BG2008

I am trying to figure out some industries that are consistently misunderstood by Wall Street. Take a look at the WWE stock chart in the last few years. Professional wrestling is generally considered by many to be trashy and watched by mouth breathers. In recent years, MMA is competing product that seemingly took a lot of the Pro Wrestling fans away. I believe that many Wall Street analysts are simply too "coastal elite" to understand the appeals of WWE for the guys with a HS education, drives a pick up truck, etc. What was fascinating about WWE is that a lot of the appeals were non-verbal. Here is a little back story. Back in the early 90s, my dad and I used to watch WWE on Saturday mornings. 92 was the year when I came to the US and I didn't understand a word of English. My dad still doesn't today. Hence, the talk shows, the drama, and most comedies were off limit. But we shared a bond watching wrestling on Saturday morning, even if it was like a half hour before we have to be at work. The action, the muscle, the bravado, the booing and cheering, it was really more like Roman coliseum. To us football was a bunch of weirdos in pads and who swings a bat at a baseball. And there is barely any action. Those damn stupid Americans!!! The NBA was a better product. We understood Michael Jordan vs Karl Malone. When I was in high school, there was an attractive girl with RBF. She came across as quite aloof. We somehow started talking about pro wrestling. We talked about Lex Luger body slamming Yokozuna on the air craft carriers. We talked about Hulk Hogan and the Ultimate Warrior. So at some point, even little girls watched WWE and have very fond memories of the build up of the drama of Lex Luger being flown in via a helicopter and walking through the crowd and managing to body slam Lex Luger. Then there was the attitude era with the Stone Cold Steven Austin, The Rock, Mankind, etc. When the WWE transition to an OTC product. I actually did some previews and find the content to be quite appealing. There were these great Pay Per View matches from the past that I never watched like Sean Michael vs Razor Ramon etc. I have grown to appreciate that "yes wrestling is fake. But those are amazing athletes and great actors." The WWE library is a great collection of content. What I am trying to say is that WWE had appeals on a very primal level to a lot of people and combine that with the non-verbal acting that appeals to the entire world. The reason why I did not invest in WWE was that I viewed MMA as a the death stab of WWE. The UFC has recently ran into its own challenges of growing live fights. I would say that the MMA product has been watered down recently due to too many fights. Another issue with the WWE is that I thought PEDs lawsuit was going to be worst than concussion in the NFL. Just google 80s and 90s wrestlers and most of them are dead or so addicted to opiate painkillers that they can barely function. It is sad to see guys like Razor Ramon reduced to nothing and many of the wrestlers are now deceased in their 40s and 50s. WWE has a huge PED issue. I think that most analysts who work at billion dollar hedge funds or at Fidelity will be too embarrassed to acknowledge that they own WWE stocks. Look at how the WWE has done. I really regret not putting in more time on WWE. This is a company where I can actually understand the product, even though I maybe too embarrassed to admit it. I can see why Credit Acceptance is a stock that kicks ass and there will constantly be skeptics. I can see why Cimpress is a good stock despite people's view that printing is dead. I would love to foster conversation on what else maybe misunderstood by Wall Street. I think Cable falls into this category. A few years ago, there was a sumzero interview where a guy published a long thesis why cord cutting and how the Cable TV bundle was about to get torn up. He was totally right about the TV bundle, but he did not mention about the cable company's ability to raise prices on internet services and how the margins are incredible on that end. I think there are a lot of many to be made on businesses that appear to be terminal, but really aren't. But picking the right one is really difficult. The mall business is one that is incredibly difficult to determine.

Grammar Nazis be damned! Say all the "b" out loud. I climb out of the tomb and my thumb went numb. I had my doubts but I ate the crumbs anyway. Those who have wombs tend to use combs. I am in debt and I am not subtle about it.

Thanks for posting this. What are KYJ And EC? KYJ - Know Your Judge EC - Equity Committee

Do you know what the following means? KYJ Fraudulent Conveyance DIP Cram Down Stalking Horse Bid Pre-petition vs Post Petition Absolute Priority GUC EC First Day Pleading Sign In Sheet PACER Docket Disclosure Statement Bankruptcy Plan Claim Transfers Chapter 11 vs Chapter 7 Equitable If you don't know most of these terms, maybe you want to stay on the sideline.

