n.r98

what's ze tldr

sorryyyy sleepy dragon haha

Strong view merger closes so sold my 25 Jan JBLU calls and closed out my SAVE option positions for March and added more to SAVE (stock as well to avoid option risk of delay or recuts) just like sleepydrag. Fings crossed

Not to throw in another useless thread into the sea of COBF topics but I cant help but notice that Elliot's activisms have worked out incredibly well. I mean for one, $CRM has performed absolutely well since the whole basic cost cutting thesis and PINS hasnt done too bad since Elliot refreshed the board. Ofc, there are factors at work here and CRM is defo part of the tech rally. But it's not only confined to tech. Look at NRG energy - been on an absolute tear since the Elliot letter in June - and CCI has rocketed off the bottom (this is still fresh). PSX is also now embroiled with Elliot. Was thinking maybe we should have a discussion on Elliot's activist stonks - because this sure as hell seems like a profitable pond to fish in of late.

Bought some SUMO

Bought some GLOP and TBPH. TBPH has some activists involved; cash, CVRs and stake in key drug Yupelri more than covers the stock price. New drug Ampre now in phase 3 could easily be worth >$5/share even on pretty conservative assumptions. Business is trimming down staff, shutting majority of their research programs and returning capital to shareholders with a planned 170m to be returned by end of this year which should add about 10% on top of the total value of the firm. Irenic capital writing that letter was probably trying to highlight where Wally is rather than admonish management; don't see why some larger firm doesn't offer a quick premium to the extant stock price and take the remaining upside for free.

mateeeeeeeee

Don't have much knowledge in this space but what are the probabilities that CG tries to sell itself to a bigger player like Brooksfield for e.g.? Why can't that happen? Brooksfield did acquire Oaktree Cap Mgmt a couple years back after all. Some other catalysts not oft mentioned re this space is S&P inclusion - the firms have slimmed their share structures etc. Also @StevieV, think Kew left because he wasn't granted the pay package he demanded https://www.ft.com/content/0d0187d3-e0fb-4e87-bbfb-2e63f467f9f4

Share price slightly stale but yeah, market seems to be implying that i) CG's BVPS is overstated (maybe too much exposure to CLO (?) ii) FRE is not worth a teen multiple. But for i) if you discount BV by 50%, CG still trades at like 12-13x FRE. ii) So big qn is why the FRE trades here esp with mgmt guiding to 15% CAGR on it + room for margin expansion. Sell side relentlessly belabors how cheap the stock is on the calls. New CEO has been announced so that should remove a leadership overhang. Re margins having room for improvement - currently theyre at 36% margins and theyre pushing for 40. BX sports 50+% and KKR sports 60%. Ares sports 40+%. Obv different type of AUM garners diff kinds of margins but seems like a nice r/r with lowest multiple + lowest margin. And they've actually expanded margins by 15+% over the last 5 years. But still doing more work.

Yes they will. Stub co at 10x EBITDA yields $90 + share price as upside. Management guiding to 500m+ (inc 350m break fee) of cash inflow if deal breaks. But leverage is quite heavy here so a turn of EBITDA is equal to around $15 of stock price value so downside can be gnarly esp in current tape where market doesn't know how to capitalize earnings of these retailers; hence call options. Think their structural remedy case is q strong on variety of merits - have a look at this merger between UNH and Change where the DOJ lost. Assa has been doing roll up for years and used incisive language - DOJ is irrational and posturing; and Assa actually paying a hefty premium here (analysts were criticizing the multiple paid, a year back), so this isn't immediately accretive to the stock unlike for SPB. So their strong words really makes one go hmmmm https://www.paulweiss.com/practices/litigation/antitrust/publications/takeaways-from-the-doj-s-unitedhealth-change-healthcare-merger-loss?id=44360

Bought some SPB calls expiring July. Thinking of initiating a position in $CG at some point to play the alt inv space.

Approx 20% up on a low 6 fig portfolio. Losses were severed quick as the theses were disproved and the momentum pushed em down - PAH3, SIX; winners were scaled up into w incremental info and momentum- OXY.WS, IPCO, TWTR, BJ- with some end year wins (VRE was a pot of gold) thanks to the very intelligent people on this forum; am immensely grateful for all your opinions + willingness to respond to even my stupidest of questions and have learnt a lot just from reading the discussions. Neither intelligence nor diligence has inoculated anyone from the caprice of the market gods but w COBF, at least the odds are slightly better :D. Here's to a prosperous 2023 for everyone and I hope to be able to contribute some profitable ideas soon rather than a bunch of duds :////

Thanks for the informative responses - wish everyone a great (maybe debaucherous?) New Year in advance. Let's get em benjamins for 2023!

interested to hear the bull case and risks as well. Is the rise in interest rates not a headwind for PE?

