BG2008

A couple years ago, many members of CoB were screwed over by Brookfield in the Teekay take private. During that period, I mentioned that I wanted to curate a list of bad actors in the public market. I really want to make this topic something that we can all use as reference in the future. Now that there is an active dialogue on DTLA preferred which once again involves Brookfield, it is time to bring up the topic. 1) Brookfield - If you want to own Brookfield, just own BAM. You can be a fanboy. I don't give 2 rat's ass. But this is fair warning to people that if you are find one of Brookfield's entities (non-Bam) trading at a cheap price, please understand that there is a good reason. The public market does not trust these guys. This is the financial #Me_TOO moment. TOO was the ticker for Teekay Offshore. The #Me_TOO is to remember that Brookfield screwed the Teekay Offshore shareholders. They took advantage of the fact that it is a limited partnership and that people did not have any appraisal rights. The take private was offered at a discount to the then publicly traded price. Here are the timelines https://bbu.brookfield.com/press-releases/2017/07-27-2017-035001869 Brookfield initially bought 60% of Teekay at $2.50 per unit plus warrants then https://privatecapitaljournal.com/brookfield-to-take-teekay-offshore-partners-private-in-us-430m-deal/ Brookfield offered to buy rest of Teekay for $1.05 per unit https://www.globenewswire.com/news-release/2020/01/23/1974173/0/en/Teekay-Offshore-Partners-Announces-Completion-of-Its-Acquisition-by-Brookfield-Changes-to-Board-of-Directors-and-Plan-to-Rebrand-as-Altera-Infrastructure.html After a really good fight from JDP Capital, Brookfield finally upped their offer at $1.55 per unit Yes, Brookfield is acting in best interest of BAM. I agree with that. But Brookfield mistreated the TOO shareholders. So this thread is to remind people that if you don't own BAM, EXPECT TO GET SCREWED. For more info, you can reference the Teekay Offshore Thread here at CoB 2) DTLA Preferred - Brookfield refuses to pay the preferred of a DTLA office acquisition that they did in the early 2010s. There is a thread on this. Again, Brookfield is doing what is right for BAM. But, this is warning to all that if you own anything that is Brookfield related that is not BAM, EXPECT to get screwed. This is a warning. I hope that #ME_TOO starts trending on twitter. 3) Bridgemarq Real Estate Services used to be called Brookfield Real Estate Services - They changed the terms of the agreement a couple years ago. I need to dig out the details. But BAM basically gets more fixed rate fees. Bridgemarq basically exist for BAM to extract fees. There is a reason why it trades at a high single digit low teens payout yield despite being a very good royalty business for Canada's real estate brokers. These things should trade for 4-5% yield. But people understand that it exists to create wealth for BAM and hence it trades at such a high yield because you never know when BAM will screw you. I request that people don't clog this thread by defend BAM and Brookfield for doing what's right for BAM. I agree with that. Yes, they are maximizing value for BAM. But there is a side that got screwed and that is the side that I am highlighting. You may say BG2008, you were too obtuse and you should have known that Brookfield is a bad player and it is your fault that you got screwed by Brookfield. Again, don't clog this thread with this. My goal is to source all of our knowledges and create a robust list of bad actors. 4) JW Mays - The CEO doesn't want to do jack. The real estate is worth a lot but he won't pay a dividend, won't put any debt on the company, and don't give a rat's ass about minority shareholders. I hope others can fill in this list and we can all search this database. There is a glimmer of hope that this list becomes well known.

I posted this in response to a question in the Canadian real estate thread about 6 weeks ago. Since that time, I have collected 100% of my May rents on time and in full. The Canadian government is basically floating my tenants, I think. Also since then, over 30% of my tenants have given notice they are moving out due to relationship breakdowns. That is insanely high, even with the same small sample size warning as above. I think it is very likely forced isolation has been pretty hard on relationships everywhere, and my tenants probably have less secure lives/relationships/jobs etc on average which has probably made the whole situation more stressful. Bizaro, I may have missed it, but how many units is your building? Trying to gauge the extent of the small sample size.

