rohitc99
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Posts posted by rohitc99
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1 hour ago, Blugolds11 said:
Correct, area specific as I said. In my area the studio on the low end $1300 and on the high end, over $1600. Even if you found a “cheap” studio and save a couple hundred a month, maybe an extra $2k/year in your pocket, does that go that far?
I honestly don’t know anywhere that $15/hr is a fantastic wage, and I’m not being argumentative, an extra value meal at McDonalds is $12.
It all comes down to viewpoint, there are those that game the system on both ends of the spectrum, isn’t much of this human nature? If someone quits a job to stay under the poverty threshold for assistance, is that much different than someone playing the game to lower their tax burden? Carried Interest loophole anyone? Both are technically legal, one is considered “smart use of the tax code” and the other a moral/ethical question? I guess I consider both to be different ways to play the same game. To be clear I don’t like either, but I think its easier to focus on the single mother with multiple kids by different fathers, smoking her menthols and sitting at home watching tick took all day on her new phone for $100k/year than the upper echelon on Wall Street playing the game with much larger numbers that is actually costing the avg joe more by them paying less.
Some people work, some people play the game. There will always be those who are deadbeats and figure what’s the point, you cant change that. I pay more in taxes in a year than the majority of those I know personally gross on their W2. Sure those gaming the system sitting at home rub me the wrong way, but my point is that it should EQUALLY rub you the wrong way that there are also those doing IMO the same thing on the top end. Warren Buffett has acknowledged this. Does this article make you more or less perturbed than the single mother with 2 kids on gov benefits that could work:
https://www.nytimes.com/2021/12/28/business/tax-break-qualified-small-business-stock.html
So true. I have friends who do the same work as me, but as an independent via S Corp. They paid themselves less than 60K, got great tax breaks and also some of the Covid Loans. In effect for similar skills and work, they are able to extract far more from the system.
I know of doctors and business owners who do the same. Its perfectly legal stuff and they are even proud of it
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15 minutes ago, Gregmal said:
Yup. Who coulda seen this coming?
Psychology is often predictable. And what’s interesting, is look at energy. Outside the US, most of the world is still hiding in their bunkers. Wait til they flip the lights back on. Crude futures still look highly attractive. As do many other commodities.
@Gregmal what would be a good way to play this ? XLE ? other commodity ETF ?
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More of a procedural question - if you want to invest 10K for yourself and another 10K for spouse, does that require opening two accounts in treasury direct ?
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4 hours ago, ValueMaven said:
Yes - a family of 4 could in theory do $40,000 in Dec, and another $40,000 in Jan - all at the i bond rate. Unique aspect of very high CPI U and the Nov reset occurrence
thank you. can you explain what you mean by 'very high CPI U and the Nov reset occurrence '
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2 hours ago, longterminvestor said:
I opened 1 for my wife, 1 for me, and then inside mine I "linked" minor accounts for both our kids. We have 4 total accounts with 2 separate logins - the minor accounts are accessed through the log-in with my account. Little annoying but its definitely set it and forget it. Will be re-loading in Jan for the full amount.
can you then invest upto 10K per account, 40K in total each year ?
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There is also a level of keeping up with the joneses and status to it. How do you show that you are successful in life ? i have looked at housing as functional but realized that a lot of friends have bought into communities near to mine which are atleast 50% more expensive to show that they are successful. my neigbour moved out from a good 3000 sqft house to 6000 sqft after he became an empty nester. why would you need 5 bedrooms for a couple. he did it because his friends did the same and he could afford it
housing also is like a luxury good like a 5000$ hand bag or shoes
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Maybe its also that after a certain level of income, you will spend more on discretionary stuff like cars, 5$ lattes and better housing ? ofcourse does not explain why this happened only after 71. ofcourse cars dont have limited supply (unless its a ferrari), whereas premium locations have finite supply
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https://www.cnn.com/2021/10/13/politics/social-security-cost-of-living-adjustment/index.html
Social Security recipients will receive an annual cost of living adjustment of 5.9% next year, the largest increase since 1982, the Social Security Administration announced Wednesday
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1 hour ago, Viking said:
Hobbit, thanks for posting. I saw the 10% move in Chemplast Sanmar shares overnight and was wondering what was up. The stock is now up more than 25% since its recent IPO. After BIAL this is Fairfax India’s largest holding so the move in the stock price is material. chug, chug, chug…Overall chemical/petrochem space is in a multi-year bull run in the Indian markets. Yesterday most of the stocks in this space were up 3-10%. Other PVC manufacturers also up, possibly due to the supply shortages from china
hopefully the management will sell some to take advantage of these prices
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9 minutes ago, glider3834 said:
fair point I think the risk of public pressure on politicans is always there with infra assets in any country & Fairfax India team would be aware of that & a consideration when doing a valuation - AERA did push back on BIAL increasing on user tariffs from October to April 2022 but did get the rest of tariff request through - that potentially could affect BIAL valuation although Fairfax have said they believe the valuation is likely to be higher if they IPO. Will have to wait and see in Q3 results if any impact.
