Cardboard

I guess it is 10:00 MT. I may buy some. Why do I have a feeling that Powell will screw up again? Well, at least disappoint. Cardboard

"Cash. Following the sale of 20% of my S&P 500 puts. Waiting for 30+ VIX to sell more." Did you make money with your puts? If so, which ones and at what price did you buy them (SPY level?). It is pretty tempting this morning to buy puts with the VIX way down, S&P up almost 1% and a huge down gap on the chart from yesterday which could be hard to fill, at least in the short term. The SPY was at $277-278 last evening until the Chinese decided to fix their currency a little higher. Then we have Kudlow saying that Trump is flexible on tarrif this morning. Of course, it would only take a little round of golf between the two to make the market reverse way higher but, there seems to be too many issues now, economic weakness and too little value for the SPY to clearly break to a new high. Historically, I have found that cash is the best hedge (if you are worried, it will be there and not budge) while I have had very mixed results with puts. So very curious as to how you do it? Cardboard

Listening to some people here and this article, you can easily come to the wrong conclusion that money made by corporation or corporate treasury used for buybacks suddenly died: a black hole sucking all dollars out of the economy. Indeed, someone sold this stock to the corporation and received cold hard cash for it. Where does it go in society after? It could be to fund a kid's education, develop a small business, build a new house and even to pay taxes... Money does not die and you can't take it with you, it goes around. And as explained by ThePupil, comparing an average of an average is dumb. So please don't fall for the trap that some of the politicians have set up regarding how evil this activity is. Cardboard

LMAO!

Dalio says to buy gold: https://www.cnbc.com/2019/07/17/ray-dalio-says-gold-will-be-a-top-investment-during-upcoming-paradigm-shift-for-global-markets.html Eventually it seems that hard assets become the place to be to protect one from devaluation, default and what you are mentioning RuleNumberOne. And on top of that, these areas have been abandonned for many years with little capital investment. Certainly the case for the entire commodity complex. Cardboard

Just thoughts or prophecy from SaintPeeter on Stockhouse: "War is a great means to purge bad blood. It is inevitable as all of human history has shown. We are afraid of war because we are having such a good life living off of future generations tax. But that could change. Many intelligent historians would say we are just about due for a global conflagration. Certain powers are rising and feel that they can challenge Uncle Sam. Cultural strife and social division are making America look vulnerable. I believe the American Empire will last for quite a while still but that doesn;t mean that other parts of the world won't try to cause havoc. When large scale war occurs, society will revert to survival mode and the essential parts of society need to be preserved. Food, energy, heavy machinery, banking, medical. Facebook and Amazon only do well in a world of abundance and gluttony. Their time of reckoning is near." Cardboard

Bank stocks will soon yield more than the debt of developing countries like Mexico and Brazil https://www.cnbc.com/2019/06/26/bank-stocks-will-soon-yield-more-than-the-debt-of-mexico-and-brazil.html Not a revelation to most here on valuation but, a different perspective to compare them to other instruments. They still seem to suffer from really bad memories from 08/09, aftermath and fear of a repeat. Cardboard

LOL! Then you never end praising Buffett for saying that Berkshire will keep beating the S&P. ::) Seriously, any worthwhile organization needs to set targets. It is an essential part of good management. In this case they badly missed so either the target is wrong and/or the execution. Cardboard

Can't be happier. Destroy the little arrogant POS! Finish it tonight! Cardboard

Point you are missing is that we are living in a world filled with debt. It only takes a small contraction to wreck havok. Cardboard

"Important but unknowable, but it seems plenty of other countries have cheap labor and don't force technology transfers." Well, I am certain that their engineers/workers will learn/copy processes on how to improve their operations and designs. I have seen that from the Chinese in the early 2000's on really basic stuff but, yes there is not that coercive factor and they don't have an army of spies and conducting cyberwarfare. True problem is the communist regime. Think about it, if Huawei was based in South Korea or Japan would we have such opposition? They are both competitors but, we are not afraid of their governments and behavior. We have no problem with Nokia which is based in Finland. I am certain that if China was democratic that most of these issues would go away. However, you can't trust a country or regime right now that wants to invade Taiwan (renegade province as they call it but, truly refugees from civil war), talks about a 5,000 year long march while they have killed 15 to 45 millions in the process of their own citizens by being starved to death or assassinated in death camps, supporting North Korea and their nuclearization, invading oceans, etc. I can only hope that young Chinese will wake-up and get rid of these old dictators. It was prevented following Tienanmen Square masacre but, maybe that today could be different.

The more I look at this, the more I think it simply means that the trend to manufacture in China for export is relocating to cheaper countries faster than otherwise. Doesn't mean it will be smooth sailing and I think that China will have to change its model to a consuming country vs mostly exporting or another accelerating trend. I also think it may mean regime change. I can't see the young Chinese people accepting this vision mentioned this week or: "That it will be a long journey, we have been there for 5,000 years, blah blah blah". This really sounds like a communist regime wanting to keep people toiling, retain its power vs changing for the better. Countries like Vietnam and India must be salivating at the opportunity and this has been going on for some time as costs in China have been trending up for over 10 years now. Reminds me of an old investment or Gildan Activewear. Bought this back in early 2000's after one of their shipments had been found containing marijuana. Stock came down as a result. What was interesting is that these guys used a loophole to create their entire business or lower tarrifs for imported clothes into the U.S. from Caribbeans and Central America than Asia or mostly China. Then they developed brand new, state of the art plants in these countries. They basically ended up eating everyone's lunch in printed t-shirts including Fruit of the Loom. Then they expanded in socks and more. Anyway what do you guys think? Cardboard

Thanks I appreciate it!

