dolce2think
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Posts posted by dolce2think
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Resource Companies
Totally beaten down. But: China is pumping money into the economy. Charlie says "Chinese are gamblers", hence they will do
some projects with the money. The structural shift is coming, but they will need growth to do this, so the will ignite investments once more.
My favourites:
Freeport McMoran
Vale SA
Oil:
Gear Energy
Baytex Energy
Gas: this is not so much about china, its about the LNG terminals and a very low gas price
Southwestern Energy
Range Resources
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ACRX.
There is a good writeup on VIC,
it depends on if they need to issue shares for finance,
but the product/approval looks good, it could go
easily into the 20ies
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As the FNMA thread is doing very well, I'd like to start a new thread about multibaggers, please throw your ideas out, mine are:
1) FNMAS
2) Gold miners
3) Maxwell Technologies
Thxs,
Dolce
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FNMAS - buy on setbacks
UK:KKB kazkommertsbank
FTP
MXWL
NL:AAA
ABX
Looking at russia and vietnam
all of this is high risk/ reward
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Yes,
17 bio in "real" buffer capital seems too thin in light of what happened.
What was the combined value of the common and preferred pre-crisis for both entities?
Around 200 Bio ?
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I understood this proposal differently:
Essentially the Value of Fannie and Freddie is split between the runoff and the ongoing/future business.
The preferred holders contribute 17 bio USD cash and the preferred stock will be converted into
"restricted capital" - which could be allowed to be counted as capital. Then, over 5 years the business
originates profits, which cannot be dividended out, until the restricted capital is paid up.
Please share your thoughts.
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The problem with the "unlimited" firepower is ultimately the currency depreciation and because all major currencies face the same issue - then it will be commodities that start rising.
I think this is a real possibility down the road, that we will see the commodities derailing the market. Its off the radar right now, since they peaked in 2010/11 and economies are considered "weak". But they may also rise in a weak economy, because of currency depreciation.
Also to note is the potential "profit peak" for the SP 500, as Hussman et al. are writing.
Further, as even the US starts to slowly reign in the bugdet deficit, this is an important channel
in "distributing the money" to the people. All the FEDs printing benefits only a small class of people,
which may only change with a rising housing market. Thats why they focus on this so much.
It will be very interesting to see the reaction once another recession hits - whether the
government will start running higher deficits again.
So in summary, I believe we will see declining profits, but expanding p/e multiples because rates
will stay low or negative. The one stocks with steady or even still rising profits will command
very high multiples.
Its a stock pickers market but not for value investors - at least if you are not willing to pay high
multiples.
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Sanjeev,
it would be interesting to know which "discount rate" you use for your 200 stock universe.
I am not asking for an exact answer, nor is a DCF always sensible,
but my problem with the current valuations is simply the very low interest rate environment.
The low/negative real yield will have to persist here for many years to come for the
deleveraging to happen, in Europe even
more compulsive than in the US. Or you have to see a growth pick up from somewhere.
So this is in my opinion leading the whole market - and as earnings have likely peaked,
it is a risky jigsaw game.
Therefore people are hesitant to leave the market and go cash, while I also see a disconnect
building, that will eventually lead to a heavy correction.
Over time - inlcuding corrections - one could argue that more and more money will get sucked into
the markets, into the remaining stocks that offer stable/rising earnings streams. Negative
real yields will drive irrational decisions.
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I think the most important for the valueinvestor - in terms of macro or "general market stuff" is to identify key risks, imbalances, that will eventually
need to correct. We don't need to try to make money on this, as the most difficult part would be the timing issue - but we need to be aware, so we don't
loose money by the unravelling effect. Where do you guys see the major issues right now?
I think, regarding the corporate profit margin discussion, that this is a key issue going forward. I am not totally convinced, that we will return to the
6% of GDP as Hussmann et. al. are saying; yet what I could see coming is, that commodity prices start rising again, and that this will push up the
costs (along with rising labour costs in EM) and that it cannot be fully rolled over on the topline. The reason I am saying this, is that a lot of money
has exited the commodities space since the peak in 2010/11 and with the current path taken by the FED, I don't think that the bonds may rise soon,
but that it eventually will lift the commodities...this could then also be the trigger for the feds tightening, since it has always been rising inflationary
pressures, that induced them to tighten. Stocks may peak even before that, if profit margins fall.
The question obviously here is, whether the commodities are still in a bull market - regarding the fundamentals of supply/demand. While a lot of
investment has been done especially in the run-up to 2008, and to some extent after it, I still don't see the major "oversupply" killer, that is
supposed to turn this into a long term bear market. It all depends on the chinese side, on their credit bubble, whether they keep growing an demanding stuff.
So, as 1999/2000 was a p/e bubble, 2007 was a housing/credit/leverage bubble, now we don't have the credit/bubble conditions yet - we might have
a peak in corporate profits. Also, we must take into account that the deleveraging has started, and eventually also the government will have to
start to balance - slowly, and this environment will mean slower growth ahead. Specifically, the FED will keep interest rates low - below inflation, or at
least below nominal growth, to accomplish the deleveraging, by slowly transferring the wealth from the creditors into the debtors.
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I have been looking at the telecoms for quite some time - as there seems to be opportunity.
Traditionally - after the TMT bubble, they were seen as poor in share appreciation/high in dividend yield.
I think a lot of investors have kept these shares for its defensive character and yield, just as to
realize that they are also impacted by the european crisis (especially in the 2nd half of 2012).
Many institutions have thrown in the towel.
Currently the cheapest seems to be Telecom Italia, but as has been pointed out, there is the
euro exit risk. So France Telecom seems the best in terms risk/reward - also KPN, once
the dilution is factored in. While looking at the FCF yield is important, one should not forget, that
some of them underinvest vs the traditional line like 15-20% capex requirement.
Further, in many countries the telecoms have been loosing ground to the cable companies
for the fixed line triple play business, but in some countries like the Netherlands this seems to
be reversing as FttH is coming, which puts the telcos in advantage again.
Down the road, the 4G rollout could bring devastating competition - especially in the low end space.
There will be essentially 3 ways to reach the customer - cable, telephone, 4G - and all will be
able to stream movies. I guess many people will then cut the cord and have all over their wireless
for a all-flat rate which is lower than the combined rates are now. That's as commodity like is it may
become....yet it may take a few years for the 4g to reach that capacity.
Speculative Multibagger Opportunities
in General Discussion
Posted · Edited by dolce2think
Please share your favourite situations that may result in multibaggers (not long term compounders, but rather motnhs to a few quarters).
Thanks