Is an airport comparable to a toll road though - I see other stakeholders here for example international tourists/workers & local businesses that benefit from international tourism? Are there higher & lower risk infra assets? I am not familiar with Noida toll road facts but I would think there would be a lot more potential social impact with a toll bridge or road particularly where people have no choice but to use that road to get to work, shops, schools etc. than say an airport where people are using the airport to fly to another country for a holiday or an international visitor who is returning to US, Europe etc.
Also I just read that the Noida toll road is basically a mess so it sounds like a public experiment that has failed - would this be a precedent or a reminder of what happens when commitments are not honoured? https://timesofindia.indiatimes.com/city/noida/once-an-infrastructure-showpiece-dnd-flyway-is-no-ones-child-now/articleshow/81383601.cms
Also with an airport there are key passenger safety & security considerations & these costs that have to be met plus it is a key entry point for international tourists - does the public/international tourists want a safe & secure airport? does the public want their parcels delivered from efficiently from overseas? does the public want attractive gateway for international tourists/workers to attract tourism $s?
I agree noida toll bridge is not a perfect comparison here and i shared it as an example. It was messy to say the least. Government initially promised 20% ROI on cost of the asset and then eventually almost completely reneged on the contract. It was not like ...20% is too high, lets bring it down to 10%. No...it was like , you guys are cheating us and hurting the broader population. Never approved any toll hikes for 10 years and then finally it was taken to the court and the whole thing scrapped
i know this closely as i was invested in it
i am from the country (though dont live there now) and have seen a lot of short sighted decisions on a lot of such public infrastructure assets especially when politicians can gain votes by calling the investors as greedy. the typical modus operandi is to renege on toll hikes and keep dragging it on. the worst thing is when these cases, land in the court, it is no different where a judge would pass some kind of a moral argument and ignore the terms of the contract
other considerations such as passenger safety, international tourism etc are rational points. however i have seen none of these considered when such decisions are made. no wonder there is not much pvt sector participation in the infrastructure space
i am invested in fairfax india, so hoping that does not happen this time around and keeping my fingers crossed.
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On 9/10/2021 at 2:59 AM, nwoodman said:
Perhaps. Maybe I am being too optimistic but it looks like classic horse trading to me. What they asked for (ambit claim) versus what they got doesn’t appear too far apart, especially when it is compared to the UDF they are currently charging. The public hand wringing also was a bit strange. Classic India?
i would suggest being careful wih BIAL valuations. there is precedent (search for noida toll bridge) of past contracts not being honored and even courts allowing for that. public hand wringing is par for the course. a lot of people want world class infra but for free and there are enough politicians to pander to it
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On 7/27/2021 at 8:45 AM, boilermaker75 said:
Michael Dell is an SoB when it comes to his shareholders. Back in 2012 I bought DELL around $16. DELL stock price fell a little more and it was such a good deal Dell took the company private forcing me to sell at $12.
+ 1
there was some shareholder lawsuit which proved it to that effect ...but i dont think most of us got much out of it
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1 minute ago, rohitc99 said:
Honestly its a mixed bag and not very different from the past. There have some bold decisions but a lot of questionable decisions too like the demonitization episode. Overall i think the investments made by FIH are not as dependent on the modi or the current govt to do well. There are a lot of tailwinds and long term growth opportunities. The best any govt can do is not screw it up
ps: i am from the region
I am baised to the airport opportunity too. Lived in bangalore for a long time and worked there too. still have an apartment in the city. Its difficult to see how traffic will not grow over time. also the land around the airport is very big optionality and the way the city is growing will accrue value. Covid has delayed the whole thing by 2 years but not impaired the opportunity. question is how soon we get to see the value
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1 hour ago, Xerxes said:
There are two different things: (1) What is Prem pitching as a global thesis/story for FIH and (2) the reality.
