Your 2016 best ideas

[Guest notorious546]

 

Happy to keep the discussion going, I can start a new thread and post more notes soon.

 

Look forward to seeing it.

https://blog.intercom.io/a-closer-look-at-saas-valuations/

 

[simplefocus]

Best ideas in order

1) FCAU

2) GM-WTB

3) AIG

4) BAC-WTA

5) IBM

6) BXE

[goldfinger]

I may sound like a broken clock on this board to many, but here are my favorite ideas in order.

 

1. BXE, GXE.TO

2. AAV, PWE, ETE, AR, PXD

3. SBRCY, DNOW

4. JD

 

Wilson, I am curious - BXE being 70% gas, do you have any special view on ng prices? Oil prices we have discussed in length in many threads on that board (and others) for example. NG prices are a different beast and a very different market. You seem to be using a 3.5C$/mcf AECO (correct me if I am wrong) for normalized prices in some of you models right?

[wondering]

Chou RRSP Fund (reasoning - I buy Chou after he has had a bad year (2015 down ~ 12%).  And he is 30% in cash ready to take advantage of opportunities where his sees it.)

 

FFH (if, if, if deflation occurs in a meaningful way).

 

Canadian preference shares (although I am second guessing myself on this one.  There maybe more downside before it gets better).

 

 

[ECCO]

Home Capital Group.  HCG.to

[Guest Grey512]

Home Capital Group.  HCG.to

 

On HCG - is this a short-term trade idea or more of a longer-term thesis? What gives you the comfort that the shorts are wrong? Are you positive on Canada sub-prime, and are you positive on Canada nat.res / global commodity prices?

 

Thanks in advance. I was short this in 2015 for a small gain, am out of it and no longer follow it. I am wondering whether Canada in general (stocks and currencies) are oversold here; potential short-term trade that I am considering putting on.

[Guest Schwab711]

Triumph Group (TGI) - new CEO, undervalued in SOTP, beneficiary of the pickup in A&D, focus on cost cutting through consolidation of facilities and product lines - a value play.

 

What is your opinion of the quality of their product lines? I thought they had a high allocation in declining aircraft models but I could be mis-remembering. I think TDG stands out because they supply a high % of products for high-demand models. I thought SPR had a better mix of product lines and valuation but I'm still learning the industry. Would be great to hear your thoughts behind TGI.

[thepupil]

My highest conviction (though certainly not highest upside) idea for 2016 is to go long the Leucadia 6 5/8% of 2043.

 

On IB: $134K Bid @ 81.97 / $500K Offered @ $82.05

 

At the offer price, the bonds yield 530 over the 30 yr (8.28%) to maturity and trade well wide of Jefferies, significantly wider than other BBB- financials, and about 300 bps wider than higher rated more liquid financials like MS and GS (which I regard as just as risky). The bonds were issued at 300 over and have since widened out by 230 bps, particularly in the last few months on no apparent news other than general market/liquidity concerns and mediocre operating results from JEF/LUK.

 

I simply don't think the mediocre earnings of Jefferies and Leucadia warrant the spread widening or make LUK a worse credit risk. Perhaps I'm the patsy at the poker table, but this is the safest bond I can find that offers an equity rate of return.

 

Duration doesn't bother me (it's about 11). I'd welcome long rates going up, though I don't think that will happen.

 

Ya it's boring.

[Picasso]

What do you think is causing the spread to come out?  It was wide from the start and just been getting wider... Not really complaining here, I've wanted to buy more but not a lot of liquidity on a tight bid/ask spread until today.

[TwoCitiesCapital]

What do you think is causing the spread to come out?  It was wide from the start and just been getting wider... Not really complaining here, I've wanted to buy more but not a lot of liquidity on a tight bid/ask spread until today.

 

I can't speak to this bond specifically, but credit spreads as a whole have blown out and are some of the highest potential returns for credit in years.

