Cardboard
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Posts posted by Cardboard
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I don't know if you guys have noticed, but Bernanke has said many many times that the U.S. government needs to put the deficit in order.
This action yesterday goes completely in the opposite direction. While this may create jobs, it is still uncertain as to how many and when and what will be the resulting tax revenue increase of a growing economy. Since it is so uncertain, I will guess something in the middle: more jobs, more tax revenues due to growth, but net net a deficit that is still not much improved from today's situation.
Hence comes the Bernanke warning. His action of buying treasuries and other securities by growing the Fed's balance sheet could have been unwound in an orderly manner in the future if the economy is growing and everything else is stable. With the government doing its stimulus at the same time as Bernanke QE program and continuing to pile up debt, I suspect that he is worried that we get into a permanent structural issue with the Fed balance sheet: can't be unwound. You have two entities trying to do their best to help the economy, but not coordinating anything.
The impact: dollar devaluation, commodity inflation, higher interest rates? I don't know which one or if all, but it seems that it is getting into motion and that we will soon learn about the unintended consequences.
Cardboard
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Somehow this is something new on a daily basis. A new piece of data...
"BREAKING NEWS
Bernanke says Fed has 'a case for further action' to stimulate economy due to high unemployment and low inflation."
The results:
"Standard & Poor's Depositary Re (NYSEArca: SPY)
Pre-Market Real-Time: 117.98 0.52 (0.44%) 8:25AM EDT"
Cardboard
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Myth,
"I think sitting on his hands hoping it all works out looks just as bad from where im sitting, and doesnt work well economically or politically. Buffett is man enough to realize that and avoids throwing stones. You seem to be bitching and thats about it. All options look bad."
Why is it that almost everyone thinks that low interest rates is a good thing for the people?
Who has that helped really, to keep rates close to 0% for so long?
The homeowners? Nope. Those who could not afford a home in the first place are still denied now. Those who have seen their rate reset, still pay a high rate. Those who could refinance at a lower rate are a little better off, but these were well off individuals in the first place. And these individuals are so worried now about what is going on (remember they are mostly savers) that they are not spending a dime more.
The alternative is to raise rates. This is the way IMO to induce confidence in the system, this is normalcy after all. 0% isn't. If savers were receiving their normal 4 or 5% a year on their savings, they would spend. It is additional cash you know. It would create jobs. The deficit would get reduced. Pension plans would be honoured. Stimulating IMO, is going from say 6% down to 4%. Going to 0% is creating an unhealthy situation.
Now you will tell me that this would push up the dollar and hurt export. This is BS. The U.S. economy never did better than during the 90's and look what was happening with the buck. A stronger currency attracts capital, it also forces a country to be productive. The Chinese currency is also pegged to the dollar, so they would have to follow.
The only people benefiting from a 0% policy are the banks and hedge funds. They can borrow at ultra low rates, leverage to the hilt and invest at higher rates. They also play carry trade with the dollar since Bernanke has almost promised them to kill it.
I just see a grand game of manipulation with very little impact for Main Street.
Instead of creating unsustainable debts for future generations with QE and massive deficits, just raise rates a little and let the real people take charge.
Cardboard
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I don't know about Munger's portfolio, but I do own individual issues since they are very cheap and let me tell you, their recent stock performance sucks. If your companies are not part of the ETF's or being very large then they are not participating in this rally. There are exceptions of course, but I see little to no interest in micro caps.
So value is there in some places, but there are no buyers to make it surface. Some will go private I suppose as many have over the past 18 months. Also, when I say value, I mean stock that can double and triple. Big caps at 12 to 15 P/E with little to no growth may interest some, but not me. With the correlation present out there in big caps, might as well buy the SPY and forget about the stock market all together. You stock pick for what reason? To make 10% instead of 9%?
Regarding the overall market, it is a bubble in the making IMO. Thanks to the Fed and guys like Tepper. Unless earnings suddenly explode with a surging economy, you are paying a fairly high P/E for little apparent growth.
The other thing that I find funny is that we never hear the other side of the story. If there is inflation down the road and I mean any small sign of it, then do you believe that treasuries will stick at 2.38% on the 10 year? If rates go rapidly to 5 or 6%, will the paltry 1.9% yield on the S&P look so attractive?
And what is that going to do to the economy? Even the earnings on my ignored stocks will get hit hard under a surging treasury yield. That is the macro risk here IMO: a loss of control of yields or currency or both.
