FCharlie

Just curious, any of you guys in the GTA?

It's not strange for companies in this industry to trade at extremely low valuations. LNC is another, trades at 4X earnings.

Will Corebridge keep buying once AIG stops selling? A lot of their buys have been timed with AIG's sales. I've never looked at Corebridge but AIG itself is buying back stock much faster than Corebridge has. Is there a reason to prefer this over AIG?

GM has repurchased 35% of itself since 2023. They just authorized a new $6 billion buyback so by end of 2026 they may be at 40%. So far the valuation has rerated from a laughable 4-5X to a slightly less laughable 7X earnings. They continue to generate around $10 billion of free cash flow per year. I've owned this since 2023, not because I love car companies, but because they are aggressively taking advantage of the fact that the market is broken, that investors don't care about them. Where's the tipping point? The stock is at an all-time high today. My guess is we'll be $100+/share soon. Considering GM was trading in the $20s/share when they began this aggressive capital allocation just two years ago I'm surprised more people aren't noticing or participating, but I guess the longer they don't, the longer this can go on for. https://investor.gm.com/static-files/36170429-ef23-4ad5-97dd-6a523c3f8deb

Bank of America's Held-To-Maturity portfolio of low-yielding MBS and Treasuries has declined by $110 billion in the last three years, from $632 billion Q4 2022 to $522 billion today. I don't believe they have taken a loss on anything. This is just natural runoff from principal payments and maturities. Everyone agrees in hindsight BAC was stupid for owning this much low-yielding MBS, but in BACs defense, they've always had a massive zero cost deposit base to support it. And FWIW, anyone who sold BAC stock in 2023 because of unrealized losses missed out on a doubling of the stock since then.

Yes. I think of oil today very much how I thought of silver years ago. Not that long ago, no one thought silver was a good idea, even at $20 and when it was in a supply deficit. No one cared. Today, oil is one of the few commodities that isn't at or even close to all-time highs. Almost no one is bullish oil. It's one of the most valuable resources on earth, global demand continues to rise every year, and no one cares.

I don't think they will need to cut the dividend. In 2023 KHC generated $998 million FCF in excess of its dividend. In 2024 $1.229 billion FCF in excess of the dividend, and in 2025, they are expected to (according to Merrill Lynch) generate $1.370 FCF in excess of the dividend. It helps that they are not increasing the dividend per share, and the buyback is actually reducing the total dollars paid out (3.4% lower over the last two years). I do think they are going to prioritize debt reduction over share repurchases in the near future, but unless free cash flow were to decline materially, I don't see the need for a dividend cut. I agree with you that banking is a better business than some of KHCs worst brands. I do find comfort, however, in the fact that KHC traded much higher in the past with these same exact brands. And the new CEO was able to get growth out of Kellogg's brands so maybe he can do the same here. Growth or no growth, I think lifting the Berkshire overhang alone could bring KHC back up to the high $20s. With a 7% dividend, you don't need much to do well.

Regarding KHC, it also helps that the new CEO is going to try to do the exact same thing he just successfully did at Kellogg's.... Turn it around, split it up, and sell each piece. Kelloggs's went out at all-time highs. I don't expect KHC to go out at all-time highs, but see my earlier post. It barely needs to go up at all for investors to do really well. https://www.youtube.com/watch?v=T55GQBU-J0w

I love this. Everyone is terrified of the lack of growth and the overhang of Berkshire selling... Reminds me of Wells Fargo during summer 2020 when it was in the $20s and no one would touch it for the exact same reasons. With KHC yielding nearly 7% investors could achieve a double-digit total return if the stock just rose 6 cents per month going forward.... But who cares because Greg's got a 325 million share iceberg sitting there on the offer, right?

It's very possible that NVDA is not experiencing a bubble in valuation, but rather a bubble in profits.

Thoughts on Venezuela? Not much other than the obvious. They has tons of reserves, but their infrastructure needs significant investment after years of starving it of capital. Also their oil is heavy, sour, high sulfur, and expensive to refine. Most of OPEC has no spare capacity already. Saudi Arabia obviously does, but think about the last time OPEC was widely perceived to be running out of spare capacity. We're talking early 2008. Global demand was growing, US shale hadn't happened yet, and oil went to $147/barrel. Perception is everything. For the last couple years everyone has been aware that OPEC has millions of barrels of day being held back. But the more they unwind their self imposed production cuts the less spare capacity they have and while it may seem counterintuitive, in my opinion it's bullish. Let's see global demand grow a few million more barrels and US shale have zero supply response. Perception will change quickly from "we're drowning in oil" to "Oh shit no one has any spare capacity"

They are going to run out of spare capacity......... and oil is going to soar.

Especially when global oil demand continues growing at the same time. I'm surprised more people aren't worried about this. 8 million barrels per day of US shale has a decline rate of 40-50% which makes it really challenging to just hold production steady. This is a key piece of why I think offshore is the most important source of production going forward.

THANK YOU FOR POSTING THIS!!!

I've been saying that since probably 2018. If that changes, I'll reconsider my thesis here.