Clutch, I did wind up buying some and will likely not sell for a really long time. Thanks for the feedback on this thread. After this year's selloff, I used the opportunity to diversify a bit beyond my RE names and bought a bit of tech and other companies that have multi-bagger opportunities.

Since there has been a lot of discussion of the work from home movement. I want to present a real world experiment of whether people will actually transact on arbitraging on cheaper locations. For those that live in Queens, Brooklyn, or Manhattan, and can now work from home on a permanent basis, I have a spare bedroom in a beach house (in the Rockaway which is just south of JFK) that will free up in the next 4 months. Could be earlier, but will likely be 4 months. It is a 3 bedroom 2 bath duplex with washer/dryer, small back yard for BBQ, garage, and parking passes in a well manicured community. We are the 3rd house from the beach. People surf year around here. The subway is a 3 minute walk and a 55 minute ride to lower Manhattan and about 40-45 mins to Downtown Brooklyn. So the Duplex is about 1,500-1,600 sqft on the ground and second floor. For those of us that have lived in shoe boxes in NYC, this is a very different change. Here is the real shocker, I am asking $950 for the bedroom. Shares like these are at least $1,500 elsewhere in NYC and likely over $2,000 in Manhattan. Are there takers? Are people curious? Yes, this is a shameless plug as I would like to have 1 roommate to share to help with the mortgage. I will mostly use the beach house as an office. Who doesn't want to run their fund from a beach house? I am also open minded to people who maybe interested in some sort of a value investing share at the beach house. So you can live in a cramped shoebox in Manhattan, LIC, Astoria, Carroll Garden, or you can be on the beach for $1,000 for a real bedroom in a 3 bed/2 bed duplex with its own washer dryer and permitted parking. Pre-Covid, I was already betting on a long term WFH trend. I thought that software coders, freelance web design, HF managers, etc will increasingly want to live on the beach. It used to be a pain to get into the city. But if you only need to be in the city for 1-2 days a week, this seems like a great option. Thoughts, feedbacks, appreciated.

Why do Costco, Best Buy, TJ Maxx, Ross Stores, Burlington, Five Below and other thrive while Macy's, JCP, Bed Bath and Beyond, J Crew, Abercrombie, etc are failing? Search cost? Not offering something compelling? Theories? Anyone? Anyone?

Pupil, Sad to see you leave, but happy to anoint myself the de facto Cob real estate guy. Like you said, I am a self important guy as well! Thank you so much for all these awesome RE posts recently. Great hunting ground for new ideas.

Any new updates on this?

When I used to deliver Chinese food for my family restaurant, I never would've thought that you can "corner the delivery" business. This new economy is so exciting that it is turning the average American into pizza delivery guy and taxi drivers while Softbank rains dollar bills at the unicorns like a degenerate strip club goer. It is a very bizarre world that we live in where you can convince people to scale up a very unprofitable job and convince VC that it has a huge TAM and they can afford to lose billions every year. If we invert this, maybe we can buy companies with network effects already that are growing at 2% a year and trading at 6-7x P/FCF. Instead of believing in the hype, just buy the finish product at a reasonable multiple. I introduce to you Univar - A levered chemical distribution company that buys in bulk and sells by the gallon. I don't think Amazon or other competitors are looking to sell corrosive chemicals anytime soon. You need licenses, trucks, and lots of warehouses. It has counter cyclical cashflow generation. I think it is a much better business than distributing steel/aluminum or building materials such as lumber. Route density is a real moat. Look at UPS and FedEx. The more packages/orders that you can deliver in a route, the lower the unit cost. Sometimes, investing boils down to a couple key takeaways.

