BG2008
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Posts posted by BG2008
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15 minutes ago, Gregmal said:
The NIMBYism is real, for sure. I actually got a flyer a couple weeks ago for a pretty interesting industrial piece in Denville off 46. I'm in those areas, IE the 80/46/206 spaces all the time. Poconos, East Stroudsberg, out to Lehigh Valley. And yea, theres TONS of "say no to the warehouse!" signs on lawns. Indeed, its largely farmland and all that good stuff. But its also not impossible to get things done there. You can go out a few miles and make something happen. The key IMO is the tailwind. With industrial you have two things going for you...construction costs and labor, as well as rising e-commerce based demand. Industrial Ive seen those things go up in much less than a year., MF takes 18 months at best. Several years at worst. Thats before the horrendous supply chain issues which are much more complex for housing then shells for storage space/warehousing.....With MF I dont think its all that different, if you're in the right area. If you're talking DC, yea, maybe over the years it gets flooded, IDK. I haven't followed it long term. Right now DC looks appealing. But comparing Austin, TX or a Raleigh to a DC is going to be a lot of apples to apples and a lot of oranges to apples. But as @thepupilsaid, it gets hot, supply increases, it stalls, catches up...whatever. I mean people talk like buying at a 4 cap you need magic for it to work...Maybe if you're looking to compound at 20%...but then you stop and realize how many institutions and funds are doing 2-3, maybe 5%....parking cash LOL...So you buy a solid new build in DC and for 5 years you clip 4% NOI with no growth...which is greater than 4% if you can slap some financing together. This is a big deal to the negative? So thats kind of what I'm getting at. Relative to the safety of these things, the returns, despite surface level wincing and "oooh thats euphoric" rhetoric, are actually quite good for a large swath of folks who a currently wasting their time in this other near zero crap. Some obviously have mandates, but a lot dont. Theres oodles of foreign money coming in. Theres a strong possibility this can sharply adjust as more folks get shaken out of the 0 interest, no inflation investments/trades.
One of the greatest gifts of 2008 was the RE shakeout and narrative buster. But the truth is, while I won't say "home prices never go down"....these seismic shifts in a negative direction really arent common, and take a TON of things going wrong to happen. Thank the GFC for effectively conditioning the majority of people to expect these sort of things to happen every few years. "Yea home prices never go down" is almost even a snarky quip of the cash up, risk paranoid worry wort quant. Buuuut...do they really, generally go down in a way where tons of folks get hurt? Let alone half intelligent ones? People put these odds at many multiples of what they really are. I wouldnt put them at zero, but certainly low single digit. Whereas theres folks who are underwriting 20-30% corrections........Laughing at that has historically been the proper move. So size up the risk/reward right now in MF to the nth degree and to a lesser but still relevant extent, SFH....for a good while Ive thought its massively skewed in favor of the long trade, its been wildly profitable, and the purpose of the thread was really to kind of gauge what people thought because frankly, I still think its got a very long way to go.
I had a conversation with an investor who said "OMG, 4.25% cap rate for the Maren, what if interest rates go to 6%?" I sat down and did a model on a 6% interest rate at year 10-12, and figured that rent will probably grow 5-6% a year in that kind of inflationary environment. When you lock in mortgages for 10-12 years, you get a lot of rent growth to alleviate cap rate expansion. I came out with nominal returns that are still around 9-12% on a 10-12 year hold until mortgage maturity. This assumes you own great products like Dock 79 and The Maren by the water which is naturally supply constrained. Replacement cost will be higher. There are other ways to value a piece of hard asset. I spoke with someone smart once and I said "I own x units of residential in NYC, I don't think of it in terms of $, I think of it as I own 1/4-1/3 of the gross income of a family in NYC for perpetuity while my debt servicing cost stays flat." Sometimes, we have to look through the clutter that is "financial analysis" and figure out what we really own which is the very bottom layer of the pyramid in Maslow's hierarchy, namely shelter for people.
On that note, I need to do my 2020 taxes.
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3 hours ago, Gregmal said:
haha yea thats a good question. Best guess would be that "glut" is a subjective term, there is limited supply of buildable space in desirable markets, and sandwiched in there somewhere is the fact that people want to live in decent areas. But thats just a guess. Similar things have been said about warehouses. Which are even more glaring and something that by and large Ive missed as an investment opportunity. But why cant you just build that to wazoo? Relative to building an office tower or even a multi family campus, throwing up a warehouse is easy. Of course theres zoning and permits and all that shit, but same question applies.
