that both sides are in a very bad spot, rather than Russia is in a bad spot because its GDP is the size of Sweden and we are wealthy so we win. Wealth advantage did not help Persia (agains the Arabs), the world (against Mongols), and the list goes on.
Stop living in the world of dreams. While you are dreaming, thousands of people are dying. Your refusal to face reality is probably helping prolong the war. What are you going to tell Ukrainians in six months - we are tired of funding your war? We do not have the ammunition anymore? What if the war lasts five more years? And yes, I care, because had I been born a decade earlier, I would have been drafted and most likely sent to my death in Afghanistan.
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@John HjorthIf you find truth uncomfortable, keep living in your bubble. It will not make the facts disappear.
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9 minutes ago, John Hjorth said:
What's your nationality? -I ask as basis for replying to you. Nothing of your post above basically makes much sense to me personally.
Really? Which part? The irrelevance of Sweden? What does Sweden export? Think what happens if Russian oil/gas/titanium/grain disappears from the world market. Russia can exist without the West. The West can exist without Sweden. Sweden cannot exist without the rest of the world. Sweden without the rest of the world will go back to stone age - using wood for firewood, assuming you have enough. What is my nationality? How does that matter? If it helps, assume that I am Assyrian, who speaks Aramaic as his mother tongue and lives in NYC. Now what conclusions can you draw?
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2 hours ago, John Hjorth said:
What @Spekulatius is writing here to me not only a fact, but a fact that is not covered and given weight sufficiently in the coverage and the overall picture painted of the conflict in the main steet media.
And that fact must matter a lot going forward for the outcome of this conflict.
Facts : Trading Economics - GDP by country - Europe .
Russia has a GDP comparable to less than twice the GDP of the Netherlands or about equal three times the GDP of Sweden.
Further sanctions against Russia are in the mould to be decided and implemented in February 2023 to further increase the pressure to break the spine of the Russian economy.
This is a faulty analysis. If Sweden disappears from the face of the earth, how will that impact the world's economy? If Russia stops exporting oil, gas, titanium, etc... the world will be devastated.
Russia's ability to suffer is orders of magnitude more than in the West. Europeans do not have electricity/gas, people riot. In Russia, there are a lot of villages without either.
Europe and the US is very vulnerable to asymmetric warfare - cyber attacks, attacks on electric grids, water supplies, etc... How difficult would it be for Russian special forces to destroy all transformers in say US and Western Europe? That would bring the Western world to its knees.
Instead of pontificating of how weak and irrelevant Russia is, think about our own vulnerabilities.
The best outcome for all parties, (Ukraine, Russia, the West) is an immediate peace treaty or armistice. The delay just benefits India and China.
Time is NOT on the side of Ukraine, do not delude yourselves. Russia has tremendous reserves of foreign currency, gold, etc... Do you realize that it could easily hire 300K North Korean mercenaries tomorrow?
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2 hours ago, changegonnacome said:
3% Risk free rate + 3.5% ERP............is a PE of 15 no?
No, because you are assuming zero growth, or growth that is worth zero. (when returns on marginal capital = cost of capital), you are correct. When there is growth and return on marginal capital exceeds cost of capital then that justifies a higher p/e. Technically, we should not even be looking at earnings, but at free cash flow.
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25 minutes ago, Gregmal said:
December calls give you time for that and then the spinoff is included. I'm more concerned with a delay than cost overruns. Even another $300M is a rounding error against the NAV. However, having construction drag on into 2024+ would be a nightmare.
Greg, if you do not mind, could you please lay out your NAV calculation for MSGE? Thank you.