I guess I know a little bit about real estate, plastic packaging, chemicals, and know enough to not invest in malls

I'm gonna disagree with all three: IBKR - they are nickel-and-diming their customers like there's no tomorrow. Pay for quotes, pay trade commissions, pay if you don't have enough trades per month. Some of these may have been removed, but because of competition and not because IBKR are good guys. So zero loyalty to IBKR, screw them. DIS - I think the park prices are ridiculous. High-speed internet - most countries have much cheaper high-speed internet than US. US monopoly pricing sucks. IBKR is much better for smaller HFs than consumers. Now that the competitors offer free trade, it is much easier to trade through TD Ameritrade.

Cherzeca, When you are a family of 6-7, husband, wife, 2 kids, parents in-law who helps out with the childcare and a brother in law who lives at home, you wind up going through a lot of everything. TP, wipes, paper towels, steak, berries, fruits, veggies, etc. It is not just the savings by buying bulk. It is also that fact that Costco berries and fruits are much nicer than any of the competition. They do so much volume that the berries go directly from the farm to the store (at least the freshness feels that way). We divide our grocery trips into restaurant depot and Costco. The savings add up. Buying 6 dental floss and 3 packs of toothpastes adds up over time. Costco also naturally caters to a more affluent customer base. It never occur to me when I was younger that being able to buy $300 at a time is an indication of a more affluent customer base. But it clearly is. If you buy the non-perishables, it really adds up to savings. Okay, maybe not the 1/2 gallon mayo. There are some items that you should buy at Trader Joes. If you are a bachelor or a couple in a small NYC apartment, yes, you're better off at Trader Joes. If you have kids and they go through 3-5 half gallons of milk a week. The eggs, bacon, fruits, milk, all adds up. Also, they control their supply chain, so if you have infants and need formula. You go to Costco to buy it because you know it won't be fake. My family literally have relatives in China who will ask us to bring them $1,000 worth of formula, razor blades, and coffee when we travel to China. Now that I am not a bachelor, yeah, even the 8 pack Puma socks, V Neck Calvin Kleins T-Shirts, Jeans ($30), and fleeces, and seasonal gloves and jackets, are all great value. They operate on 10% gross margin. Sometimes, my wife and I will be like "we just spent $500" stocking up on stuff. But everytime we go to CVS or a convenient store, we are reminded of how much cheaper Costco is. We generally get 2x the product for the same price elsewhere.

Quitting a stable job at the start of a global recession/depression does help one post a lot You all have me for 4 more weeks...then my days belong to my new employer! I’m going out with a bang, so many worthless buildings to buy before then! Thepupil, Can you update us on what you are doing job wise? I remember you mentioning it in a few of your posts. I hope you'll be able to post as freely in 4 more weeks. Would hate to lose your awesome high octane posts!! Just want to add that Pupil's post along exhibits power law dynamics that makes this forum much more valuable since Covid.

Okay, I think perhaps I should have titled this as "Businesses That Choose To Completely Monetize" Perhaps this is me getting older and increasingly appreciate Costco and Visa/Mastercard. It's appreciating that you don't have to extract every last cent. Recently, my wife and I have had a lot of restaurant and construction employees who can't pay rent. We choose to work with them and decided that life is too short to be a-holes. The point of the thread is to identify companies that have monetized every last cent. My theory is that the companies that somehow manage to charge a 10% gross margin and pay their employees a livable wage, i.e. Costco, can thrive for a very long time. Invert this and the companies that makes one of their constituent, customer, supplier, etc unsustainable in the long run will likely face structural issues. I think QSR franchisors are great restaurants. But the franchisees are really suffering. At some point, this will come to bite the franchisors in the butt.

