SharperDingaan

The weapons don't have to be heavier. The Belgorod strike was a proof of concept, lots of fire/smoke but relatively little damage. Were Ukraine serious, it would have also used drones dropping mines; both magnetic and AP - adding choppers just stirs the pot and drive up the loss. Today it was a refinery, tomorrow its your tank park? https://www.cbsnews.com/news/russia-ukraine-war-news-chernobyl-belgorod-oil-depot-attack/ https://www.icrc.org/en/doc/assets/files/other/icrc_002_0654.pdf SD

ESI.TO No div yet; but only a matter of time until they reinstate. Murray Edwards, and FFH have involvement. At the current CAD 3.67, most would expect a cash yield of 8.5-13.0% within 12 months, and capital appreciation of 100% We own a few, at a much lower cost base SD

The intent would seem to be resume assault, but ability suggests otherwise. Tanks/transport don't move with no gas, guns/launchers don't fire with no bullets/shells/missiles, troops don't move when commanders are dead. It's also doubtful that Putin can afford troops coming home, spreading 'tales from the front'. The more troops in the south, the less in the north, and the more exposed the czar becomes. And if that military is not entirely 'on board', the rink opens up a bit. Interesting times. SD

There are also the recent BBC reports of widespread dissention within the ranks, and refusal to fight. The old fodder is being replaced, and 'disciplined' in places where there are no cameras. This is Russia; expect some viscous fire fights, war crimes, and 'eliminations'. SD

The king may order, but it takes many fingers to push the button. Back in the day, press at the time; revealed Trump had ordered a nuclear strike on Qom; that saner heads declined to execute. Russia has saner heads too. Money is the oxygen a regime needs to survive; a plastic bag over its head, and it soon suffocates. Sanctions, currency implosion, etc. are just different bags. One/all works ... and suddenly there is a new king. SD

Russia will be declaring force majeure on its external debt very shortly. Shortly thereafter, all Russian financial transactions will be COD, and liquidity implodes; the Central Bank forced to print unlimited RUB, driving inflation and riots. And if there is no market to suck up those RUB (pay for oil, commodities, etc), Russia becomes an even more dangerous place. Employees/citizens simply convert RUB into crypto as soon as they get them, same as everyone else already does in a South America. Shops take both RUB and crypto, where they have to. All that is required is internet, and that can easily be supplied via satellite. Europe is just being smart - it already has the gas. Putin wants conversion at todays Ruble/USD FX rate - USD 10M for RUB 800M. But if after force majeure the Ruble collapses to 1/3 its current value? delivery of RUB 800M only costs USD 3.33M - and the USD 6.67M gain can be given to European consumers to offset higher gas prices. Economics is such a bitch! We live in interesting times. SD

Business magazines used to be pretty good, but today? would you really buy the magazine, were you not already a subscriber? And when it did arrive? - did you actually read anything 'in the moment', or did you really just toss it aside 'for later'? If the answer was 'yes', it's clearly a pretty sh1tty product !! Trade magazines offer far better value for your time; not newsletters. They come at a cost/magazine, tout product for the industry, and are written by industry experts for industry experts, in real time.. In o/g it has been well known, and for quite some time, that there are serious shortages of mud, sand, transport, chemicals, and drill crew. And that in some basins, it is much worse than in others. Yet most investors are only going to discover this in early May - when Q1 earnings come out? Obviously, if you can apply what you read, you should do very well! If you just want to keep up on the 'market', you can do no better than the 'market' At any given time, either buy the index or hold cash, according to your view. If you want to keep up on 'industry circles of competence', you need to invest in ongoing maintenance. If you don't think it worth the cost of the subscription, you obviously don't have the 'industry circle of competence' that you think you have! Journalists will hate you, 'cause it costs jobs! And neglect to mention that the few employed to write for trade magazines, earn multiples more than most business columnists. Same total bill, just spread over fewer and better paid journalists! SD

The problem with mercenaries is that they work for the highest bidder, and the payer needs to periodically keep changing them. While the payer is the stronger man, they are a useful tool; when the payer is weakening .... the puppet master risks becoming the puppet. The Wagner Group WWII equivalent is the German SS. Yet despite incredible power, and effective control over Hitler, it still didn't work out so well for the SS. The organization broke up and scattered, a few were hanged, and a great many others met Nazi-hunters in the night. Lot of nations have their military equivalents, and all are very good. Attrition and bribery can be a bitch. Putin will not be czar 'forever', and it is increasingly becoming a time-limited engagement. This is what options were designed for. Dead money, until suddenly it isn't. SD