The Modi debacle did hurt the (1) argument, however thankfully the reality matter more than an investment thesis/story pitched to investors on conference calls. Modi' ascension some years ago had, I believe, put India on a different trajectory. i.e. there is no going back to the way things were even without Modi in charge. So I think we are safe on that specific front.
Perhaps someone from the region can comment.
Honestly its a mixed bag and not very different from the past. There have some bold decisions but a lot of questionable decisions too like the demonitization episode. Overall i think the investments made by FIH are not as dependent on the modi or the current govt to do well. There are a lot of tailwinds and long term growth opportunities. The best any govt can do is not screw it up
ps: i am from the region
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Thanks for posting this. As a shareholder of Fairfax. India, does anyone know the relationship to Anchorage holdings? Why is Prem forming yet another holding company and does this negativity affect Fairfax India shareholders?
Fairfax has a successful long term track record when it comes to investing in India. And i think they view Fairfax India as their growth vehicle of the future in India (for non-insurance companies). It appears Fairfax/Fairfax India likes what they have learned with BIAL and want to expand in ‘infrastructure’ type assets in India. The problem is these types of assets will likely be very expensive to buy. And Fairfax India simply does not have the $ today. And currently, neither does Fairfax (a spare $500 million or more kicking around). Anchorage should be a good way to monetize BIAL at a premium valuation and sign on the right like-minded partners with deep pockets and a long term view (like OMERS). If they are successful obtaining more infrastructure assets they should be able to find more partners and fund their contributions from further sales of Anchorage. So they use BIAL as a way to flip into a growing collection of infrastructure assets; and collect some nice recurring management fees along the way. But this will likely be a slow process as approvals can take longer than expected.
The recent budget has also increased the spending on infrastructure by the government by 25%+. There are plans to monetize existing assets to fund the increased spend. A lot of norms are also being liberalized. Also the number of contracts being awarded to domestic construction companies is rising rapidly. so the plans around anchorage make sense to take advantage of this change and plans around infra
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Are you buying the currencies outright or via some other manner (eg MSTR mentioned previously)?
I am buying ETFs with "physical" backing. I would prefer to buy bitcoin and ether directly (what I have done in the past) but reasons not worth discussing here have me not doing so until about next summer. Then I will sell the ETFs and use the proceeds to buy bitcoin, ether.
Can you give names of such ETFs ? Is GBTC one of them ? are there any other ?
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One point to keep in mind is to look at the history of infrastructure development in India. From 2003-2008, there was big boom in this (and real estate). a lot of capital flowed into airports, roads, power plants etc. There was a lot of optimism in these sectors. Since 2008, it has been a complete bust. A lot of these projects got stalled due to regulatory reasons, land not being available, coal linkage issues and so on. A lot of companies including GVK have been under financial distress and the whole banking sector has been hit badly. The NPA from all these infra projects have hit close to 10% of GDP and are still being worked through.
If you go to a bank and suggest an infra project, they wont even talk to you. there is absolutely no capital flowing into these sectors and the only capital is from the likes of fairfax, Blackstone etc. So it is not surprising that Fairfax got a good deal in 2011. GVK was a distressed seller.
If you look at the projections for BAIL, they have taken 3-4% as volume growth in their DCF in the past. I have lived in bangalore in the past ...nothing grows at 3% :) ...the city is growing rapidly and the area around the airport is becoming more valuable by the day even if it doesnt show up on the balance sheet.
Thanks for commenting. Very helpful to understand the GVK purchases in 2009 and 2011 and the bigger picture.
The growth of the airport the past 10 years has been impressive. Phase 1 (Terminal A1) expansion was completed in 2013 increasing passenger capacity to 25 million. The second runway was just completed in Dec 2019. And the new terminal (phase 1) is scheduled to open March of next year (2021) and when fully completed will add passenger capacity of 25 million. And they already have plans to add a third runway. Bottom line, the development of the airport is in the early innings of another growth phase.
Link to article discussing plans for the new terminal:
I lived in bangalore from 1995 to 2005 and have travelled through the old airport and now through the new one for the last few years (the difference is stark). There is a lot of pent up demand for air travel and the traffic growth is quite reasonable. A very small fraction of the population is flying for now and this should increase over the years. For a lot of indians, flying is still aspirational. Both domestic and international travel is increasing.