By "leech" I assume you mean a business that provides far less value to its customers than it charges. Unless there is some regulatory capture or market failure, how does a business like that last? In other words, why would customers keep using it. For example, if Seamless is truly a leech, why are restaurants doing business with it? My contribution: ESPN, AMC Networks, Viacom, MSGN, etc. They were exploiting a legacy distribution system and are now losing customers hand over fist and the barriers to distribution fall. I think industry structure acts as the enabler of Seamless' leech status. At one point, Seamless was a niche provider of a "seamless" way to order meals for I Banking analysts working really late hours in the office. Since time is money, the few restaurants that are on Seamless' platform that got the orders truly got access to a new source of revenue versus those that are not on the platform. As time goes on and Seamless went more main stream, they held onto the 20-30%. Now every John and Jane orders from Seamless. That's why if you go to restaurants, they will ask you to call direct or order direct from their websites. This is probably the best sign that a company is acting like a leech. To get back, there are lots of restaurants and they are afraid to lose sales to another restaurant. So they bid up prices to get the order flow. This is usually 20-30% of the actual order. Being from the food industry, this is likely fine if this was an "one time" CAC to acquire a new recurring customer. But restaurant diners are generally promiscuous and tend to try different restaurants. Hence, they don't stay loyal customers. So the restaurants have to constantly pay up to get that order flow. Most customers probably aren't aware of the take of Seamless and feels that the transaction is Seamless. The TAM could be so much larger if Seamless decided to take 3-5% of a transaction which is much more sustainable for a restaurant. Unlike e-commerce such as Amazon where Amazon is providing the warehousing, i.e. rent and logistics, restaurants still have to pay rent which is 10% or higher, the 20-30% take rate on a gross margin that is 40-60% really cuts into the profits before adding cooks and other overhead. It is simply unsustainable. But the leeches keep leeching because restaurants are low barrier to entry but high barrier to exit business much like small hedge funds. There are lots of passionate hedge funds managers (one man shops), but the barrier to exit is very high. I don't use Seamless (not in my area?), I use Grubhub. I can see that restaurants would think them as a leech. IMO the restaurants are mostly forced into this no-win situation that they do lose orders if they are not on a platform. Yeah, some outstanding restaurants can leave the platform and get the same orders through their phones or websites. But for most restaurants I will just order from their competitor that is on the platform. So I'd stay with platform rather than staying with the restaurant. (And I would pretty much never call a restaurant if they are not on a platform and they don't have website - calling just sucks.) Yeah, it sucks for the restaurant, but that's how it is. What is it about the platform that causes you to continue to use it? Convenience. I have past orders that I can reuse - which I do. I have my account, CCs, etc. I know the UI, I know the UI works. I know that ordering works. And TBH restaurants mostly don't leave, so I know what I can order and from which restaurants. If restaurants left en-masse, I'd be forced to switch. But if just one-two restaurants leave, then I choose platform. Seamless is very convenient for customers hence the Seamless name. But it chooses to "over monetize" the restaurants IMHO

By "leech" I assume you mean a business that provides far less value to its customers than it charges. Unless there is some regulatory capture or market failure, how does a business like that last? In other words, why would customers keep using it. For example, if Seamless is truly a leech, why are restaurants doing business with it? My contribution: ESPN, AMC Networks, Viacom, MSGN, etc. They were exploiting a legacy distribution system and are now losing customers hand over fist and the barriers to distribution fall. I think industry structure acts as the enabler of Seamless' leech status. At one point, Seamless was a niche provider of a "seamless" way to order meals for I Banking analysts working really late hours in the office. Since time is money, the few restaurants that are on Seamless' platform that got the orders truly got access to a new source of revenue versus those that are not on the platform. As time goes on and Seamless went more main stream, they held onto the 20-30%. Now every John and Jane orders from Seamless. That's why if you go to restaurants, they will ask you to call direct or order direct from their websites. This is probably the best sign that a company is acting like a leech. To get back, there are lots of restaurants and they are afraid to lose sales to another restaurant. So they bid up prices to get the order flow. This is usually 20-30% of the actual order. Being from the food industry, this is likely fine if this was an "one time" CAC to acquire a new recurring customer. But restaurant diners are generally promiscuous and tend to try different restaurants. Hence, they don't stay loyal customers. So the restaurants have to constantly pay up to get that order flow. Most customers probably aren't aware of the take of Seamless and feels that the transaction is Seamless. The TAM could be so much larger if Seamless decided to take 3-5% of a transaction which is much more sustainable for a restaurant. Unlike e-commerce such as Amazon where Amazon is providing the warehousing, i.e. rent and logistics, restaurants still have to pay rent which is 10% or higher, the 20-30% take rate on a gross margin that is 40-60% really cuts into the profits before adding cooks and other overhead. It is simply unsustainable. But the leeches keep leeching because restaurants are low barrier to entry but high barrier to exit business much like small hedge funds. There are lots of passionate hedge funds managers (one man shops), but the barrier to exit is very high.