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The Fed has a big problem, and that is beyond 2023. There are a number of structural factors that will push inflation above 3% per annum on a measured basis starting in 2024/2025 and beyond. They are:
a) Transition to green energy is very inflationary, since you need a back up source of power for wind/solar/hydro
b) Deglobalization
c) Continued left-wing policies in the US (on the federal level + NY+California+NJ et all) that discourage work and encourage idleness (being on the dole) and reducing the size of the labor force. Ironically, in France, Macron is going the other way.
d) Demonization by the educated, but without common sense, elites of everyone that disagrees with them which leads to distrust in institutions, drops in vaccinations for things like measles, prevents common sense reforms.
e) Rapidly declining quality of education in the US, and hence declining skills of the labor force.
f) Too many people in the labor force are employed in producing nothing - diversity consultants, etc...
g) Promoting people/hiring contractors based on skin color/sexual orientation, rather than how good they are. I wonder how much money FAA spends per year on diversity/equity/inclusion and how much on testing software?
h) Insane government waste. In NYC, for instance, the educational budget per pupil is for $40K per year, yet only $10K reaches the actual school.
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Conservative is a liberal mugged by reality. You are right of course, but may be things will change, (Murphy came close to losing in NJ and Hochul in NY), and you are paying nothing for the option. As for Weisselberg, unless I am mistaken, pretty much every university does things he was accused of.
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1 hour ago, Gregmal said:
About the only thing going for NYC is hospitality/dining. Now they wanna ban gas stoves lol. These losers deserve to fail.
https://nypost.com/2023/01/10/manhattans-population-has-rebounded-in-the-wake-of-covid-19/
NY Post says population keeps growing despite retarded policies. What happens when we get a good mayor and governor? NYC will explode upward
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@changegonnacomeWith all due respect, where do you see railroad workers getting 20% annual wage increases? I saw 20% over four or five years, which is 4-5% per annum, not 20% per annum. Would you mind sharing where your data is coming from?
Similarly, I have not seen nurses in NYC offered 19% annual wage increases. Would you mind showing the source of information? 19% over 5 years is not the same as 19% per annum.
I am very glad for your circle of friends, but I do not see these 9-10% pay increases anywhere, here are a few datapoints:
a) My friend has a nanny that he employs - he gave her a 4% wage increase and she was happy - this is in NYC
b) A brother in law is a very highly skilled computer programmer - when he tried to leave a few years ago, he was begged to stay, promoted and his pay increased 25%. He is getting a 3% wage increase in 2023 (works for a ratings agency in NYC)
c) Private nursery school that my daughter is attending announced zero tuition increase in Manhattan for 2023-2024 year and we were told by friends at a private school that my son used to attend that there will not be a tuition increase, after a 4% increase in 2022-2023 year. Staff at these places is not getting double digit wage increases.
d) Wall Street - based on what I read/heard, comp is down 50% at the top level, also banks are firing people.
e) Technology - given the lay-offs, hard to expect much/any compensation increases
f) NY City employees based on conversations with three that work for NYC are not getting anything above 3-4%.
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11 hours ago, frommi said:
Who cares about revenues?
Latest Altria Q3 numbers: (and it was a horrible year with 9% volume declines)
Total cigarettes
64,971 71,370 (9.0) % Revenues net of excise taxes $ 13,731 $ 13,655 Reported OCI $ 8,112 $ 7,901 2.7 % $ Add in share buybacks and you have 4% EPS growth in a very bad year with 9% volume declines. These 9% volume declines are not the long term average and are just that high because smokers have downtraded to cheaper cigarettes. That will normalize and Altria will go back to 7-9% EPS growth. Should trade back to a P/E of 15 someday. They also have a lever to pull when they sell their BUD stake.
If you like high dividends, take a look at Clipper realty (I own it.) I think that the dividend will go from 5.4% on today's stock price to around 7.5% on today's stock price in 2025 as first building in Prospect Heights Brooklyn gets fully leased and the second one gets built and leased, which is a late 2024/early 2025 event.
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Thank you for a very interesting letter, could you please discuss the Canadian company that provides software for utilities? Specifically, where do you see revenues and EBIT in say 2030, if it is not too much trouble? Thank you in advance
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45 minutes ago, Gamecock-YT said:
to be fair if the stated hurdle rate in the original post is 10% THIS year, Altria has a dividend yield of 8%, BTI is even higher at 8.6%, throw in a 2% buyback and you are there.There is an implicit assumption in your analysis that the stock price will not change. Say Altria sees another 7% volume decline, 5% price hike, then revenues are down 2%. If market starts pricing in 3-5% annual profit declines, then using an 8-9% nominal discount rate, then you could see P/e = 7-9, vs 9 today. BTI is not at an 8.6% dividend yield, it is actually 6.63% dividend yield.