Don't you guys remember late 08 and early 09 and how useless were any of the moves attempted by the Fed? The sellers kept on selling until they were done. It did not matter what the Fed or the Treasury were trying to do. They had no control whatsoever. This QE2 and yield chasing is dangerous. There is a belief out there that the Fed can control everything right now. This is retarded. It seems to me that it would take very little to unwind it all. Just a small change in confidence due to some event, which will be used as the excuse, to then interpret reality very differently. By the way, it is very hard to notice that you are part of a mania when you are in it. What I see since early September are the pavlov dogs coming in every trading day for their 0.5% fill.
Cardboard
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What is going on right now is absolutely insane.
Treasuries are rallying because the economy is weak, people are starved for income and there is a belief that the Fed will keep buying treasuries via QE2 to push yields lower.
Gold is rallying because the USD is weaker due to the fear of QE2 on the dollar and the various currency wars that are brewing because of U.S. and now Japan actions.
Stocks are rallying because earnings are all right and QE2 is believed to help reflate the economy. Reaching for yield and returns is there too.
Everything that you are seeing is based on the belief of the power of QE2. When you look at the numbers, you start wondering if people are not making too much of it. For example, net issuance of treasuries is much much larger than current QE2 or what it is speculated to become after the next Fed meeting.
Then combine this with massive leverage to reach for returns and the use of carry trade and we have quite an explosive recipe. Oh, you think that leverage is a thing of the past at hedge funds following the credit crisis?
QE2 is truly an economic miracle. It makes all assets go up in price and someday maybe that it will help create a job or two. There is also no cost at all to it since Bernanke will somehow make the Fed balance sheet return to a low level with no impact when the time is right.
Cardboard
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Am I missing something here or there is something truly wrong with this market?
You have gold exploding. The U.S. dollar is plummetting. Long term treasuries are still going up. Japan is desperate, cuts its rate to 0% and its market along with every other world market surge. Commodities are now surging which at some point should act as an economic brake as it did in 2008. Note also that every time the market goes up that the Euro goes up. Carry trade and massive leverage being employed?
Gold and treasuries are not where they were when the equity correction began in April. They are still much higher while the market has regained most of its losses. There is a dislocation somewhere in there.
How is that going to end? Hyperinflation? Crash?
Sure, you can make money being long almost anything in this market, but what we are witnessing here isn't the signs of something truly nasty down the road?
It feels like you need to be in this market to make a return, but eventually something will arise that will make you lose most and maybe more of the gains in short order.
Kyle Bass made a pretty compelling case about Japan's coming problems. He looks very foolish right now, but so did he during the U.S. housing bubble until proven right.
I don't know. Maybe I make too much of this, but I feel very uneasy.
Cardboard
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There seems to be an assumption in this thread that Harry is just letting NFLX ride up well beyond his IV number. I am not sure if he will comment, but I don't think that is the case since he sold his Salesforce.com. It is true that momentum in CRM shares seems to have slowed in recent days, but it is still in an uptrend, sales are still growing and there has been no filing or announcement indicating the opposite. So I guess that he could have held on if he just relied on momentum.
Now, calculating the IV of NFLX is not easy for a long or a short. There are so many moving pieces at a very rapid pace that predicting cash flows with a high degree of certainty over the next, say 5 years, seems impossible. The high near term P/E vs near term seen growth seems to favour a short, but who knows what the earnings model will be exactly in 2 or 3 years.
So as long as sales are growing at the current pace, I think that shorting is highly dangerous since we won't know the eventual earnings of this business for a few years. As a reminder, they missed their earnings on the last quarter and see what happened with the shares. Unless there is some really bad news to shake investors confidence a la 2008, it seems to me that the shares may remain high.
NFLX could end up with 50 million subscribers in 3 to 4 years. They charge $9 a month. With some decent margins that could mean a lot of profits and it does not say what else they may offer by that point and the extra dollars that may come in. It could become quite sticky and difficult to do business with anyone else but these guys. I understand the "squeeze" argument by content and delivery players, but it just seems to me that they are nothing without this intermediary. They will be quite happy to stick with them if they keep adding more and more subscribers.
I had some puts on NFLX, lost money and I have given up. I thought it was quite ahead of itself, but also realized that the longs may end up right with enough time. Some short term event may have worked for me or a return to a show me attitude by investors, but that is all it is. Seeing no real breakdown in the business model told me to get out of there.