Also the new airports like bangalore, and other cities are world class now and provide a good flying experience - far better than some of the cities in US.
My guess is that this deal allows Fairfax to fund other assets via this platform. The risk aversion very high in the infra space and so hopefully then can get good risk adjusted returns. There is almost no appetite for such assets among the domestic investors
Something similar applies to financial services - my family has accounts with IIFL and the service levels are good and the number of investors/ borrowers is still a fraction of the potential.
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The key to Fairfax India is BIAL. It is the 800 pound gorilla in the BV calculation. Are there some other ways we can get a fix on some other measures that might help us understand what might be fair value for that asset?
How about looking at all the historical sales since 1999 (when BIAL was born)? There have not been many transactions as stakes in trophy assets like this do not come up for sale often.
- 2009 GVK purchases 2 stakes for 12% and 17%; implied value for BIAL = $800 million.
- 2011 GVK purchased 14% (total ownership to 43%); implied value for BIAL = $964 million.
- 2016 Fairfax purchased 33% for $336 million; implied value for BIAL = $1,018 million
- 2016 Fairfax purchased 5% for $49 million; implied value for BIAL = $980 million
- 2017 Fairfax purchased 10% for $200 million; implied value for BIAL = $2,000 million (this purchase is the outlier of recent transactions; it gave Fairfax control and they subsequently made management changes)
- March 2018 Fairfax purchased 6% (total stake = 54%) for $67 million; implied value for BIAL = $1,117 million
- Dec 2019 Fairfax sell 5% for $134 million; implied value for BIAL = $2,680 million
Based off what GVK paid back in 2009 and 2011 it looks like FFH may have gotten a steal of a deal on 3 of its purchases (time value of money, plus the actual asset is much more valuable given all the improvements made over 5 years). Perhaps the one higher purchase ($200 million for 10%) was closer to what Fairfax felt was actual fair value for BIAL (still worth doing to get management control of the asset). Interesting :-)
In the attachment below I constructed a timeline for BIAL from 1999 to today with all transactions entered.
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It is interesting to see that L&T IDPL was part of the original consortium when BIAL was birthed back in 2001. I think they were awarded the contract to build the 2nd runway (recently opened) and also the new terminal.
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Another thing to understand would be how BIAL's value compares to the other big airports in India, like Mumbai. when it made its purchases of BIAL back in 2009 and 2011, GVK also was majority owner of the Mumbai airport. Here is a quote from an article (Aug 2011) commenting on its 14% purchase:
"Aviation experts say GVK must have exercised its right reluctantly considering the money involved, but BIAL was too important an asset to let go. "In the long term, BIAL will be a stronger asset for GVK even better than the Mumbai airport. The revenue share of the government in Mumbai airport with GVK is 37% whereas in BIAL it is only 4%," said Kapil Kaul, CEO, India and Middle-East, Centre for Asia Pacific Aviation, an aviation research and advisory firm.
"Also, Mumbai has structural issues and is a locked airport whereas BIAL has a lot of scope of expansion and development," he added.
One point to keep in mind is to look at the history of infrastructure development in India. From 2003-2008, there was big boom in this (and real estate). a lot of capital flowed into airports, roads, power plants etc. There was a lot of optimism in these sectors. Since 2008, it has been a complete bust. A lot of these projects got stalled due to regulatory reasons, land not being available, coal linkage issues and so on. A lot of companies including GVK have been under financial distress and the whole banking sector has been hit badly. The NPA from all these infra projects have hit close to 10% of GDP and are still being worked through.
If you go to a bank and suggest an infra project, they wont even talk to you. there is absolutely no capital flowing into these sectors and the only capital is from the likes of fairfax, Blackstone etc. So it is not surprising that Fairfax got a good deal in 2011. GVK was a distressed seller.
If you look at the projections for BAIL, they have taken 3-4% as volume growth in their DCF in the past. I have lived in bangalore in the past ...nothing grows at 3% :) ...the city is growing rapidly and the area around the airport is becoming more valuable by the day even if it doesnt show up on the balance sheet.
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I think of the moat in terms of how much engineering effort it would take to replicate the company and whether there are enough engineers hireable in that space to make such a company.
The only SAAS company I can think of that is without GAAP profits and that has a big moat is AMZN. Others such as MSFT, ADBE, ADSK already had a wide network-effect moat that just continues with SAAS. SAAS by itself does not confer or widen the moat.