And that is its charm .... devastating, and hard to trace where it came from. SD

A man in Moscow buys a newspaper, glances at the front page, and throws it away. He does the same thing every day. Eventually the seller snaps "Why DO you do that?" 'I'm just checking for an obituary" "But obituaries aren't on the front page!" "The one I'm looking for will be." With jokes like these in circulation, one has to think there's also a healthy underground betting line. Obviously, the knives are lining up SD

Agreed re the security establishment. However the security establishment is an arm of the party, the spy master is old, not on his game anymore, and in the way of the advancement of ambitious people. Still useful for now; but as the asset value falls and the liability rises, it rapidly closes in on 'cut bait' time. Doubtful he passes away peacefully in bed. This is Russia; there will not be a power vacuum, and transition will be swift/brutal. At the practical level, there will be multiple near-simultaneous terminations; executors will not be able to remain in Russia, and it will primarily be their families that benefit - not them. Lot of body bags coming home, creating people with little to lose, and too many lit matches to put out. Clock ticks down instead. Ultimately, Russia will resolve Putin 'internally'; the when/how still to be determined. All that we can really do, is hold some binary options on a Russian recovery. And trust in the long-term survival of the Communist Party! Seems a reasonable bet. SD

It was a state sanctioned contract on Putin's termination, and all parties fully understand that. The communist party is free to continue ruling Russia, but it does so without Putin - their decision as to whether Putin remains alive or not. Bounty for the hit, and relaxation of sanctions once it's done. No different to the attempted WWII assassination of Hitler ,,, but this time, with no mistakes. The same doctrine applying to China and the US. Leader and party are not the same thing, and there needs to be a 'correcting' mechanism. The US has elections every 4 years, Russia and China just do it a little differently. The same doctrine ALSO applying to the global dictator community. No interference if within your own borders. Resistance if you interfere outside of your borders. Term limit, behave, and it is hands off. 3rd strike against and you are terminated. The Godfathers impose the rules, and the capos follow. Free reign within the rails, electrocution outside the rails. Capitalism at multiple levels SD

1M bounty for Putin's arrest, as at March 04. As at today; following Biden's Poland speech, it's quite a bit higher Not as many 'conditions' either https://fortune.com/2022/03/04/putin-bounty-russia-ukraine-1-million-dollars/ Last month (February) this was unimaginable. Today? it would appear the czar is loosing his grip. A year from now? maybe it proves fatal? Putin isn't the communist party, and the communist party is very good at survival. SD

It would seem that Putin now has a price on his head, and that global economic policy is indeed 'Putin in a box'. https://www.cbc.ca/news/world/russia-ukraine-march26-2022-1.6398710 Have to think there is now a new card deck. Putin as the 'Ace of Spades', and worth a lot more than a mere 25M! Thing is .. if you're one of the other 51 in the deck - Russian Roulette now has a whole new meaning. https://www.bbc.com/news/magazine-14666182 The obvious competitive solution is to do a deal. Hands off for X years, and an extended crackdown on your competitors ..... if the czar is dead? Verified by multiple and independent DNA testing, paid in BTC, and no questions asked? Capitalism is such a bastard! SD

Where do you think the BRIC thesis originally came from? Somebody just puled it out of their ass?? Whether one gives it credence or not is irrelevant, but to ignore the linkage is to bury ones head in the sand. The process creates opportunities, as does disruption of the process. It is what one does with those opportunities ..... SD

This has been well known for many years, but most just haven't recognized its significance. Many years ago I was reminded of what this meant by a very well travelled diplomat. To paraphrase ...An India, or an Asia, bats above its weight, because any kind of good governance in these geographies is really about 'safely' making millions of poor people wealthier. Millions of poor people able to spend a little more on better food/health/comfort quickly adds up to incremental massive demand on the underlying commodities enabling that better food/health/comfort. The US has a large population, and a high average annual spend/person, but its getting old. China has a much larger population, but its average annual spend/person is relatively modest, and the population younger. However, economic activity is essentially population x average spend/person. Over time, as those foreign populations progress into their higher spending years, and US spend diminishes - the nexus of economic activity inevitably shifts away from the US. The diplomat has long since passed, but his observation is just as true today as it was back then. SD

