BG2008

Yes, the SALT deduction changes definitely impacts RE values in high tax states - NY, NJ, CT and MA. NY probably the worst. LOL. That's likely a reason a friend lost a bid on a house against 5 cash offers two weeks ago. Not. My cousin is not backing away from 900k house in SF Bay Area suburbs. It will be her primary residence. She is not worry about a downturn and said she will buy more as investments if she see "deals." I feel Bay Area housing pain. Last year I was going from SFO to Bay Area and I'm like "there's so much empty space everywhere, why nobody's building". But, yeah, I know, reasons. I did not go to work in Silly Valley for RE price reasons close to 20 years ago. Yeah, I know looks stupid now. Coulda bought a house below 500K in Palo Alto haha. A friend has $2-3M house in Los Altos. I'm telling him just sell and retire to some nice place and sip margaritas. Nah. It's OK, everyone makes their choices. 8) Jurgis, Us bi-coastal elites have standards :) arts, restaurants, and class and a rat race to get your kids into Harvard and Yale

Kelcy Warren is known for screwing minority and you should read the preferred documents very closely. If he can get away with it, he will.

I think 80/20, 80% fortress balance sheet and 20% leveraged stuff that would be multi-baggers

I think one of the easiest places to look for value today is simply locate companies with lots of liquidity and cash on balance sheet and with very little operating leverage. This means restaurants, cruise ships, airlines etc are out. Laaco - Only $44mm of net debt, generates almost $30mm of cash from operations a year. Gross asset value of about $700mm for self storage and Downtown LA Athletic club and parking garage. Almost everyone pays electronically for their storage units. During times like this, it is comforting to know that they will keep spitting out cash and won't go under. So 8% Loan to Value. Excelsior Capital - Net net that sells mission critical coal mining electrical couplers. Used to prevent explosion in coal mines, high liability to switching suppliers. $47mm of current assets, $12mm of cash, vs total liabilities of $11.1mm. Implied liquidation value is $35.9mm vs $31mm of market cap. Earns about $5mm a year give or take $1mm either direction. Pays out $0.05 a year on a $1.11 stock Berkshire Hathaway - We all know about $100 bn of cash on the BS Equity Common Wealth - Sam Zell's Cash Box for Office REIT acquisition Google - $109bn of cash and mints money Apple - $200bn of cash and markettable securities FB - $54bn of cash and marketable securities Love to hear more from others

I just want to point out that Tom Barrack is a terrible investor who supposedly made 0% returns in his career. So I would calibrate what he says a bit.

Ferrari at 40x P/FCF and Kinsale Capital (Insurance company at 6x BV) Not my original idea, but it just looks pricey. Ferrari factory is also shut down for at least 2 weeks.

This changed as of this morning: https://mf.freddiemac.com/COVID-19/ https://www.fanniemae.com/portal/media/corporate-news/2020/renters-covid-19-multifamily-7002.html Basically, multifamily owners will be allowed to defer mortgage payments if they agree to pause evictions due to non-payment of rent. My day job is to own/operate multifamily investments, so I pay a lot of attention to this :-) Only about 50% of all multi-family mortgages are Fannie/Freddie insured. This a big help for the other half, but the way I see it, almost all tenants will choose to not pay rent, even if they can. It will just be too easy to say they were negatively affected by the virus: "I have to help my parents/sister" etc. I see the word spreading on social media that you can just skip rent for a while. there is no incentive for anyone to keep paying. You can't kick them out and it won't affect their credit rating. So you have multi-family managers that get minimal rents coming in, but still have to maintain the building, pay for utilities (if they are not individually billed to renters directly from the utility) If you can defer mortgage payments, you will still be cash squeezed because of costs, and if you can't defer, then you are at the mercy of the lender. I can see the pressure on landlords to limit evictions continuing for months, not weeks. Even once people are allowed to go look for work, many of them will not find one right away. What are you seeing in your business? This thread highlights for me why the UK took the right approach with fiscal stimulus. Cover 80% of the salary of those that are unable to work as long as they remain on the company's payroll. This enables the rest of the financial system to continue working in a relatively normal fashion (e.g. people can continue to pay rent and utilities, landlords can continue to make mortgage payments, and so on). I fear that with the US approach to fiscal stimulus, we have created incentives for tenants to not pay their rent, as noted very well in the preceding comment. If this actually happens on a large-scale, there will be significant knock-on effects through the rest of the economy. For example, if you aren't paying rent, and the landlord can't evict you, does that mean you are still entitled to have things repaired in your apartment when they break? I would think not - if the tenant is not paying, why should the landlord pay for the cost of the repair? Hahahaha, I guess depends on where you are. If you live in the state of New York, you bet that the landlord will be repairing broken stuff. There was a NYT article on a guy facing eviction from a development in the Bronx. They really portrayed him as a victim. The guy lived in a rent regulated apartment for 40-50 years and the developers wanted him out. The video really portrayed gentrification as bad and the developers greedy. Turns out the developer went broken and the guy got $1-2mm to vacate his space. So he paid below market rent his whole life and got paid $1-2mm to move out. Talk about winning the lottery!!