In the dense urban areas, warehouse traditional has the "flour" that multi-family developers turn into "bread" So in cities in NYC, SF, and SoCal, warehouse and warehouse land is actually being depleted. That's why urban warehouses trade for, gasp, 2.5% cap rate. I know that's crazy. But if you have 4% cap upon lease renewal in a market with supply depleting, it may not be all that crazy. Add in the fact that warehouses have much lower cap ex than MF and Offices, more of the NOI dollars goes to the owner.
In regions like LeHigh Valley where it seems like there are land everywhere, the bottleneck is on the local residents hesitancy on having 18 wheelers throttling their 2 lane roads. Sure the jobs are good and pay more than retail or fast food, but many of the people in these communities want a nice pleasant farming community. As more warehouses get built and the road capacities start to suffer and traffic start to appear, there will be more oppositions against new supply. Ranking NIMBYism, it goes something like this
Chemical Plants > Waste Management > Rock Quarries > Prison > Self Storage > Warehouses > Affordable Housing > Offices, retail, apartments > parks and amenities
The order goes from least desirable to most desirable
NIMBYism score is one of the top 5 analysis that I do when analyzing a real asset investment
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1 hour ago, Broeb22 said:
IFF has underperformed the S&P by 30 points since announcement and flat since the close in February…
After deal close Yes. I think IFF was held down because of the RMT transaction in 2020 as some people were likely long DD and short IFF. There was a nice pop in early 2021 when the deal was about to close. I have sold since. But if you swapped DD shares for IFF, that was a nice outcome. I tendered 40% and was pro-rated about half.
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1 hour ago, Gregmal said:
Wasn't DD one not long ago?
Yeah DD merged its nutrition biz with IFF in a RMT. IFF took off pretty quickly after the deal.
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Lots of China experts here. How many lived there and speak Chinese? Beerbaron has the view that I agree with the most.
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35 minutes ago, Gregmal said:
Just closed on this recently. Ironically enough, more anecdotal evidence for the @BG2008 NY revival thesis...the seller was a PGRE exec who got called back to the office in Manhattan, starting in September. Fun times.
@Gregmal You are a beast with those private purchases. We should probably create a CLPR thread. Generally, people get to buy NYC at a discount every 10 years or so. 9/11, GFC, and Covid. Rhythm is about right.
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You know it's a bunch of dudes talking real estate when the conversation revolves around which neighborhoods has the best dating prospects. God forbid someone starts talking about depreciation.
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I think I know your too illiquid to mention deep value stock. It's not for me due to family dynamics and illiquidity. That's a hilarious take. The Brighton Beach take is "do you want to mess with the Russian mobs"
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I think with $CLPR, I recommend buying some puts in AVB and EQR. I do this across the board. I own INDT in size and buy puts in PLD. It is to hedge out overall market and sector risk and interest rate risk. After that I can see a small chance that Delta variant causing issues. But everyone is masking up in NYC and went to dinner last night and they asked for the vaccination proof. I know this will piss off people. But it probably also mean that Delta may surge less in NYC. When they regulate your rent, asking for proof of vaccination status comes with the territory. I am personally for it as it will make me and my kids safer. But this may open a can of worms more than I would like to get involved with. So let's just stop the debate there and focus on $CLPR's fundamentals. The other dynamic is that $CLPR is a family controlled company. So far they have been good people. I spoke with a long term holder and he told me they have been straight. But I just want to point out the >50% ownership. That's kind of sums up all the important risk factors that I can think of. If Delta becomes a huge deal, I think the puts in AVB and EQR will help. Frankly, if it goes to $6 or 7 again, you can create your own share buyback.
I agree that I am less enamored with ALX or VNO or PGRE as it's been almost 2 years now and we are not back to the office. As @thepupil said these young kids want to go to NYC because they want to "get paid and get laid." Just giving credit where credit is due.