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4 hours ago, SharperDingaan said:
Good catch. The extra 590K bbl/day (890-300 existing) is 24 500K tanker loads every 3 weeks.
Listen to the market, and apparently the only way that Cdn heavy crude gets to US refiners is via pipelines headed south (Keystone, etc.). Shut down Keystone, and you get dirt-cheap heavy crude at Galveston, etc.
Little realized is that when TMP comes on-line, Cdn crude can get to Galveston by tanker, or go directly west to Asian refiners with hungrier and much more advanced refineries. Keystone either strands permanently or a deal gets cut to reopen it. And as pipe transport is typically cheaper than boat, and it's a more direct route .... if/when Keystone ever reopens - differentials permanently drop even further.
Also little credited at present is Cdn C02 pipeline sequester displacing the o/g 'windfall taxation' commonly seen everywhere else. Ultimately, it's a nod from environmentalists that will eventually translate into tar sands becoming 'greener', and more egress flowing south. Keystone eventually reopening.
All of which adds up to the WCSB being a very good place to be over the long term.
Closely followed by Newfoundland exporting NGL to Europe.
SD
SD, thank you for the insights. Are your top plays still Obsidian, Whitecap Resources & Gear energy, or given the moves in the stocks did you change your opinion? Thank you.
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27 minutes ago, ValueArb said:
not sure I understand. It says it’s inflation adjusted already. Are you saying its not, or done incorrectly?They are not doing it correctly. Take EPS for the index, adjust for inflation, and take the average. You will not get 28.45 p/e.
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58 minutes ago, ValueArb said:
An alternative viewpoint.
https://www.multpl.com/shiller-pe
When the market PE is over 25 the odds of another upswing start to get significantly lower, and the odds of a bad year get significantly higher..
These figures are NOT accurate. Ben Graham/Shiller's P/E has earnings adjusted for inflation. Take a look at S&P 500 EPS over the last decade, adjust for inflation and do the calculation. You do not get 28.48.
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4 hours ago, crs223 said:
Thank you. you are “marking assets to market” because real estate is carried on the balance sheet at purchase price (minus depreciation)? Does the REIT offer a “mark to market” asset value? or do investors have to make it up themselves? If the latter, do REITs offer the addresses and cost basis of all their properties so you can look it up on zillow yourself? Sounds like a lot of work!
thanks again, and again i apologize for the naive questions.
Yes, I am marking up assets to markets. Generally REITs do not, the only exception to that rule that I know of are REITs in UK, France, Hong Kong and Singapore which do, possibly Belgium and Spain as well. Investors have to do their own NAV calculations. Depends on the REIT, Clipper does offer excellent disclosure, including addresses and cost basis for each of their properties, as well as rental income, expenses, and net operating income.
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2 minutes ago, crs223 said:
Im sorry to be so naive, but how do you get 3% leverage?
CLPR has $1.2B in assets, $1.2B in debt, and $44M in equity. If assets drop by 3 percent, all equity is wiped out.
When pupil said leverage at 3%, he meant debt bearing 3% interest, and that's what I responded to. We both used sloppy language. Clipper has debt paying about 3-3.75% per annum, but leverage as in Debt/Assets is obviously much higher than 3%. Debt / Assets (marking assets to market in my opinion) for Clipper = 55-60%.
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33 minutes ago, frommi said:
Maybe, but they did very well between 1995 and 2007 where we had inflation of 4-5%. And when we get a recession and long term yields go down these REIT's will probably outperform bonds over 2-3 years. I wouldnt use Realty income in that sector because its already too big and they need big aquisitions to move the needle. But a small underlevered REIT like EPRT that has a great model is where i want to be. Stable predictable cashflows and safe dividends that can be reinvested.