Cardboard
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http://www.cnbc.com/id/39320992
Sounds a little different than his recent statement that we will not see a double dip isn't?
I am starting to wonder what's his agenda. Was it to help the Democrats?
Please don't get me wrong, I still respect Warren and I am grateful for his teachings, but I liked the guy much more when he was giving very few interviews.
On the other hand, instead of wasting time with Becky, I would much rather see the guy help his country by straightening things up a bit. There are many issues that he could help fix with his power and influence. It would be a big act of charity.
Cardboard
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"Ebix has outperformed. Have you actually checked?"
Yes I did and as I said it is a massive underperformer relative to CRM, NFLX, AMZN. It is unable to trade above 15 times earnings while the others trade as high as 200 times earnings.
Unless you have more invested in CRM than EBIX at the moment, your capital has been poorly employed. You are no different than us Harry. Value is killing your performance. Join the new Nifty-Fifty. The Internet stocks that can do no wrong.
Cardboard
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Use any logic in this market and you end up being a loser.
Hold EBIX, KSP, JNJ, MSFT, FBK and other stocks that have been discussed many times on this board for their attractive valuation and you are underperforming.
Hold overvalued garbage and hype and you end up a winner. See NFLX on a "rumour" that they may have a deal with AAPL. See AMZN on a potential foray into TV.
Also, have you noticed the flash crash today in the SPY? At 11:27 am the SPY, which is extremely liquid by the way, went down to $105.39 from $108.24 then back up to $108.24. What happened? Is that normal?
I am optimistic that value will triumph in the long term. However, it does not appear that value moved stocks much since early 2008. Unless you were lucky to be bought out via a take-over, it seems very difficult for value to be recognized by the market anymore. It seems to be a wild gyration based on emotions, macro and other factors. Normally this wears off quickly, but it has been going on for over 2 years now. Very frustrating out there.
Cardboard
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Anyone else short Genworth MI Canada? The stock price is up a fair bit since the end of its Dutch auction to repurchase $325 million worth of shares. I am sure that Genworth Financial was quite happy to see $187 million of cold hard cash coming in the door.
Canadian housing is clearly cooling down and fast. Sales down 45% year over year in many bubbly areas. First we heard it was due to the end of tax credits, then it was due to harmonized sales taxes in B.C. and Ontario. What is going to be the next excuse to explain the decline? The average Canadian homeowner is more levered in housing than the Americans were at the top. We keep hearing that it can't happen here, but it seems to be in progress.
Even if we have no collapse, a slowdown is not good for MIC. They need new policies since showing earnings by only using unearned premiums is not creating any cash. Also, how can they compete with CMHC without offering lower policy pricing and accepting lower quality profiles? Time will tell, but reading the Annual Information Form gave me good data on their competitive situation vs CMHC.
Cardboard
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"It sounds like we should be fully invested."
Did you forget that Prem, a friend of Francis, just bought billions (notional) worth of protection against deflation?
If you read between the lines, I think that Francis is giving a fair warning to all his investors. Said differently: I am a long only fund, if there is deflation which I can't predict (me neither), my picks may not work out even if they appear to represent great value at the moment. Temper your expectations.
So it is fine to invest in companies right now, but look at hedging, keep an eye on the economy and sovereign risks. If there are catalysts to unlock the value in your undervalued stocks even better. I don't know if you have listened to Kyle Bass interview on CNBC on Aug 17 (or 18?), but we can't just dismiss the risks of a country the size of Japan defaulting on its obligations.
Cardboard
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Zimbabwe and Weimar Germany got inflation and a lot of it. Did you like the end result? Food inflation is actually a perfect recipe for civil unrest.
What about the Chinese? Do you think they will just sit there while you are destroying their reserves? Do that and I can almost guarantee you that they will invade Taiwan.
No matter what is implemented by our governments, there is a certain amount of pain required to offset the party that people went to. It could be short and painful (30's) or long and not as painful (Japan). There is no magical solution with debt, it has to be repaid one way or another. It is either at the borrower/lender level or at the population level if the debt is absorbed by the government via whatever method. Then if you make suffer another country by not paying your debts the right way, you can expect some backlash.
I am also amazed that people still believe in the infinite power of our governments. The biggest interventions were in September 2008 with TARP, the saving of AIG and a few other manipulations. Interestingly, the stock market really started its plunge post September. At the end of September 2008 we were higher than today! It may sound like bullish, but it just shows how little these tricks did to improve the actual situation.