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@gregmal I think you are missing one of the best opportunities in $CLPR and I want to jokingly call you a village idiot for some of the commentary about recent price performance. Look, I bailed on $LAACZ right before it popped. It was mostly because I was just clipping a coupon for 3-4 years and there were little price gain. The same can be said about $CLPR. They IPO at $13.50 which is the right price, but then ran into that pesky rent law in 2019 and Covid. Also it wasn't a great acquisition environment in 2016-2017. But they built scale. The NOI is now $60-65mm in run rate but likely going to $80mm when recovered. Sometimes value stocks just don't work for a few years. Then they get scale (GRIF/INDT) and numbers start inflecting (LAACZ) and the negatives clears and people start to actually like a stock. You trade more than I do. I am more of a long term and tend to focus more on a single company at a time. The $LAACZ K-1s were just killing me. So I bailed last year and what do I get the stock goes to over $3,000. I think $CLPR is on the verge of comping double digits in NOI and FFO for the next 2-3 years. The results may look at Sunbelt rental growth in the next 1-3 years. This is my gut feel. Go on Twitter and just lurk on some of the commentary. People are getting into bidding wars on rentals. Apartments are going over ask. Renters are paying for broker fees again. No one is given out concessions anymore. I suspect that $CLPR will trade at 12x P/FFO when stabilized at $80mm of NOI. You get 5% yield to wait for that to happen. The best is that you got EQR and AVB working already. The market is telling you that they believe in coastal high price rentals. Now you got a smaller market cap trading at 4.7% cap rate but with a ton of room to grow rent and FFO. If you are worried about overall market cap rates etc, may be long CLPR and buy some cheap OTM puts in EQR and AVB. It's a way for me to hedge out market and interest rate risk.
Regarding the population. NYC was already at 7.9mm population in 1950. Yes, that's right, 7.9mm in 1950 some 70 years ago. It went down in the 1970s to a low of 7.1mm in early 1980. So that population growth in the last decade is actually very impressive!! How is this possible? Well, when you are literally on an island (Manhattan, Statement Island, Queens and BK are geographically part of Long Island), you can't freaking build outwards like a Dallas, Tampa, or Phoenix! NYC is like Harvard as in there are only so many slots here for the best and the brightest. Yes, I know I sound super elitist, but 20 years in a the RE business on the private side, you start to appreciate all the people that comes through NYC each year. It is an impressive roster of Ivy, Stanford, MIT, every year. Having an Ivy degree in most industries is mere table stakes. It does not set you apart. Oh, you went to school in Ithaca or Boston. Who gives a rats ass? Are you any good? Give me a stock pitch in 2 minutes or GTFO.
Regarding leverage. First of all, they went through 2020 and didn't go broke, that should tell you something. They did a cash out refi of $100mm IIRC around May 2020. That's just baller. People say "Geez that leverage is ridiculous" First of all, if own 4% cap rate assets, 50% LTV is 12x NOI approximately. So if you think the run rate NOI is $80mm, that $1.0bn of non-recourse mortgage is about 50% LTV. Also, nothing comes due till 2027 IIRC. So this thing can't break until then when you will likely have rent growth and maybe $90-100mm of NOI. The bigger REITs just want 6-8x debt/EBITDA for MF assets. But these are scrappy and competent family operators. So they put 50% LTV which allows for better long term compounding.
Replacement cost - 20 years in this biz. Let me tell you something, it gets harder and harder to build in NYC. When I bought my first property, it was $250/sqft all in including land, construction, time cost, and developer profit. Today, it probably cost $150/sqft for the land and $300 for construction, plus time and developer profit and there are less land now. If you want to build anything, you buy a lot with a house on it, tear it down and risk pissing off the neighbor and getting into law suit. That's why the only thing you build in NYC are $2,000-10,000/sqft luxury condos. This portfolio trades at $400/sqft. This is absurd! Their Tribeca was bought for $1,200/sqft IIRC and their cost in their Dumbo building was $1,500/sqft. Flatbush Garden is probably only worth $300/sqft and is half of the portfolio. If you just blindly say the non-Flatbush is $900/sqft and the Flatbush is $300/sqft, you get a blended $600/sqft and you buy it at $400 today. I'm ball parking it. But debt is $300 and you get to buy $300/sqft of equity for $100 or so. Do I want to bet that replacement cost goes up in NYC in 5, 10 years, you bet your sweet ass I do!!! If anything construction cost goes up probably 2% more each year in NYC than elsewhere. To summarize, you're buying at roughly 30% off market price on an unlevered basis and you get to put 50% LTV on it. The discount to private market EV is 30% and the discount to equity is likely 60-70%. I feel like we are sitting on one of the best bargain and people just don't appreciate all the nuances of NYC multifamily dynamics. Generally, you get a shot at buying cheap in NYC every 10 years or so. The last time things were this cheap was in 2009.