I am sorry, but where do you get average inflation 1995-2007 = 4.5%? According to US CPI figures, average inflation was around 2.7% per annum in that period.
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2 hours ago, thepupil said:
also relevant to rising rates/ cap rates. At a constant exit cap rate (a key assumption), it is better to buy at a higher cap rate, and lever with higher cost debt, than to buy at a low cap rate and lever with low cost debt. A big landlord on twitter did a poll on this to illustrate it and 63% of people answered "incorrectly".
Now it's more complex than that, but the public market allows us to buy MF at 6% cap rates with 3% in place debt (ie the best of both world's) but with too little leverage (ie overly safe). Because of this low leverage, cash flows to equity aren't as exciting as one would like (call it 6% ish)
https://twitter.com/MRossG199/status/1603445100939341824?s=20&t=TwL6ugvNPveI5hNSwlhk2A
https://twitter.com/c_huss/status/1603454080403357698?s=20&t=TwL6ugvNPveI5hNSwlhk2A
If you want 6%+ MF cap rates + 3% leverage, buy Clipper (I am long.)
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30 minutes ago, frommi said:
EPRT has been a pretty good investment since its IPO, outperformed all other NNN REIT's and NNN Reits return on average between 10-15% over the long term. Its a pretty simple business. SRC had problems with leverage, but they are now pretty much the same as Realty Income, which was a very good long term hold. But SRC is 50% cheaper.
Chris Volk of STORE Capital (where BRK invested some years ago) has created SRC and his colleague has created EPRT, and they are even better and more conservative (less leverage= more future growth) than the folks at STOR.If you think that EPRT and other NNN Reits will return 10-15% per annum on a going forward basis, I think you will be very disappointed. Just do the math based on the value of the portfolio (cap rates), cost of financing and you will see.
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10 hours ago, frommi said:
I hold positions in EPRT,SRC and AMT. I think NNN and the Tower-REIT's (CCI,AMT) are the best REIT's to own, because they have the most staying power, easily survived the GFC and Covid situations without dividend cuts or problems with tenants. Especially the tower REIT's are very interesting because they can get high ROI's when a tower is leased to several different wireless providers. I think that they capture most of the value of wireless connections, while AT&T, Verizon etc. are the true bagholders. And because the big telcos always struggle for money they outsource more and more of their towers. The only risk is when some of the big telcos merge, like last year it happened with Sprint, thats the reason FFO of the tower REIT's didnt grow last year.
I would avoid stuff like EPRT and SRC, historically have been lousy investments
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Just a data point. My daughter's private nursery school in NYC said that there will be no tuition increase for 2023-2024 academic year. Too late for us, but interesting.
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In many states like NY, mortgages are fully recourse
Russia-Ukrainian War
in General Discussion
Posted
I agree with everything that you say except for your claim that Russians look upon Putin favorably. I know many people who either came from Russia recently or know people who have. None of them know anyone who looks upon the guy favorably. Millions of people fled Russia. Last week I took a gypsy cap in Brooklyn, the driver was from Yakutia. He and his two sons made it via Kazakhstan to Mexico and walked across the border. According to him, it is not an isolated case. Had Putin been so popular, would he really need to rig every election?
As for backing out of treaties, I recall Kaiser Wilhelm saying that treaties were just scraps of paper. I personally do not support this view, but this has been the way of the world for millenia. As for Russia being aggrieved here, spare me. Invasion of Poland in 1919 when Pilsudski stopped them, invasion of Poland in 1939, winter war with Finland. The bully gets punched in the face, cry me a river!
I do find it hypocritical when Boris Johnson is incensed about Russian war atrocities, and yet is silent on even bigger atrocities committed by the British in the Boer War.
If the West was not run by hypocritical morons - Biden, Macron, et all, they would instead of sending tanks to Ukraine do the following:
a) Open borders to Russians fleeing Putin
b) Given citizenship to deserters from Putin's army
c) Publicize the above in Russia
Putin would not have an army in three months.