And they are still manipulating today. Maybe that some of you never watch the overall market, but any familiar observer can see on many, many days that the market opens lower on bad news and then by 10:30 am some mysterious force comes out and push the market ever higher until the end of the trading day. Daily reversals used to be extremely rare. Not anymore.
Capitalism and free markets can do wonders. They are volatile, but they are the only way to cleanse the system. It is also quite good at evaluating firms properly. The market right now is so illogical it makes me sick. This will end badly.
Cardboard
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I would say that Fairfax's current stocks exposure is actually lower than for average unleveraged investors fully invested in stocks.
Total stocks exposure at Fairfax is around $4.6 billion including stocks at holdco and the fair value of equity investments vs a common book value of $7.9 billion (excludes preferreds). They also have a lot of government bonds which would typically go up in value if stocks are thrown out.
So to hedge 93% of this already low exposure is quite a warning sign IMO. We should also remember that KFT and JNJ represent quite a proportion of the total or already defensive positions.
Hedges always have a cost (either you pay a premium or you lose with the short/swap), so they must be quite concerned about the possibility of a major correction and not just a small temporary dip to be spending money on that. It is never good for them to see their equity being reduced due to portfolio movement since it impacts their underwriting capacity and ratings, but again let's remember that they are only using a portion of that capacity at the moment.
Cardboard
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Myth,
We have been through the valley of death together with ATSG. I don't intend to pick on you, but look at some of your current holdings that you have discussed on the board: ATSG, KSP, SSW, SD. What happens to them if we have a recession or oil goes back to $30? They are all heavily levered companies and highly dependant on a strong economy. They are pretty agressive stocks and if things get nasty enough, it is not just temporary stock losses that may occur. They have assets, but what will they get for them in a major downturn if they need cash?
That is a reason why I am worried because the value is now in places where there is major risk. Low risk, high reward has mostly disappeared.
Cardboard
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Eric50,
Lululemon is one of my biggest shorts. Founder, CEO and CFO all selling shares. Disclosure of sales between Canada and U.S. is terrible and hidden for what purpose? Recent tax change indicate that growth in Canada is over. Many warnings in last conference call (relocations, showroom costs, increased product costs, lower margin on Fall merchandise, higher inventory write-downs). There are so many things that could be used as an excuse for a quarter miss, they are protected on every side from shareholders saying: you did not tell us.
Nonetheless, I think that they could still show growth for a while since they are adding more stores in the U.S. and there is quite a cult around it. But, they are not growing fast enough to justify the multiple and the merchandise is simply too expensive to get to the number of stores required (niche player). You don't expand in Australia when you have hardly scratched the surface in the U.S., something does not add up.
Cardboard
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Txlaw,
Based on what you are saying are you not worried that Intel could be entering a race to the bottom, a secular decline? Increased competition, change in technology, leading it eventually to make less and less profits and declining sales? IMO, buying McAfee won't be enough to stop such trend. Valuation for companies experiencing this is always low as you know.
History has shown that very few Dow Jones companies remain over time. I think that people should be very careful to place MSFT, CSCO, INTC, GOOG (not a Dow yet!) in the same category of "high quality" companies as JNJ, KO, PG and others. People have grown comfortable with them since they are so big, are everywhere and appear stable. They remain high tech companies with an industry that is rapidly changing.
Cardboard
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Once in a while, I look at "other" stocks to see if I am well calibrated with my analysis of my own companies regarding management, how to interpret numbers, etc. To prove that I am not making things up or being in denial or missing something else better in the market.
I think that you should all look at the results published tonight by Salesforce.com and tell me that this thing is worth a P/E of 90.0 times earnings (that is based on after hours closing and their suggested adjusted earnings). A $13 billion market cap. You will love your stocks once you have looked at this one.
Based on sales growth, earnings growth, cash flow, ROE, net cash and any possible metric that I can think of, I have no way to even get close to the multiple currently attached to the company. IMO, 40 times earnings would even look rich. Sales growth is not even impressive at 25%. They are forecasting Q2 to Q3 sales growth of only 4%. I must admit that marketing is a large expense, but if you slow this down what will happen to sales growth? Then to the P/E?
Beyond valuation, this stock could be manipulated at will. The way it works, this company can beat estimates forever by simply guiding a range and then adjusting its stock based compensation which is enormous relative to operating earnings to beat the number. Then if they see business slowing a bit, they could acquire a few competitors to ensure that sales keep up.