I am surprised I didn't see this mentioned in a long while. It is apparently one of Buffett's favorite economic activity indicator and was quoted often here (to debunk their theory) when ECRI was predicting the end of the world in 2010 or 2011 (can't recall exactly). It is down so far this year: https://www.aar.org/news/aar-reports-weekly-rail-traffic-for-the-week-ending-may-18-2019/ Any thoughts? Is the big one coming? Cardboard

Price of gold is down, all precious metals stocks are down. Cardboard

You were in diapers back then. LOL! Brolgaboy was Sanjeev's enemy on Stockhouse and partially why he created this site. Rumour is that it was John Hempton. Maybe it was proven, I don't know. He was a poster shorting Fairfax in 2002-2003 and thought it was a zero. Kept arguing with many of us here and smartest counter-puncher by far was BSilly. He did dig pretty deep into Fairfax even finding far flung subsidiaries that none (if few) of us knew about such as in Mauritius and other places. Like every good shorter, he was able to pull facts from the company, some obscure, then turn every one of them as negative. Interestingly, Fairfax had to disclose much more about all of these including the really large Swiss Re reinsurance contract and it made me reconsider my understanding of the company, honesty, etc. Problem is that he missed the big picture or mainly how large Fairfax treasury gains turned out to be in that period and that pretty much saved the company. Then they issued a bunch of stock at a discount to "friends" such as Long Leaf over a few years to patch pretty large holes that came as under-reserving from Crum & Forster acquisition, TIG, etc. The latter is what killed the long thesis. We were right on the initial rebound or that the company would not go bankrupt. However, the negative surprises that kept occuring year after year followed by dilution prevented any real gain until they made that huge profit with CDS in 2008-2009. Cardboard

T-MEG

"When I was reading news about the Occidental deal, I thought to myself - this seems a little unlike Buffet. " What is so unlike? He made a deal for a $10 billion preferred at 8%. He has done that many times prior. Cardboard

Almost every time I have heard or read these words in investing, it was a pretty solid signal to stay away. At best, dead money for a while and we only have one life to live. "...told shareholders to be patient and ignore the short-term stock market fluctuations and focus on the long-term performance." https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aFFH-2743339&symbol=FFH&region=C Nothing wrong with planning for the long term but, you have to deliver also in the short term. People need to be held accountable to both short and long term deliverables. If not, it is just an excuse that can be repeated ad infinitum. Cardboard

There are no miracles: https://www.bloomberg.com/news/articles/2019-04-02/saudi-aramco-reveals-sharp-output-drop-at-super-giant-oil-field It was supposed to pump 5 million barrels/day and now it is down to 3.8 million. So a bunch of lies were provided by the Saudis for many years to shut-up critics. Therefore, their spare capacity is a bunch of baloney and can only come on for a short period of time when you stress their reservoirs and probably hurting their long term productivity. These are all old oil fields and have been sustained by constantly using best EUR techniques. Eventually you reach a peak and production comes down, it is unavoidable. Cardboard

"I took a pretty good short position this AM." By the way, which broker got you a large number of shares to short of an illiquid stock, trading below $2 hence not marginable and usually unavailable for retail accounts? Cardboard

Failed to mention that what is left in "debt" or preferreds B and D is $130 million of financing/capital with no repayment schedule, ever, costing around 5.7% or $7.4 million/year. All they have to do is to pay that amount each year and they can keep that for as long as they want. It is not bad at all financing terms. No covenant, no bank review, etc. And if they ever have a decent amount of excess cash I am about certain that they could still buy back a fair amount of these on the open market at a good discount to par based on how others are trading on the market with better credit rating. Cardboard

I think that you guys are way too pessimistic. The share count goes from 63 million to around 105 million with this conversion. It is significant but, it is far from debentures forced conversion or a restructuring a la Bellatrix today. Balance sheet will see an $82 million reduction in preferred debt and dividend cost goes down by $6.2 million/year. So $130 million is then left in pref B and D or only recourse debt. So 38% of debt is gone without spending a dime of cash. Instead they used stock trading at $1.35 to redeem debt with stock valued at $2. On the call they said that Parq should hopefully be restructured by the end of April with same group who loaned $20 million in September. Also working on 3 sales: 360, CSE and Blue Goose. Apparently that land value at Blue Goose is less than it was but, it did not collapse by half. It was estimated at $100 million prior. Per my notes, cash at holdco on Sept 30 was $26.3 million and public holdings worth $152.3 million. At Dec 31, and prior to completion of sale of Union Group for $14.5 million, cash at holdco was $38 million and public holdings worth $166 million. Since then DPM has gone up around 24%. That is another $31 million. So liquidity is going up, not down. And with this conversion, there is no longer any forced sale which should help DPM being valued properly and their other negotiations. The risk that I don't like is this CRA thing. So no, I don't think it is a good short from now on as you are exposing yourself to potentially very positive news on Delonex which would be significant, the balance sheet got better and liquidity is also getting better. If they had choosen instead to try to repay this preferred in full, then financial risk would have been much higher. I can see the argument about stock market mechanics or preferred holders unloading at any cost but, again people don't throw money away if they see that a return of capital is possible with a little more patience. I also doubt very much that most of these "E" were held by funds mandated to invest in preferreds. These would have been considered too risky by most of these funds. The fact that you did not see a full exercise of that partial redemption for $25 in cash in Q1 2018 is also an indication of poor sophistication. I still think that it is a pretty dumb move as I strongly believe that an extension of at least 60% of the preferred E should have been feasible. So the upside and gap to to value in the stock has certainly decreased but, so is the risk. Cardboard

I would buy more if I was not afraid of a disaster in Chad. Amazing that we have not heard anything yet. Meanwhile DPM continues to outperform and I am glad to own some instead of just this dog. Cardboard

Some puts on AAPL. Really underwhelming announcements vs market reaction last week. Cardboard