Cost arb - Now that the Sunbelt rent is getting pricey. The arb of living in Tampa or Dallas is getting tighter. So if you are a 25 year old smoke show or a tech dude, do you chose Tampa and pay $2,000 for a 2 bed or do you pay $3,500-4,000 for a 2 bed with a friend? Yes, you save a bunch, but you have to live in Tampa!
Optionality - $CLPR has $100mm of cash (roughly) and they are developing 1010 Pacific Ave and they own 500k to 1.0mm of development rights in Flatbush Garden. 1010 Pacific will likely add $6mm of NOI and $4mm of FFO. They own some air rights near Central Park West. The Amish market tenant went broke. So there is no rent income there. If they lease that space, it is likely $50-100/sqft even though NYC street level retail has been absolutely obliterated.
Just writing this out gets me a little pumped. I actually really like it when the common sentiment is negative or not understanding all the nuances.
@gregmal I love you bro. You're like the brother from a different mother! Your post on APTS and some of the sunbelt exposures opened my eyes to a lot of the trends in the industry. I should have paid more attention to it. I totally missed $NXRT with my measly <1% allocation. But it may just be $CLPR's turn. I can see a situation where $CLPR trades to $20/share, but it will take 2-3 years. I think they can actually raise dividend to $0.60 in the long run and after 2-3 years of comping double digit NOI and FFO growth, market may actually want to pay 3% yield for it. At 300mm market cap, no one wants to own this thing. At a $1bn market cap, it will be in every institution's book. Don't believe me, look at $INDT!!
Lastly, management said that new leases on their Tribeca is averaging $78/sqft. This is 10% more than Pre-Covid average. The rate that younger kids flooded back into NYC after Covid should tell you something. My brother-in-law was chomping to move out of my FIL house. He is super happy to get a place with 3 of his friends in a duplex 4 bed near Barcaly's Center. He's living life now. If he waited another 2-3 months, he would have been shit out of luck. That's how NYC operates. 1-2% vacancy is the norm. When it got really bad, it was only 5-6% vacancy and people thought it was the end of the world. But going from 1-2% vacancy to 5-6% meant 20% rent drops. But closing that gap also means that rent spikes like crazy. In the 7-8 years after GFC, apartment rent in NYC was up probably 4-5% a year. Local dynamics matters a lot as one area's rent spikes, it drives people out of the neighborhood further away from Manhattan.
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42 minutes ago, Gregmal said:
Thought this would make an interesting topic.
Theres good ideas, and then there's punch card ideas. I think any reasonably capable investor, if they sit down for an hour, can find ideas that are good enough, and actionable enough to make money. But those are just general ideas, hardly bet the farm type ideas. 0-3% allocations. However, every so often, we all come across a company, a sector, a theme, or just a super high probability setup where you know you're going to make money. My question for folks is, whats the most % wise you've put into a high conviction idea, and whats your typical high conviction allocation?
For me, I think if you're not doing at least 5%, but probably at minimum 10%....you're wasting your time. You can compound 1-2% ideas at 50% annually and your still not going to get rich any time soon. But generating alpha on 10%+ positions gets things done. A once every couple year type idea I'll generally be comfortable going up to about 40%. But average, 1-2 type situations a year, Im generally in between 10-15%. The only things I weigh when doing this are probability of a profitable outcome, and cost to fund the idea. For example, a SPAC at 9.80 may take 18 months but is a guaranteed 2%. To me, a waste of time because my Margi costs 1% and the net IRR sucks. But Berkshire at $230 with any decline a buying opportunity means buy hand over fist. Or FRPH cruising into a decade long tailwind trading still at covid prices. Or ALCO trading flat for a decade and at a 20% discount to a 2013 change of control deal despite the core biz about to inflect at 10x earnings and the land value going parabolic. These are 12-40% allocation ideas Ive put on in the past 12 months. Curious how others express themselves when they find a money tree.