GAAP earnings are completely irrelevant in this story. Stock compensation don't matter according to management and to the analysts even if it reduces operating income by 47%. The amortization of purchased intangibles is also irrelevant (in the software business!). Even after all these massive adjustments, it trades at 90 times earnings.
Then when you turn to see what the insiders are up to, all you find is a massive number of shares being sold daily on automatic sale programs and options being exercised. The CEO Marc Benioff collects almost $1 million a day with these sales. He must hate Saturdays and Sundays since the market is closed!
Shorting would make sense IMO. Unfortunately, the game is rigged since it takes much more buying power to short Internet stocks than regular stocks. If they move against you, they kill you due to the multiplying effect. The puts are also very expensive. The great winners appear to be again the insiders who are liquidating and diluting shareholders until the music finally stops.
Cardboard
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When you guys are done playing with Google please read this from Fairfax 2007 annual report:
"Recently, we came across an interesting observation by the man who provided the intellectual underpinnings of “long term value investing” and to whom we are ever indebted. Ben Graham made the point that only 1 in 100 of the investors who were invested in the stockmarket in 1925 survived the crash of 1929 – 1932. If you didn’t see the risks in 1925 (very hard to do), it was very unlikely that you survived the crash! We think Ben’s observation may be relevant to what we have experienced in the past five years. We reminded you in our 2005 Annual Report that “Jeremy Grantham of Grantham Mayo said that of the 28 bubbles that they have studied in all asset categories (including
gold, silver, Japanese equities and 1929), this recent bubble in the U.S. stock market is the only one that has not completely reversed itself (just as it was about to in 2003, it turned and rebounded).”"
Then take a deep look at the actions that this same man has taken in Q2.
We have a bubble in Internet stocks, a bubble in treasuries and other yielding instruments (REIT's anyone?), a bubble in housing of most countries other than the U.S., countries deep in deficits and debt, a stock market that acts completely bizarre with HFT, an economy that has 500,000 new requests each week for unemployment.
I don't care how many people talk about it on the Internet or wherever, it remains that the reality is very fragile to any kind of shock. Very few are prepared or seem to accept the possibility.
This is not to say that JNJ is not a great bargain at this price. I think it is if you are looking for 10% returns. However, keep in mind that no brainers or very cheap stocks offering amazing rewards are now rare. Every time it is the case, something happens to change that.
Cardboard
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Here is one reason why you need to be very selective in this environment:
http://money.cnn.com/2010/08/19/technology/intel_mcafee/index.htm
Intel a hardware manufacturer is buying a software security company. On the surface, it looks bad. The management probably has interesting ideas on how it fits, but the stock is down over 2% on the news so I am not sure that the Street will buy the argument.
Intel has a large net cash position, so they can affort to buy McAfee. This cash earns next to nothing, so even if they buy McAfee for 19 times earnings, the return should still be better.
My view is that cash should be returned to shareholders unless management can find better ways to use it. This company is forecasted to grow earnings (EPS) by only 3% from 2010 to 2011. The dividend payout is only 31% and they have quite a bit of cash. They are also a near monopoly.
Unless McAfee provides something special to Intel that will really accelerate its organic sales, I think it is a waste of capital. Intel shareholders could have taken Intel's net cash and bought themselves shares of McAfee for 11.5 times earnings or a higher return than Intel will receive.
So many of these "high quality" mega caps that many talk about have a big issue: ego and incentives of their managers; can accomplish anything and best to expand the corporate empire. It is especially true today since many of these have grown rapidly in the recent past so they cannot accept the idea of being stuck with slower growth. To them a dividend or share buy-back is just like throwing a bone at the dog (shareholder) who is crying all the time. You increase it a little bit once in a while to keep the dog happy. Because of that, I believe that looking at earnings yield is inadequate since you don't know what rate of return will be made on retained earnings.
Things like JNJ are likely better on that standpoint, although we have seen a company like PG, when it was clicking on all cylinders, buying Gillette which has not helped its shareholders any yet. Buffett has been disappointed by Kraft. He also had to get involved to prevent Coke from making silly moves. A big margin of safety remains essential to protect yourself from stupidity no matter how large or how powerful is the corporation that you are looking at.