Look at a few of the below, and their approaches .... there are also a few others that are not mentioned in the article. https://techbullion.com/10-european-fintech-companies-in-the-real-estate-space-to-watch-out-for/ No opinion, merely a PSA SD

Just to add a different take. We own a long lease in Knightsbridge, and have had it for many years. Lease payments are paid up front, and rich Russians have been very good tenants. Demand is stronger than ever, and we will very likely get a 10-15% rent increase if we agree to re-let on a 2–3-year term. Quality counts. Whatever we put into London, is ‘safety’ money. As long as we only buy quality, we will always have a liquid market, no matter the worlds problems; liquidity at a discount/premium according to net money inflow at the time. Could have done the same thing in Vancouver/Toronto; we don’t, because we already have a ‘safe’ Canadian base, and prefer the diversification. ‘Safety’ money is almost never going to be the marginal money subject to rising mortgage rates, inflation, etc. Mortgage servicing is typically used to reduce net income to zero, and avoid taxes; not to purchase the property itself. However, foreign based safety money will drive up the price of the RE, and it will be subject to penalty if the property is not subsequently let. Invest via a local, and opportunities present. The business decision simply becomes whether similar quality RE in a secondary city, over the same time horizon, is the better choice. Midlands or Aberdeen, property/opportunity specific, vs London. Also, a lot less chance of digging a hole and hitting a long-lost Roman in a Birmingham - than there is in a London! At the practical level, location is really decided by objective. To get wealthy, invest in the secondary cities. To stay wealthy, invest in the highest quality London RE you can afford. Different POV SD

We come at London RE from the Quantity Surveyors viewpoint. Agreed if you want out of the box, you are going to overpay. The flipside is that if you have the expertise/connection, a re-development can be fixed up/remodeled, and resold fairly easily. It just means partnering up with trusted entities, which we're OK with. Ultimately the long-term aim is a reliable rental machine, throwing off a few bob every week. SD

We own a lot of CVE (SU competitor) warrants at a very low cost base, a lot of OBE at a ridiculous cost base, and a lot of PD, ESI, CET that we have been steadily adding to. We are long tar sands via CVE/OBE (Peace River), long light oil/gas via OBE, and long the industry itself via the drillers. We take an investment versus trading view, and the WCSB is a strong circle of competence. Drill rigs have been coming out of cold stack in a big way, demand/day rates are materially higher than they were, and spring breakup is temporarily freeing up some crews. Drillers spent their money on consolidation, and cashflow is rapidly paying down debt. Not hard to see what happens once target debt is reached. Delusions of grandeur managed by redirecting wealth into London(UK) RE. Haircut at 40%, margin to get to target capital allocation, and buy the RE mortgage free. O/G goes tits up tomorrow; we walk away with a stub and fully paid up London RE. The longer the o/g party continues, the more RE we accumulate. Why London RE? We have a strong circle of competence in it. Commodities are known for their risk, and their ability to create wealth. If you hope to do well in this area, your risk management needs to be up to the game - we aren't playing for annual 10% returns, we're playing for 75%+ Obviously, not for everyone. SD

We have no idea how this plays out. While the o/g risk/reward is attractive, it really depends upon your circle of competence and time horizon. There are currently a great many CDN o/g firms of moderate risk, that will very likely both double < 18 months, and reinstate dividends to former levels. Example: In 18 months, most would expect an OBE currently trading at CDN 9.39, to trade at CDN 18-20 on an 20-25c dividend/quarter. Potentially a cash yield of 8.52% to 10.65%, and a double; but obviously more risk than a SU More inclined towards a new world order, and secular change versus long term cycle. It's pretty clear to me that 'big oil' is being asset stripped, and proceeds redirected into green energy. Hard not to be long term supportive, and we invest accordingly; but it's very much the outlier position. It is highly likely that the Soviet, Iranian, and Chinese tanker fleets have been routinely engaged in at sea ship-to-ship cargo transfers. The oil is still getting to market, it's just the price being paid for it, and China/India have obviously being doing very well. China isn't stupid, and neither is Biden. They both have very well connected advisors, and each team will be very aware of the relative risks, costs and benefits. Putin needs to exchange Yuan receipts for USD in volume, which really means China selling down its USD reserves ... for a transactional fee Ultimately, it leads to a globally shared central bank reserve currency and everybody's benefit; again not a popular view! Green transition is already here, and alive and well. There are even west coast forestry companies concluding that their growing trees are worth more in carbon credits, than cut down as lumber. Green in Europe is pretty much everywhere, and accepted fact; whereas it is just starting in NA, but further ahead in Asia. A number of Cdn o/g companies have long term warrants, look at those with big hedge positions rolling off this month SD