Before this turns into a circle jerk for FRPH. I'll say this. FRPH was a 23% at cost for me in late 2016. Sold everything in 2018 when it traded at about 85-90% of NAV. Last year, let's just say it is a more than 23% after it became obvious that 1) 40% of market cap is in cash. 2) Dock 79 and The Maren leasing well. 3) Possibility of infrastructure plan 4) Homebuilding surprisingly strong 5) and good management team that I know for 6 years 6) Share buyback at 50% of NAV roughly and 7) Good thematic play on homebuilding, DC MF, and infrastructure. It is not a 5 bagger. But it is back the truck up and buy hands over fist. Imagine if there is a billionaire family in your town with a diversified collection of asset. They go "hey, you can buy into my portfolio at 1/2 price." This is the situation. It's not a 10 bagger like Carvanna from March 2020 lows. But when MLM, Vulcan, and even US Lime have all hit all time highs and EQR and Avalonbay hit high and you can still pick it up for low to mid $40, you just have to be greedy and back up the truck. Greg and I probably put 30-40% of our net worth into our first private RE property. That's with leverage and single tenant concentration likely. Here you can buy a good portfolio with little leverage, 40% excess cash and a good operator. That was the moment.
These are rare. Unlike Pupil and Greg who seem to be able to find multiple companies. I am a little stunted. I can only find 1 company a year. Typically 2-3 year doubles. But I tend to bet over 10% each time.
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Does anyone know the typical SPAC players and dynamics in 2021? I've been investing in the space for the past decade. But the recent vintages have been very different than previous iterations. A lot of SPACs have lost momentum lately. Do people typically hold 2-3x exposure? The PIPE features are also interesting. Just trying to get a little smarter and figure out the players, structure, and capital flow dynamic.
Thanks in advance.
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Gregmal,
1) Don't under estimate how handsome you are. You devilish good looking man with wicked sense of humor. The rest of us don't have your game.
2) I think today, Sunbelt is at 3 handle cap rate and NYC is a 5 cap. It has inverted.
3) Higher taxes affects 20 year old less than old stodgy dudes like you and me with kids
4) Most 20 year old willingly spend all salary and just contribute to 401K with matching. I did that and I have no regrets even if that $1,000 will become $1mm of 2060 money or whatever.
5) Big law, entry tech, IB, etc don't migrate well outside of NYC. Once you have built a reputation as smart with 10 years of experience, Miami, Tampa, Dallas, and Phoenix look a lot more attractive.
Differences in opinions make markets. I would've made more money if I bought more NXRT and PCYO. But not complaining about my current picks. Although, I have sold out of VNO and PGRE and kept some ALX.
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One area of incremental demand that I have not heard of people talk about is wealth empty nesters selling their large homes in the burbs and moving into the city and wanting Class A apartments. This is increasingly a trend among folks who are 60+ as they do not want to maintain a 3-4k sqft house and want the convenience of living in a big city in a doorman building with high walkability scores and access to arts and culture. Cities are generally still safer than 30 years ago. First order thinking is all the millenials decamp to the burbs. But there is likely a swap between a family of 3 with an empty nester who is wealthier.
Maybe this is just wishful thinking on my end.
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I think you're referring to the Bloomberg article referencing the Miller report
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So you complain about not making money and Boom, it's up 8% 2 hours later. I'll tell you what I own and you can bitch about it and we'll split the gain at 4%!
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2 hours ago, Gregmal said:
I keep hearing this, and then I look at my CLPR shares and Im like "WHERES MY FUCKING MONEY?"!
What did you do? Up 8% on a day when everything is down and about 2.5x average daily volume by noon?
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45 minutes ago, DeepSouth said:
Moved to west village last month. Close to zero listed inventory and 40-50 people touring per listing, so prices feel above 2019 levels. My sense is rent is still attractive in outer boroughs and commercial districts with high rise resi (midtown/fidi)
Thank you for the valuable data point. Seems like the better neighborhoods are already back to 2019 levels.
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Guys,
I have been hearing that NYC apartment rent has really firmed up lately with concession gone. Any NYC residents here that can share their recent lease renewal or apartment hunting experience? My former intern just got a pretty awesome duplex in Brooklyn by Barclays for $4,500 for 4 people. He got a really good deal.
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58 minutes ago, Spekulatius said:
The answer to the bubble question depends on
1) will interest rates remains low
2) will cooperate to rates remain low
3) will cooperate profit margins remain at current levels or even go higher.
If the answer to all those questions remains yes, then we are not in a bubble. If one or more of these factors (which so far have been tailwinds) become a headwind, then valuations are most likely adjust accordingly.