Challenge accepted, Rock Pits and NYC Class B/C apartment units from 1990s and onward. Sometimes the gentrification trends are so strong that a caveman can do it. I know lots of people who got rich off buying NYC real estate. Most don't have a story of scoring a crazy deal. They just bought and collected rent.

You only get a Sergio every once in a while

The thing about large returns on small amount of capital is that "returns are returns." As long as you understand that you were taking on the risk, I think it's fine. I think if you are under 30, can re-coop the capital over time, and have very high conviction (companies you own have diversified assets/businesses, good management team, high upside, low downside), I think it makes sense to back up the truck and buy with conviction. Heck, Ericopoly did it for over a decade. But he has an uncanny ability to spot these crazy opportunities and he's been right for so many times in a row. Ultimately, he realized that he may want to hedge his huuuge BoA position. My take on concentrated returns is that if you've done the work and the business is stable (I wouldn't do it with O&G assets myself, unless midstream), it's okay while you're young. I think if you are in your 50s and you are midway through your retirement and you are working with 6 to 7 digits of capital, you are taking on a too much risk. Diversify yourself a bit (more than 5-7 names).

Honestly, I have no idea how to interpret the Trump story and how it affects my investing strategy. I just looked at the NAV/Price of my portfolio and took the puts that went up 10x recently and increased what I considered to be my most undervalued/longest runway idea and increased the allocation by 65%. I think I can sleep on that idea for the next 2-10 years. I am literally not smart enough to interpret Trump.

I spent my early career at a too-big-to-fail bank when the stock went from $50 to $1. I saw a lot of long faces and I started going to Omaha in early 2009. It was a great experience to go through and it taught me that 1) You never want to be forced out of the investment game. I saw too many people lever up and got the house/farm/business taken away. 2) It was great to learn how not to blow up, but it probably made me a bit too bearish as well. 3) I am starting to realize that let the ideas guide you. What I mean is that if you find it easy to find doubles and triples in good companies with good balance sheet, buy them. If you find yourself buying into crappy companies with bad balance sheet and no moat and you're underwriting it at a high single digit IRR, it's probably better to sit on the side line. Buying something at 25-30x P/E for a good company with less than 10% growth is probably not a sound value strategy. Keep some cash. If you start finding high quality doubles as easy as shooting fish in a barrel, it's time to pull the trigger. If you invest in companies where you know the CEO will buy back stock in a crisis from the operating cashflow, even better! Given all that I have said, I think that the market is down high teens from its peak already. It's a decent starting point. We are certainly not at the point of capitulation where everyone is scared and thinks that nothing will be worth anything.

CMI_FY_2018_Year_End_Results.pdf Full_Year_2017_Presentation.pdf

I like Excelsior Capital Limited CMI.AU. There is a thread on it. In short it is a net net that pays a 4% dividend. The tangible assets backing the stock is in the $1.20 to $1.30 per share range. Tangible assets includes account receivables, inventories, and investments net of total liabilities. The company did $6.2mm of EBITDA and earned 13.5 cents per share for FY18 ending in 2018. They bought back some stock in November at $1.44. Now you can buy it at prices cheaper than that at $1.41 AUD. This is a net net because they sold a badco segment in recent years and is now focus on their coupler business. The coupler is used in mostly underground coal mines mostly in Australia. There is a lot to like about the business in that if you use the wrong coupler, it could lead to coal mine explosion. I also think that we are at trough or near trough EBITDA and NI figures. I've talked to the chairman and we talked about how hard/easy it is for new entrants to enter the space. It's tough. The Chinese can't really introduce a product into this space. The Australian competitors haven't been able to make headway. There are real barriers to entry in this business. Ultimately, it is a small ticket item relative to the large financial consequence of a coal mine catching fire. Just ask the FELP people on what it is like to have a coal mine burning, i.e. Deer Run. You also get a free call option on an asset management business where it will only cost the company about $0.5 to $1.0mm. My understanding is that the publicly traded asset management firms in Australia is worth quite a bit. Getting listed in Australia is tough. So starting the asset management firm inside Excelsior Capital and then potentially spinning it off is an easier way. No idea on the probability and the value of the asset management business, but it could potentially be worth quite a bit (more than market cap). I got lucky in that I sold Teekay Offshore to buy this and my avg cost is $1.46 AUD while TOO has pretty much cratered during that time per my commentary in the TOO thread. On the negative, there are a couple post on the CMI thread that said that the people involved are bad people. Objectively, I see the company selling off a badco, the company trading at net-net valuation, and they try to buy back 10% of the S/O at 10-15% above net tangible asset value. Is it their reponsibility to take out shares at fair value? Could they take us under? I think when you have something trading at 85-90% of liquidation value that generates a 10% FCF yield with a decent business, it's worth taking the risk. FYI, I bought back some TOO as well in the low $1.20s. My gut told me that the year end price was partially due to oil prices collapsing but also largely due to tax loss harvesting.