I generally view Visa and Mastercard and Costco as companies that generate a tremendous amount of value add for their customers. If we invert this, there are companies that act like leeches. One example is Seamless. Trust me, restaurants can't afford to give away 20-30% of their revenue to Seamless for something that is supposed to be recurring. I feel that Seamless is particularly a leech. What are others?

I was looking for shorter man's shorts a couple years ago. I do squats and my quads are the only things that naturally look good on me. Plus, it's not "gay" to wear 7 inch inseams anymore. The 90s were awful. Anyway, Instagram's algorithms figured this out and was showing me quite a bit of Chubbies and Birdog's shorts. I was genuinely entertained in a fun way. I winded up buying some bear bottoms for 1/2 price. I guess what I am saying is that the algorithms work. Alternatively, I have become a lot more well verses on various Michelin star restaurants that I had no idea about in the past. I am not eating there yet, but do wish to one day with my wife. So these restaurants are playing the long game. Lately, I've been targeted restaurant ads from California etc. I feel bad because those restaurants pay for those ads, but I am not flying to Cali for a neighborhood restaurant.

Quitting a stable job at the start of a global recession/depression does help one post a lot You all have me for 4 more weeks...then my days belong to my new employer! I’m going out with a bang, so many worthless buildings to buy before then! Thepupil, Can you update us on what you are doing job wise? I remember you mentioning it in a few of your posts. I hope you'll be able to post as freely in 4 more weeks. Would hate to lose your awesome high octane posts!!

Which high yield bond ETF went up 100x? I'm curious

You are forgetting about all the jobs created by technology such as Official Twitter Troll Career Instagram Models with sub 10k followers Aspiring Michelin star food critics Carole Baskins Tik Tok Creators

Thank you for this update

Recently, meat packaging plants have been in the news for Covid 19 related shutdowns due to their working conditions and densely packed setups. What other industries have very densely packed working conditions? Obviously, the general office buildings in CBDs and hence most of them have instituted work from home strategies. Frankly, I have been a bit surprised that most factories are actually humming. Most of the chemical operations have not been forced to shut down. On the front of construction, working outdoors on a civil project is likely fine. But working on a project in NYC doing interior installation is likely difficult as they tend to be tightly crammed. Are there industries or business that are more or less dense than people may perceive them to be?

I once wrestled a guy who look like he was cut from granite. For some reason, I wrestled like I was in the matrix that day. I was seeing his moves before he took them and I I felt like I was side stepping bullets. I took him down and turned him to his back a few times. Before he knew what hit him, he was down 13 points and 2 points from a "tech fall." He came to life and started wrestling competitively. I stalled like hell to preserve that victory and almost got points taken off for stalling. The guy pulled his fist back and all my teammates swore that he was about to punch me because he was so frustrated. Instead, he threw his head gear away and walked off the mat before the match was over. My teammates can still recount that match (20 years later). Yes, I am living in my glory days. The moral of the story is that if you had a career like Buffet and you are 89 years old. I think you have earned the right to "stall" and preserve an incredible legacy. Why mess up and wind up getting thrown to your back and get pinned in the last 10 seconds? I did say the guy look like he was cut from granite. Maybe this Coronavirus is just as scary as that dude that I wrestled. I think to expect Buffet to behave like a 40, 50, 60, or even 78 years old version of himself is asking too much of him. Heck, I can't stay up till 3AM and crank through models like I used to anymore.

Jurgis is not The Terminator and actually has weaknesses. Quick, put him in that vat of molten metal. Actually, I mean put him on a plane.

How aggressive are they buying back shares?