Btw, I am not saying that my relatives can't pay their mortgages if their tenants skip rent for a month. They have quite a bit of liquidity. Their simple and naive way of buying NYC residential rentals will make 95% of public market investors look like chumps with regards to their 10-20 year track records.

I have mentioned a few times that my family and I own 2-4 unit NYC residential rental buildings. In the last week, my relatives have been getting quite a few request from otherwise great tenants asking for rent deferral. Their reasoning is very sound as they cannot go to work on the construction sites and restaurants etc. Obviously, this impacts my relatives' ability to service their mortgage. I think most of them are set up where if 50% of their tenant pays, they can pay that mortgage. Governor Cuomo also signed an executive order forbidding foreclosures. But I heard that the wait is literally 3 hours to get someone on the phone and the banks have no clue on how to handle this as they are slammed with request from homeowners for mortgage deferral. I doubt the banks want to become equity owners in most homes and part of the stimulus bill is supposed to handle this. This is likely very obvious, but I hope this anecdote provides a bit of insight into the seriousness of the situation.

Does anyone have more detail on this news? The Governor also announced the Department of Financial Services has issued a new directive to New York State mortgage servicers to provide 90-day mortgage relief to mortgage borrowers impacted by the novel coronavirus. The directive includes: Waiving mortgage payments based on financial hardship; No negative reporting to credit bureaus; Grace period for loan modification; No late payment fees or online payment fees; and Postponing or suspending foreclosures. Do we call the banks directly? The Corona Virus has been a very different event than 2008/2009 GFC in that many hard working blue collar employees/renters kept working through it. If you took the time to lease your rentals to good people, you winded up with 99% occupancy during this time. I have been hearing from many of my relatives, who own 2-4 family residential buildings, that they are getting requests from tenants to postpone rent which affects their ability to pay their mortgage. Traditionally, these are some of the most reliable tenants and the workforce housing is the cheapest in the NYC area. If anyone has any details on the 90 day mortgage relief, it will be very helpful for us and all others have a mortgage in NY State. This time around, the white collar folks/office workers have had more time to adjust as there is typically contingency plans in place to work from home.

They also have more experience with these issue and a greater expectation to continue to be ground zero for outbreaks so that likely makes a difference. From my anecdotes, you just can't stop 16-28 year old Americans from trying to get laid.

The winners from the last few years are high quality compounder that grew EPS over time. FANGs are a different animal as the growth rate is in excess of 15-20%. What is the appropriate multiple for a high quality business like a Sherwin Williams, Ferrari, Heico, etc? It seems that these growth compounders do really well if they continue to grow their cash EPS and buy back shares. For the first time in a long time, investors have to take a hard look at the denominator and use math that involves declining EPS (even if temporary). So what is the appropriate multiple for a high quality company then? For those people looking for potential short candidates, Ferrari is still trading at 32x 2020 P/FCF. They just announced factory stoppage for 2 weeks. I thought that Boeing was a very good short candidate before the implosion as they were dealing with the Max issues and the virus was a game changer in terms of reducing flight demand.

All the trading and price discovery is done in the last 30 minutes of the day. What's it gonna be today?

I worked for Citigroup's mid market real estate investment bank in 2008 and saw Citi go from $50 to under $1 during my time there...I'm now one of the old guys

Guys, Does anyone have information/procedure if you have family member who are infected? Testing? Go to ER, PCP, not go? My brother has had a fever for an almost a week now. We are in NYC. Thank you. I see that NYC has a drive through testing in New Rochelle.

Priced in. Eric, Just wondering what level of concentration is the BAC position for you? I have followed your investments in the past and when you put more than 50% into a position (even if it is fully hedged), I noticed that I should be paying attention.