The required gas is already stored; in the ground, at the source fields. Generally the shorter the supply chain, and the more above ground storage it has (storage tanks, floating, pipeline, etc.), the more in ground storage you can have. Hence to a Europe, supply from the ME or Scandinavia is preferable as it results in less stress on the infrastructure, and more underground storage. Example: If your supply chain is reliable, your delivery time from well-head to local storage is 3 months, and you can secure enough above ground storage to comfortably cover 'emergencies' - you can store roughly 9 months of your annual need, less the above ground inventory, in the ground, for free, and at source. However the more/faster you can move to green energy, the less reliant you will be on that underground storage in whatever nation it may be. The reality is that European transition away from Russian gas, is not as difficult as Russia would like you to believe - 'cause if it were, Russia would not have recently sold the future long term supply to China SD

It really comes down to a planed depletion of ME storage and a ramp-up of Gulf state production. The facilities are already on-line, and the proceeds will fund upgrades that ultimately power Europe's coming EV demand. NA will supply as well, but it will primarily be the growing gas cut on ageing shale wells, and not from newly drilled gas wells. US Shale is primarily from gas fields, producing oil/liquids as byproduct. We think of US Shale as oil fields; because at the well-head, on a new well, the oil production is worth materially more than the gas production. Whereas in reality, over the total producing life of the well, the accumulated value of the gas production will typically exceed that of the oil/liquids. SD

Gas producers will be going flat out this summer, as Europe will be doing everything it can to build inventory as high as possible ahead of next winter. Gas for heating, will also be competing against gas for fertilizer, as the globe attempts to offset reduced Ukrainian food production. The more gas produced the more oil produced as well.. Russian o/g wells are stranded, but not shut in While sanctions continue, flow will be cut back to minimum levels, and inventory allowed to build until all Russian controlled land and floating storage is maxed out. Thereafter, wells will begin to shut in, and for many - it will be permanent. As/when sanctions lift, most would expect Russia to reclaim market share by flooding the market and driving down prices. If o/g companies used the good times to pay down their debt there will be no ill effect, and existing fields are simply allowed to deplete into the incremental demand resulting from lower oil prices. If debt wasn't repaid, in favor of M&A field consolidation, all remains good. However, if the money was used to simply open new fields, those new fields are at risk of stranding. Obviously, not what US independents want to hear. Bigger players controlling entire fields, and managing the medium term transition from primarily oil to gas. ESG metrics as the scorecard driving the process. 'Old School' o/g men/women shown the door if they choose not to get on board. Market at work. SD

It’s useful to look at the Sovcomflot fleet. 145 tankers averaging around an Aframax, or 800,000 bbls/load. Closed off from western off-loading facilities, these tankers are now idling, and are essentially floating storage. https://en.wikipedia.org/wiki/Sovcomflot https://www.bloomberg.com/news/articles/2022-03-11/russia-s-state-owned-fleet-of-oiltankers-is-starting-to-idle Back-of-the-envelope calculation Assume roughly ½ the fleet is currently stranded. 70 tankers @ 800,000 bbl, or 56 million bbl. Assume the oil is sold underground at a deep discount, we know from recent press that the discount for a direct sale from Russia to China is around US 28.50/bbl. Assume the underground discount is 20% above this, or US 34.20. Total discount of roughly 1.9BM (56M bbl @ US 35) on ½ the fleet. Assume another 60% on the remaining 50% of oil going directly between states. Every time that 145 ship fleet fills up, the total sales discount is a conservative 3.00-3.25B. At maybe 6 refills/yr? this is costing Russia 20B+ All that Russia can do, is try to keep oil prices as high as possible, and they can’t hold the oil off the market because they need the money. Very similar dynamics in the diamond trade as well. SD