Is Molson Coords Brewing really trading at 6x FCF?

I was buying cash box liquidations 5-6 years ago with 20+IRR underwritten and I usually end up in the teens. Be mindful of small liquidations, the fees eat up everything. A lot of people figure out over time that the fees and the accounting adjustments is a pain in the ass, especially if you run a fund.

NYRT was the sexy trade and was written up on VIC and Sumzero over 5 times. Everyone wants a special situation in late bull market. Most people have been left holding the bag.

This is a bit of an old man response. I used to do a lot more liquidations. There are a few issues. I think if you can buy "cash boxes" in 2017, by all means do it. But "cash boxes" tend to not exist in the euphoria of 2017. The issue is that special situations requires a lot of turn over. As an old man, I prefer to find 10 really good ideas that I can sit on for a very long period of time, i.e. BRK. More turnover also expose you to more mistakes.

Wall Street Is the John Johns create the demand (Wall Street keeps giving money to the drillers)

Midstream Is Kind of Like A PIMP You get a fixed fee whether the girls make money or not "Is Wayne Brady Gunna have to choke a bitch?" (Take or pay contracts) You stay in the warmth while the girls stay out in the cold (Cashflow much more stable than E&P) You offer a service that is highly desirable, protection from Ted Bundy (Moves the O&G out of the basin into the market) The relationship feels like it should not be sustainable, but it is sustainable, because sex work is the oldest profession and there will always be demand for the product (I just realized this while I type this out) In theory, the gals should not enter this profession and enter into an agreement with you. You have almost complete control over the gals. But there are lots of broken homes and gals who don't have other skillsets. Hence, new gals keep entering this terrible business.

+1! I was a bear when Jeff Rubin was predicting and writing about $200/barrel oil. People told me I was wrong then. Today, I'm watching people pour out of oil, and it has done nothing except to get me titillated and excited. If you think oil will be permanently at $40 or less per barrel, you are out of your mind. Cheers! Heading back to $40 per bbl! I was definitely an oil bull when prices were below $30 / bbl a few years ago. Too bad there's no good way for me to trade that other than buying actual oil future contracts, and I really don't know much about commodities trading to get into that. I looked at USO, USL, and OIL, and they all pretty much suck in tracking the actual commodity. Anyone know of a good way to get into the actual commodity without having to keep buying long dated futures contracts? By the way, Bethany Mclean came out with an awesome book on the U.S. shale revolution being largely driven by ZIRP and Fed policies of the past 15 years. I remember back on CBOF, people were looking at O&G shale / fracking companies, and I thought it was absurd that no one on here thought about the biggest glaring issue: if these companies can't make money at $100 usd / bbl, how the hell are they going to make money when oil prices revert back to mean, which is exactly what happened, and exactly where we're at today. I highly recommend her new book. I pretty much agreed with everything she said, and I believe if interest rates normalize above 5%, U.S. shale oil production will decline big time. From VIC's discussion of the E&P business E&P Companies Are Like Street Walkers (From a generalist perspective) They promise a good time (Look at those IRRs) You rent them (Have to trade in and out) You don't marry them (Can't really hold for long term) I won't touch them with a ten foot pole (Personal choice) You can't bring them home to your parents (Can't really tell your LPs that you own them, hard to justify unless that's your strategy) When the cops pull you guys over, it's a very awkward situation (If the stock price is down, you can't really back up the truck and buy more) They have very short careers (The assets depreciate and the street walker ages quickly) Totally supply and demand driven equal zero pricing power (Commodity price) They like to party and blow their money (Similarity is uncanny) Hard to find an honest woman in the house of pleasure (Not a fertile hunting ground for me) Surprises tend to be negative, they give gifts that keeps giving and gifts that can be cured with antibiotics (Have you been negatively surprised while investing in E&Ps??) Lots of liars, I'm doing this to pay for college (Right!!) Your ability to identify Julia Roberts won't improve over time (My ability to identify the right E&P has not improved in 10 years, luckily I have never owned a E&P company) Depletion is real for both youth and O&G