I wonder how title insurance deals with this

Some of Boston’s Priciest Real Estate Is Sinking Into the Earth https://www.wsj.com/articles/bostons-priciest-real-estate-is-sinking-into-the-earth-11583416663?mod=hp_listc_pos3

A lot of people talk about fatality rates and ease of transmission. Here is a very tangible quote form Marriott. The problem is that even if this is only for 1-2 months, it trickles down. From WSJ: Marriott International Inc. said during an earnings call last week that revenue per available room for Greater China, which represents about 9% of the company’s total room count, plunged nearly 90% in February compared with a year earlier. I remember trying to sell a Tier 4 hotel in 2008 and the GM was telling me that the cheerleaders cancelling their bookings threw a big monkey wrench into their revenue projections.

Speaking of 2nd and 3rd order effects, I think that Fintwit and CoB have both been overly focused on the math behind the death rates, speed of spreading, etc. So I will offer some of my personal opinions. 1) Fear of becoming infected is very real and it is altering consumer/business behavior. Anything that is discretionary is and have likely been hurt. Many of these businesses have substantial operating leverage. A 5% drop in revenue is likely a 50% drop in EBITDA. Companies need to right size. This likely means layouts, buying less inventory, etc. To what degree? I don't know. Which leads me to my next point, MasterCard 2) This is a quote from Masterdard. I think Mastercard is a great proxy for world economy. It sees GDP in real time. They took their revenue guidance down by 2-3%. I am not a macro-economist. But I find it interesting that if they are lowering their revenue estimate by 2-3%, it likely means that the word's GDP is expected to grow 2-3% lower. Someone correct me if I am wrong. World GDP is expected to grow around 3%. Won't this put the world into the dreaded "R Word"? “Cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the Coronavirus,” the company said in a statement on Monday after the bell. The company said its first-quarter revenue growth will be about two to three percentage points lower than previous guidance. “If the impact is limited to the first quarter only, we expect that our 2020 annual year-over-year net revenue growth rate would be at the low end of the low-teens range,” the company added. 3) The WHO infection reports are interesting to look at. 67k infected in Hubei province and 2,803 death. Muscelman (I hope his family is doing well) has mentioned that both numerator and denominator are likely too low. To be honest, I think the figure outside of Hubei is actually trending better than I thought as it has been a few weeks. A few thoughts here, people on FinTwit and here may be overly relying on different disease ratios etc. First, you're working with data provided by Chinese government which probably under reports the figures. There is the testing/no testing dynamic. One interesting thing to note is that diseases spread differently in different population density. What do we know? https://www.who.int/docs/default-source/coronaviruse/20200302-sitrep-42-covid-19.pdf?sfvrsn=d863e045_2 It spreads easily on a cruise ship - Close quarters, shared, facilities etc It spread easily in WuHan, Hubei has a population of 8.3mm. Like most cities in China, it has a high reliance on buses, subways, and most buildings are high density apartment buildings. This is likely very different than the US where people live in suburbs and tend to travel by their own car which tends to carry the atmosphere with it. Which leads me to the fact that New York City, Paris, London, and etc are more prone than Rochester NY or Detroit Suburbs. 4) The community spread in California worries me. They can't trace the origin. So the virus was already in the population. Like the Chinese data, US data likely has too low numerator and denominator. Then we hear that a Rhode Island school has contracted the virus on a field trip to Italy. 5) Any comparison to SARs and previous disease is likely flawed because 1) the supply chain is way more interconnected globally and 2) the ability to get on a plane and be half way across the world in 12 hours in unbelievable 6) The initial reaction is to become "anti-social". This has tremendous effects on the economy. If you talk to most restaurant operators in NYC, they have noticed drops in business volume, especially the ones in the Chinese communities. No it's not racism, the Chinese American consumers have stopped doing Dim Sum and Chinese restaurants. 7) There are too much unknown unknowns and we can even have a contagion of the spread of the disease but the economic impact could be quite substantial. I think Q1 earnings will be interesting to see. Businesses are adaptive and trickles down. If the Airline is laying off people, then there is less need for parts. If the supply chain is disruptive and they can't get the auto parts to the US, then car plants have to slow the plant assembly. If you read enough of the various corporate announcements to revisions to revenue, you can kind of see lots of revenue and earnings miss in Q1. Even Microsoft has said that corporate updates for Windows 10 will likely slip into another quarter. Nike has warned of supply chain issues. Is this 1 quarter, 2 quarters, 3? At what point does the market as a whole loses confidence? Just be more open minded people, embrace the chaos, prepare accordingly, and don't declare intellectual victory too soon. I think the next 4-8 weeks will be critical.