Cardboard
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http://news.yahoo.com/s/afp/20100817/ts_afp/irannuclearpoliticsisraelusmilitary
Unlike Bush, Obama is not a confrontational guy. At least, that is how he is perceived now. However, Israel has not changed and will take actions to defend itself against its enemies.
I am not saying who is right in this story if there is one, but I would suspect that looking at Israel's history that taking the offensive in this saga is certainly on their list of options.
Cardboard
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Vinod1,
Yes, you are correct I have made a mistake. I thought that the 3.6% being quoted was EPS growth, but after checking, it was net income growth. The number was actually 9.0%.
So if I add 9.0% EPS growth and a 2.4% dividend yield I get 11.4%. So if they can keep this up it looks like quite attractive.
My bad.
Cardboard
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"Wal-Mart Stores Inc. reported a 3.6 percent increase in second-quarter net income and raised its earnings guidance for the full year as it benefits from cost-cutting and robust global growth in China, Brazil and Mexico."
"Walmart U.S. comparable store sales for the second quarter 13-week period declined 1.8 percent. Sam’s Club posted a comparable club sales increase, without fuel, of 1.0 percent."
People will say that I only focus on the negatives these days, but I can't ignore this kind of data. Yes, Walmart did beat expectations by a penny (you tell people a tight range and beat that, what a joke!) and raised full year EPS by $0.05 and CNBC and analysts will be all happy. The reality is that things are getting worse in the U.S. economy.
The stock is trading at 12.5 times current earnings and 11.5 times next year. The dividend yield is 2.4%. If they can grow earnings at 10% a year for the foreseable future it is a bargain. What if it is only 3 or 4% as these numbers show? Graham once said that stocks with no growth should be worth around 8 times earnings.
Still, I agree that the logic is to buy WMT at 3.5% + 2.5% or roughly 6% total return and to sell treasuries at 2.58%. The problem is that this logic fits a static world. Things could change rapidly making this 6% apparent return not satisfactory at all. IMO, something like JNJ has a bigger moat, but they have their own issues.
What I think will need to happen with these high quality mega caps is for them to increase their dividend payout to 50% or more. WMT is at 30% now. It will become unacceptable for companies like MSFT to keep sitting on mountains of cash with little growth. Indicated yields will become more important and we may revert to the past where buying many DOW companies at 5 or 6% dividend yields is just normal no matter what treasuries are doing.
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Something that people should be quite careful of is after-tax corporate profits in relation to GDP. It is currently running at close to record levels or around 8%. Buffett discussed that in 1999 and that since 1951 it oscillated between 4 and 6.5%. He also mentioned:
"One thing keeping the percentage down will be competition, which is alive and well. In addition, there's a public-policy point: If corporate investors, in aggregate, are going to eat an ever-growing portion of the American economic pie, some other group will have to settle for a smaller portion. That would justifiably raise political problems--and in my view a major re slicing of the pie just isn't going to happen."
It simply won't be acceptable for Democrats or Republicans to keep having 10% unemployment, massive deficits and no GDP growth while corporate America and its CEO's are having a party. Fortune 500's are known to be job cutters. I would expect to see some taxation pressure from Washington going forward on large corporations. If not, it is the economy that will take this % down. A reversal to the mean should be expected.
I also don't think that people quite understand or grasp what means a slowdown now or a double dip. We hear the term often, but what does it really mean? IMO, it means unemployment reaching 14 to 15% or catastrophic levels. This would trigger massive changes in society.
Getting back to the big caps attraction, while it is true that Buffett has added a lot to JNJ in Q2, he also trimmed PG, KFT and COP. One could argue that all 3 companies being reduced are of the high quality type and cheap. Their dividend yields are all quite attractive relative to treasuries and well covered by the earnings. P&G has the highest P/E around 14, but it is hardly overvalued. The Burlington acquisition is done and there is already $25 billion in cash on the balance sheet. So why did he sell a portion of these names?
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New FBK
in Fairfax Financial
Posted
What is most discouraging is to look at the stock performance of Tembec vs Fibrek or another high cost producer. Then UFS, Mercer, Canfor Pulp. The outperformance for any vs Fibrek is simply massive.
Tax loss selling may help explain recent weeks movement, but not that they missed the boat since the April drop. All these stocks hit a big air pocket after April and all have rebounded higher or close to (CFX.UN) their April high except for our dog: FBK.
The issue IMO remains RBK. Until they fix this problem for good via lower cost/higher selling price/sale of this unit we are stuck with low earnings and low stock price targets by analysts.
Cardboard