[frommi]

Maybe a bit late, but my best ideas are

 

Spin offs:

CCP - Healthcare REIT, ~9 x FFO (TTM)

CABO - Cable company, ~10 x FCF (2016)

 

Stocks:

BBBY ~9 x ~FCF (TTM)

IBM ~10 x FCF (TTM)

KMI ~7 x DCF (TTM)

 

Oh and just in case oil and gas prices come back:

BXE

[John Hjorth]

Novo Nordisk A/S [Novo B.CPH] [uS ADR: NVO].

[plato1976]

Should we value KMI like a utility?

Then its EV/EBITDA is not low at 12 plus

 

Maybe a bit late, but my best ideas are

 

Spin offs:

CCP - Healthcare REIT, ~9 x FFO (TTM)

CABO - Cable company, ~10 x FCF (2016)

 

Stocks:

BBBY ~9 x ~FCF (TTM)

IBM ~10 x FCF (TTM)

KMI ~7 x DCF (TTM)

 

Oh and just in case oil and gas prices come back:

BXE

[frommi]

Should we value KMI like a utility?

Then its EV/EBITDA is not low at 12 plus

 

I know of no utility with an ROIC of 11-13% and i think that pipelines are more like real estate. Of course i can be wrong on that. And regarding the multiple i don`t trust the yahoo finance data and calculated myself with the debt/(net debt/ebitda multiple) in the latest presentation. That gives ~7.5 billion EBITDA and a EV of 75.5 billion for a EV/EBITDA multiple of ~10. This is in-line with some utilities, despite the fact that most utilities grow EBITDA by 1-3% and KMI by 8-10%. But please don`t trust me. :)

[Guest Grey512]

Grey512,

 

Can you explain your long for Groupon?

 

Full disclosure, I'm out of Groupon. It's had a nice run, and I'm taking exposure off the table on the long side of the book.

[Picasso]

Nice trade.  I almost bought in the low $2's but dropped the ball on that one.

[Guest Grey512]

The trade looked dumb for a while.

And when GRPN was at $2 there was a lot of other cheap stuff in the market.

[spartansaver]

Maybe a bit late, but my best ideas are

 

Spin offs:

CCP - Healthcare REIT, ~9 x FFO (TTM)

CABO - Cable company, ~10 x FCF (2016)

 

Stocks:

BBBY ~9 x ~FCF (TTM)

IBM ~10 x FCF (TTM)

KMI ~7 x DCF (TTM)

 

Oh and just in case oil and gas prices come back:

BXE

 

  How are you getting comfortable with the increasing threat of e-commerce? Taking Wayfair as an example, they have 23.5% GM versus BBBY at 38.5%. If you assume BBBY is forced to cut margins down to 30%, you've cut their operating income in half. Seems like a fair amount of risk this company's earnings could be materially negatively impacted in the future.

 

[frommi]

How are you getting comfortable with the increasing threat of e-commerce? Taking Wayfair as an example, they have 23.5% GM versus BBBY at 38.5%. If you assume BBBY is forced to cut margins down to 30%, you've cut their operating income in half. Seems like a fair amount of risk this company's earnings could be materially negatively impacted in the future.

 

I change my mind every two days, so just ignore my picks. I am clearly not smart enough to pick a concentrated list of stocks that perform well 1-2 years out. But funnily my 60 picks outperform the market.

[spartansaver]

How are you getting comfortable with the increasing threat of e-commerce? Taking Wayfair as an example, they have 23.5% GM versus BBBY at 38.5%. If you assume BBBY is forced to cut margins down to 30%, you've cut their operating income in half. Seems like a fair amount of risk this company's earnings could be materially negatively impacted in the future.

 

I change my mind every two days, so just ignore my picks. I am clearly not smart enough to pick a concentrated list of stocks that perform well 1-2 years out. But funnily my 60 picks outperform the market.

 

Fair enough, seems like they are definitely trading cheaply. My paranoia is likely priced in a bit although it remains to be seen whether it is enough of a discount.