Spek, I think this is very well said. It's not the death rate. The moment for me was when Microsoft and Mastercard issued warnings on their revenue guidance. Mastercard sees economic activities in real time as you, I, and everyone else swipe our cards. That was my "oh, I suspected and hedged, but this is confirmation" moment. I bought more hedge. People keep saying 2% death rate is not much. Bigger picture, I think Germany is already in a recession. Japan printed a negative 5 or 6% and now they have to deal with Corona Virus. The US only grows GDP by 2%. Recession is when it goes negative for 2 quarters. The R word has not reared its head. But when people start to throw around the word, economic planning and future purchases go down. Everything has a feedback loop. Anecdotal observation, restaurants in Flushing Queens have started to suffer. It's not racist, even the Chinese people are avoiding going out to Dim Sum or dinner. There is bound to be someone from Wuhan. Also, rice is out of stock in Chinese supermarkets. Colorox wipes are out of stock at my local Costco.

https://i.redd.it/bxn2mf4bzoj41.jpg - Great meme on our cult leader, WEB https://i.redd.it/w29sdn25goj41.png Another fun meme This is well done Sample Post Is the Dow racist? Shitpost This is a genuine question. For over a month The US economy watched China slowly cease to a halt while production plummeted along with it. The Dow stayed steady during this. Then suddenly a few white people caught beer AIDS and the Dow immediately shits itself and bled off 12% in a matter of days. I imagine the % drop is directly related to the amount of white people that catch the virus. Sample Post From the r/YOLO thread Maxed out what was left of my account today on OTM BYND FDs to play their earnings release/call that came out after close today. My first strike is $95, conveniently where after hours trading stopped today. All my contracts expireie at close tomorrow, so Im on the fence between a weekend in Vegas doing lines off a strippers ass, or telling my pregnant wife that I have decided to become a stay at home dad to raise her and her boyfriend's baby. So, I wouldn't say I'm rooting for corona virus, but I wouldn't mind if they held off on the cure till after close tomorrow. Sorry gram and gramps, I know this could kill you and some of your boomer friends, but I'm willing to risk your life and the lives of others in the pursuit of tendies for drugs, prostitutes and a small to medium sized yacht. POSITIONS: https://imgur.com/axV9Oll

Guys, This thread has been incredibly helpful for me. For those that want to trash talk partisan politics, I can set up a cage and give you guys head gears and gloves. Go at it. Let's keep the partisan politics out of this. How politics and policy affects markets and behavior will be appreciated. Thanks.

Eric, You always have a good way of putting things into the right perspective. Market has been nutz for sometime. I can't count how many value investors are saying "well interest rate is 2%, so 3% FCF yield on a great business is cheap in the long" It's probably true over 10 years for the right companies. But it seems to be applied to every company. I think Coronavirus is the fuse that lit this market on fire. The Wallstreetbets people was kind of the top tick.

On this note, I found the following pretty funny and a good summary of most folks Everyone is always "waiting to buy on a pullback" but quite frequently when they get it, sit on their hands rife with paralysis. Some stuff is currently absurdly cheap. A lot of stuff was already a bit out of hand and probably becomes attractive again with the next 5-10% off the SPY. Guys, I value this community a great deal as I particularly thank this thread for heightening my awareness of the potential impact from the Corona Virus. It is interesting to note that Microsoft, PayPal, and Mastercard have all issued revenue warnings. These are "rails" of the economy. Particularly Mastercard as it is likely a leading indicator of future spending, be it purchases, travel, hotel rooms etc. So We are getting a glimp of the Q1 earnings. I feel that whatever number that comes out of China will likely be altered. Whatever the US multinationals report will actually be the real numbers. Q1 is likely going to be a bloodbath. I started buying a lot of puts in Mid Jan (thanks to this thread) and I look like an idiot for about a month. These SPY, RACE, PLD, etc puts are allowing me to become more greedy. So, I don't think this is buy another dip. The reaction to an outbreak is to shut everything down. This will likely hit the GDP pretty hard. Just my crappy opinion.