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.

You are like a guy who at 4am tells the early riser who's excited for morning that it's been dark all night and will probably never be morning again ever. In my experience, that doesn't work well with investing.

Ensco, Rowan, and Atwood minus most of the debt. I do own NE, just not as much. I prefer the buyback to the dividend, but I definitely own NE. I don't believe Loews ever got back into offshore. I always wondered why because they used to brag about how they had received many multiples of their investment from DO through dividends alone

I don't know if I'd call it beating the table but I have definitely been long and wrong for a while now. I wish I knew what or when the market's opinion will change but I don't. With that said, I don't feel any less optimistic about this than I did last summer when VAL was at all-time highs. The market never cares about something that is more than a few quarters away and for the last few quarters all they seem to care about is white space on the calendar. If I had to guess what will change the market's opinion I think simply continuing to contract at solid dayrates, filling in white space, and buying back stock. I personally just don't worry because by the time the market cares they might be paying double the price. My higher cost basis purchases have turned out to be a dud but I've bought wayyy more in the last six months. Like most of my other large positions, the longer this takes the higher the upside.

Valaris is of my largest positions. I owned it pre bankruptcy but no where near the size of today. I think if 2020 hadn't happened most of the offshore drillers would have turned out really well but the negative oil prices and lack of travel demand in 2020 took the entire industry under with exception of Transocean, Today I basically have the same view I had pre bankruptcy but with far more confidence as $7 billion of debt is gone, oil demand is higher, and the offshore fleet is even smaller. The view is have is this: 1) There will never be another newbuild cycle 2) Oil demand is going to continue to grow no matter how much people wish it wasn't 3) Offshore is a critical part of oil supply and is too large to replace 4) There will be a shift away from shale and towards offshore because the breakeven is lower offshore and because offshore doesn't deplete at ridiculous rates (40%-70% in first year) 5)Utilization will remain high because of #1,#2, #3 and #4 6)Dayrates will probably reach record levels at some point in the future 7) Valaris only has 71 million shares and is allocating 100% of free cash flow to buybacks. They could easily buy back 2 million shares per quarter at these prices 8( If the stock doesn't rise dramatically there won't be any shares left long before the last rig is obsolete As far as your point about offshore tech deterioration, if there are no more newbuilds going forward, then the current fleet will always be the most technologically advanced. Upgrades to rigs can happen and in a high utilization market Valaris can get their customers to pay for upgrades just as they get them to pay for mobilization. I realize this isn't the VAL board so I'm happy to talk over there or privately.

It's nice to see so much posting on this page today with the Fear & Greed Index at 4. These are most likely some outstanding purchases/trades you guys are all making today. https://www.cnn.com/markets/fear-and-greed?utm_source=hp

You may be right about them deserving a low PE. The market certainly disagrees with me, but I'm in the David Einhorn camp that the market is fundamentally broken and the passive bid is just relentlessly being pumped into to the same winners while the losers are permanently abandoned. If this is true, GM is doing the exact right thing and the market is going to allow them to buy 40%, 50%, 60%, hopefully 70% without rerating the stock. This doesn't mean the stock won't go up, in fact, eps estimates for 2025 have risen from $7.60 to $11.45 since they started this aggressive share repurchase strategy. I believe $11.45 will be revised higher because of the $2 billion ASR which should advance over 30 million shares today, taking the share count from 995 million to 965 million.

With the initial delivery from the ASR, GM will have repurchased 30% of its shares in less than a year and a half. Assuming they complete the entire $6 billion this year that number will be up to 36% in two years. Current non-GAAP EPS estimates are $11.45 but all things equal, EPS estimates should immediately rise because of this ASR, probably closer to $11.75-$12, putting the non-GAAP P/E on today's purchase price at about 4. Of course these estimates are subject to change due to tariffs but does a dividend increase and a $6 billion buyback sound like a company that is worried about tariffs? Also noteworthy, in the last six years GM has generated over $50 billion of free cash flow, meanwhile today's market cap is $48 billion.

GM wiped out 10.1% of their share count in Q4, bringing their share count destruction up to 28% in the last two years and 31.5% in the last three years. 2025 Adj EPS guidance is $11-$12 implying the stock is trading at 4.3X earnings. 2025 FCF guidance is $11-$13 billion or 20+% of the market cap. Management said on today's conf. call to expect continued buybacks. Also, Adj EPS guidance does not take into account any buybacks so all things equal, I expect 2025 EPS guidance to rise with each quarter due to buybacks just like last year. GM is pulling an AZO in record time and investors are all too happy to sell to them.

As if buying 20% of their shares in the past year wasn't awesome enough, GM should again be in the market very aggressively in the next quarter or two. No surprise because they have about $27 billion of cash on hand vs their $20 billion target and they just increased their FCF guidance yet again. Even with the stock at a new 52 week high, it still trades at 5X earnings An excerpt from today's conf call: Emmanuel Rosner Okay. That's great to hear. And then I guess as a follow-up, I think you reiterated your commitment to try and reduce share count to 1 billion shares in early 2025. You would probably need to reduce your share count by like 120 million shares over the next 3 months or so. Is that like a $5 billion buyback? Is that the sort of acceleration that you're targeting just over the next few months essentially? Obviously, would be significantly faster than what we've seen recently. Just generally speaking, is this the right math? And then how should we think about future pace of buybacks? Paul Jacobson Yes. So I will agree with your math that it's about 120 million shares to get there. And we've said that we believe that we can get there in early 2025. So no specific comments on when that is or what the velocity might be. But I think over the past year or so, I think we've demonstrated our commitment to returning capital to shareholders.