There is stickiness associated with NOW and WDAY. But the market caps are way too big and the revenue/employee too small, the technical-effort bar too low. As a reference point, Oracle bought Peoplesoft for $10.3 billion when Peoplesoft had $2.9 billion in revenue with 12,000 employees in 2004. I don't know how much Peoplesoft was trading for before the hostile takeover premium. Also, I don't know the market conditions in 2004 when the takeover happened.
I think every SAAS company that has IPO'ed in this bull market will eventually trade at a valuation less than half their current valuation. SAAS means these companies build an app on AWS - but so can their competitors. To fight competition because the technical-effort bar is not high, enterprise SAAS companies price their product well below cost and survive by paying their employees in stock. I can't think of any enterprise SAAS company with a moat that is worth even half its market cap.
Right now every house/building in every street in the Bay Area is building a web service on AWS. When the tide goes out eventually, these startups can be acquired in a firesale and there will be plenty of engineers who can build AWS apps looking for work.
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i have worked in the enterprise software space for last 20 years and was with oracle when it accquired PSFT. These software have a stickiness but there is limit and pricing elements to it. It also depends on the type of application. replacing core operations software such as for banking or supply chain for a manufacturing company is tough. very few companies bother to do that unless there is a merger or accquisition.
however outside of the core, in areas such as HR, analytics, expense management etc ..the stickiness is much lower. we have moved from psft, to oracle SaaS to SAP SaaS in a span of 2 years for various reasons. it needed 6 months to make the transition and was not a big deal.
also most of these softwares at least in the enterprise space are very similar ..they are different flavors of vanilla with a lot of marketing speak and BS thrown in by the vendor.
After having worked in the SaaS space from a user and company IT standpoint i can tell you that the onpremise software is richer in function (as they were developed over 20 years) and a lot of SaaS products are more show and tell for now. they are ofcourse developing rapidly and reaching there. But there isnt a massive difference from the old ERP software ..there are benefits for sure ..but its way oversold
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Opened the S-1 after reading all the hoopla about WeWork. The first two sentences are:
"We are a community company committed to maximum global impact. Our mission is to elevate the world’s consciousness."
For some reason, it reminds me of Sardar Biglari.
Vinod
if the current business doesn't work, they can always diversify into weed to achieve their mission :D
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Let us say this can compound at 8% in dollar terms, higher than the last five years average in very favorable conditions. After paying 20% performance fee and 1.5% management fee, your return will be 4.9%.
Why do you think it would compound at 8% in dollar terms when the investments seem to doing better. IIFL (inspite of the recent NBFC issues), BAIL etc are all growing at 12-15% range when the economy is going through a lot of stress and liquidity issues.
8% in dollar terms is the broad market returns over the long term. If that is what they achieve, then yes the outcome will be bad. However the entire thesis is that team can do better than that in the pvt and public markets.
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I emailed investor relations about this and here is their reply
"Thank you for your email.
Fairfax India Holdings Corporation has been listed on the Toronto Stock Exchange in US dollars under the symbol FIH.U since it's inception year end 2014. The company files all required news releases, financial reports and other disclosures only under the SEDAR system in Canada as required by the Ontario Securities Commission.
The Company does not market or disseminate information in the United States or through the SEC.
The Company has not created or supported any other listings beside the FIH.U symbol on the TSX."
Not sure where this leaves us.
i am facing the same issue. how did this work till now if it was listed only on TSX
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Might be easier to get your fidelity account approved to purchase the Toronto shares directly vs. waiting for something to be 'fixed' on an unsponsored adr.
I have access to purchase toronto shares and tried that. It gives the same message : 144A restriction
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FIH is only listed in Canada. Why would the management have to report to SEC?
This is a genuine question. I don’t know what form the US listed entity is. It’s not an ADR. It’s a Wall Street manufactured trading instrument of some type.
It trades as FFXDF on the OTCmarkets. is this not a US traded instrument. sorry, i am not clear about it, but i thought its traded in the US and hence needs to registered with the SEC
Is there a value rotation going on today?
in General Discussion
Posted
i could be mistaken on this as i dont have one. i was told that an S-corp can withhold earnings and pay the owner a salary. that way the 'employee' gets paid less and is taxed at a lower rate. if you want to pull the earnings, then you pay yourself a dividend and get taxed accordingly. thats my understanding which could be wrong
If thats not allowed, i hope those who are doing it better be careful