Even if interest rates were to go up, if you have advantageous financing such as 30 year fixed rate mortgage on your house or some of the Liberty Complex' crazy 30-60 year debt at sub 5% interest rate, those are actually assets in that kind of environment. This assumes that the operating business or RE assets' ability to generate EBITDA-Cap Ex remains the same or even go up. If you have to keep rolling 5 year debt, it is a different conversation. These are strategies that BAM, Blackstone, and everyday American homeowners can participate in. The housing bubble was very different. You literally have meatheads going "I bought a house and flip it for $30-50k profit in one week" Meathead #2 "That doesn't make sense." Meathead #1 "Dude, that's just the market!" RE markets, bank lending, systemic risk, blah blah blah. The RE side is much healthier. Only the best credit gets approval. SFH has an affordability issue. But the existing homeowners are in much better shape.
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Insurance Costs Threaten Florida Real-Estate Boom
https://www.wsj.com/articles/insurance-costs-threaten-florida-real-estate-boom-11619343002
MIAMI—Florida’s property-insurance market is in trouble, as mounting carrier losses and rising premiums threaten the state’s booming real-estate market, according to insurance executives and industry analysts.
Longtime homeowners are getting socked with double-digit rate increases or notices that their policies won’t be renewed. Out-of-state home buyers who have flocked to Florida during the pandemic are experiencing sticker shock. Insurers that are swimming in red ink are cutting back coverage in certain geographic areas to shore up their finances.
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Bill Brewster's Pod is very entertaining and I find Bill's open mindedness to be refreshing
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I got the Moderna vaccine last week. The first shot. I had no side effects other than a sore arm. A clinic that one of my friends manages had extra shots, so I was able to get vaccinated a bit earlier than I expected.
My wife and I were fine after the first Moderna shot. After the second dose we both had effects, her's much worse than mine. We had gotten our shots in the morning and I didn't sleep well that night. I think I woke up 20 times and could not get comfortable. The next day I woke with a headache and felt like I was coming down with something, but I could function. The second day I was much better, the effects about 10% of what they were the day before.
For my wife she didn't feel well for two days with her symptoms being more severe than mine.
This is a well known side effect profile (more side effects, more pronounced and lasting longer) with the second dose. It's actually a sign that your immune response (protection) is building. An interesting feature in many places is that (given the spread that has occurred) many people who are being vaccinated have been exposed to the virus already and it is expected that such a pre-exposed population is more likely to suffer from side effects. An interesting aspect which is being documented with the CV vaccines is that the increased delay (vs studied delay and initial recommendations) between the two doses is actually associated with a stronger (and likely longer lasting) immunity ('booster' effect).
Local reactions to vaccines can be quite marked (pain and skin changes at injection site) for certain vaccines (ie tetanus shot) when immunity is already present. Keep a record for your next emergency room visit.
There are 'biological' explanations behind this phenomenon but it's basically the inverse of the law of diminishing returns (on certain incremental capital).
I have been waiting for the side effects of the second shot and it hasn't materialize yet. The first shot had more side effects.
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clearly permanent loss of cash purchasing power can't be good for savers, rich or poor.
why do nations and people accept it ? why wouldn't they just not spend or lock their money away even if it earns little ? isn't there a human tendency toward deflation as a protection of one's savings? or is the issue that the vast majority of people have no money at all so any handout or income, inflated or otherwise, is better than nothing?
Do you want deflation? Inflation is great for owners of hard assets. As someone who has a 30 year fixed mortgage and 2 investment properties, I don't mind inflation at all in that portion of the portfolio.
Multifamily vs Treasury/MBS
in General Discussion
Posted
I have been thinking about this scenario as I have a lot of hard asset exposure. It is certainly possible. The takeaway is that do you 1) Do nothing and continue let your cash erode its purchasing power? 2) Buy hard assets with long term debt? 3) hedge the interest rate exposure by shorting some 10-30 year debt (can really backfire if rates go even lower) 4) Some combo? I don't have an answer and I am looking for one. I think the scenario that you laid out hurts all asset classes. It goes back to picking 1) or 2). I would argue that good hard asset is probably better than rolling the dice on O&G or metals or some other commodity. Okay I am biased. But I have warmed up my mind to having 2-3% O&G and just view it as heavy inflation protection. I appreciate you "red teaming" the scenario.