I'm wondering if anyone has breakdowns of S&P 500 performance YTD? It feels a bit weird that there are a ton of companies down 20, 30, 40, 50% this year. It feels like there are way more carnage than the nice 0% YTD performance of the S&P 500.

1. Start an asset management firm and charge incentive fees. Losses on LP capital are non-recourse to you, but you get a nice slice of the upside on any increase in value on that capital. 2. Invest in the equity of highly levered firms. Small changes in their enterprise value will lead to large changes in their equity prices, which would be similar to the effect on the value of your portfolio of levering your own balance sheet to buy unlevered firms, with the benefit that debt at the firm level is non-recourse to you. KJP, 1. In theory true. In practice you have to be very very good at sales to pull it off. Judging from most people on this board, we're mostly doers rather than sales guys.

Thank you so much for this feedback. It's certainly made the experience that much better.

Is there a way to unfollow the entire politics thread on this site?

I know someone who dumpster dive for fruit juice. While I like a bargain, I like my dignity intact as well. If you are serious, we can never be friends. Dumpster diving is where I draw the line of people that I want to be friends with. Because if you are financially secure, it is simply not acceptable in my books. What if I was to tell you that I wear a snorkel when I dumpster dive? Does that make it more acceptable? In all seriousness, the dumpster diving thing was just a joke. I actually obtained my collection of fine wines by searching alongside railroad tracks for bottles discarded by vagrants. Well a snorkel changes everything.

As someone who grew up in the food business and have been cooking dinner for my family since I was in my teens, I would say that the Instant is the highest return on dollar of any kitchen equipment that I have bought. It won't do everything well. It is very good for braising, soups, oxtails, and general wet cooking methods that would take way too long. By insulating heat inside a pot, it also means that you don't run a hot kitchen. It's utility is in the set it, leave it, and forget it functions. Many of the functions you have to learn and you need to experiment a bit. If you have a "general understanding of food deliciousness" (trademark), you can really use it to your advantage. You can't cook steaks in it. It won't get that nice browning. But it will turn your oxtail into a rich and delicious gelatinous piece of meat in about 45 minutes of cooking time. Some of the functions that I use it for are: 1) Making oatmeal - Set to delay start the night before and set to cook one hour before you wake up and you will have delicious oatmeal for breakfast 2) Oxtail soup - parboil oxtail and wash oxtail under cold water to clean off any residual (do this on stove top). Add carrots, celery, and tomatoes to Instant Pot and cook under high pressure for 40-45 minutes. It's a very hearty soup for the winter. Serve with some rice and you have a whole complete meal basically. 3) Chicken soup - parboil whole chicken and wash under cold water. Add carrots, celeary, and tomato to instant pot and cook under high pressure for 20 minutes. Shred chicken and eat. 4) Cook beans in instant pot and throw in a bunch of kale into the hot bean mixture. The residual heat will cook it. Now you've got beans and kale. 5) Steamed eggs - Beat eggs and add some water and mix well. Steam for 6-7 minutes. It's a great savory egg custard. 6) Steam sweet potatoes - 20 mins or so. Depending on size. 7) Sterilize baby bottles using steam function - 2 minutes (use this if you have a newborn, cut outs having to boil everything) 8) Pot roast, never made them, but apparently very good 9) You can cook rice and etc. But I am Chinese, so we have a separate rice cooker. 10) Quinoa - cook in high pressure for 10 minutes In general, any cuts of meat that is tough and require a lot of cooking time can be cooked quickly and in its own juice with aromatic vegetables. I have attached my graphic resume. It wasn't made in the instant, but you can.

I know someone who dumpster dive for fruit juice. While I like a bargain, I like my dignity intact as well. If you are serious, we can never be friends. Dumpster diving is where I draw the line of people that I want to be friends with. Because if you are financially secure, it is simply not acceptable in my books.