Sturgill Simpson's "Sound and Fury" with the anime movie overlay is pretty dope; can be found on Netflix if im not wrong.

https://www.wsj.com/articles/the-computers-driving-the-oil-market-get-fresh-scrutiny-11671718021?mod=markets_featst_pos3 " Wall Street is closely tracking firms that use trend-following algorithms to trade oil futures, which profited mightily from betting on higher prices as crude climbed to more than $120 per barrel this spring. But with oil falling bumpily since June, the trend-followers have waffled between bullish and bearish wagers and given some of those profits back. Analysts are blaming them for amplifying oil’s wild price swings. Traders are monitoring them to steer clear of the waves they make in the market. Investors are mimicking them for profit. And this year’s oil-price roller-coaster ride is putting their logic to the test. Recent research from Goldman Sachs cited so-called commodity trading advisers for intensifying a recent five-week slide in which oil dropped nearly 23%. Brent crude, the international benchmark for oil prices, landed at a recent low around $79 a barrel, close to where it started the year. Commodity trading adviser, or CTA, is industry jargon for a hedge fund that uses computer algorithms to divine and follow price trends, typically by comparing recent prices to their average over a previous period. Despite their name, CTAs trade futures on currencies, stocks, and bonds in addition to commodities such as oil. Like previous ones, “the most recent selloff, has also been associated with substantial CTA liquidations,” says Daniel Ghali, senior commodities strategist at TD Securities. "

Covering some shorts today. CBOE PCR abnormally high + January effect? Just dart throwing here probably to rationalize some profit taking but we'll see.

Steve Clapham has a great newsletter and he attended the MoneyWeek Conference where Napier was the keynote speaker. here's a snippet From his newsletter - https://behindthebalancesheet.substack.com/ " Russell Napier/Financial Repression Russell Napier was the keynote speaker and he gave his usual session on the need for financial repression. I have heard the presentation several times (Russell is a friend), but he always manages to refresh the content and make it interesting. Of course, since I last heard it, the debt numbers have all gone up. Russell, in contrast to the modern monetary theorists, looks at a country’s debt as the sum of Government debt and corporate (non-financial sector) debt. If you are an MMT enthusiast, you probably know that I don’t understand the theory – please email me and explain why the Government doesn’t solve all our problems by mailing $1m through everyone’s letterbox. (I shall probably regret this). The problem is self evident from the chart, especially when you consider that debt servicing costs are exploding to the upside, from an all-time low. The global average is extremely high and the UK, US and Euro area are all ahead of that high average. What the gap between France (very high) and Germany (relatively low) means for the future of the ECB and the Euro is hard to predict, but I am guessing it’s not positive for the stability of the Euro and warm relations between the two main participants. The gap has grown from 12% at the formation of the Euro to over 150% today – a useful illustration of how unusual, recent history has been; more on this later. Global Non-Financial Debt to GDP Source: Behind the Balance Sheet from Russell Napier, The Solid Ground It’s quite clear from this chart that there is more risk in DM than EM, especially if you consider that the EM indebtedness falls below 200% if China is excluded. This is where Napier thinks you should put your money. Paying subscribers will learn later where I have put my biggest bet. Russell’s rule number 1 in a financial repression is simple: get your money out of the UK or the US and look at Asia.£"

I read through the comments on Whitman's books and wow, the sentiment... but maybe it's time to dust off "Distress Investing: Principles and Technique" for the coming cycle?

Been buying $DCP. Another MLP company, probably gets taken out by PSX soon - read PSX latest Q3 transcript - almost seems like a 99.99% probability, big question is what's the premium? That's all a wild guess of course - SHLX was 23%, BKEP was like 50% +.. Simple back of the envelope - 8% normalized yield on 60% 2022 distributable cash flow = $47 per share. So maybe another 15-20% upside from here, downside is perhaps 10% (?) - PSX offered a zero premium bid in August. But given oil markets a lot stronger now than in Aug, maybe trades higher even. Seems like a nice uncorrelated sit.

How are they putting up these crazy numbers in such a hostile environment, esp the high dd comp store sales? They're not a new brand either.

Is the TLT a bet on a FED pivot?

Speaking about insurance companies - maybe $ARGO might interest you, still looking into it. Right off the bat, already trading at 0.6 BV despite making a division sale at 0.81 BV. Business has been trimming international divisions and current core US insurance biz has a combined ratio <100 whilst previously, blended combined ratio in the 120s. Activists just got on BoD and really pushing for a sale here it seems.

Bought a little $KSS. Trading at trough P/E of 9-10x, average EPS was $4-5 pre COV and share count has reduced bigly so any reversion could bring this back up to $40-50? Also stock trades below BV which has never happened except at Covid troughs. This is the reversion to the mean story. Insiders just bought cum $1m worth of stock past week after whiff of a print. 7-8b real estate portfolio value. Perhaps mgmt extrapolated cov environment and thought stock should be worth oodles more but perhaps not anymore and be more willing to sell the co now? Idk. But seems like a decent r/r apart from the icky balance sheet.

It's weird because he wasn't like this previously. Back in the mid 2000s, u can track his 13F and turnover was not this high, some stocks lasted multiple quarters etc. But now, it's literally a full portfolio turnover every q.