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'Inside S&P 500, most stocks in correction or bear market' (Reuters)


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https://www.reuters.com/article/us-usa-stocks-underwater/inside-sp-500-most-stocks-in-correction-or-bear-market-idUSKCN1MX33D

 

Interesting piece looking below the surface of the indexes.

 

On the New York Stock Exchange, 1,256 stocks hit 52-week lows, with only 21 establishing new highs [...]

 

About 353 S&P 500 stocks have fallen 10 percent or more from their 52-week highs. Of those, 179 stocks have fallen by 20 percent or more from their highs, establishing them in a bear market by many investors’ definitions.

 

Apple Inc, whose $1 trillion market value makes it by far the most heavily weighted stock within the S&P 500, has fallen 4.6 percent from its October 3 record high. That has helped the S&P 500 itself remain out of correction territory.

 

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I don't understand how a stock can be up from its 52 week high. Unless that part of the pie chart is only stocks that are flat at a 52 week high?

 

The pie charts only show how down from peak.

 

As you talking about the other chart? I think that one only looks on each day how many are making new lows and how many are making new highs, day by day.

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I don't understand how a stock can be up from its 52 week high. Unless that part of the pie chart is only stocks that are flat at a 52 week high?

 

The pie charts only show how down from peak.

 

There is a slice in the pie that says "flat to up 10%"

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I don't understand how a stock can be up from its 52 week high. Unless that part of the pie chart is only stocks that are flat at a 52 week high?

 

The pie charts only show how down from peak.

 

There is a slice in the pie that says "flat to up 10%"

 

My bad, it was so small I didn't see it.

 

Not sure. Doesn't seem to make sense. Could be a mistake. If it was based on YTD numbers, it might make sense, but they say from peak, so ¯\_(ツ)_/¯

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered).  I've also seen you post about FRPH, which I've followed for some time.  Any others that you believe are particularly attractive right now?

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered).  I've also seen you post about FRPH, which I've followed for some time.  Any others that you believe are particularly attractive right now?

 

Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size;

 

NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX...

 

Can get into more detail later but didn't want to write a book write now...

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered).  I've also seen you post about FRPH, which I've followed for some time.  Any others that you believe are particularly attractive right now?

 

Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size;

 

NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX...

 

Can get into more detail later but didn't want to write a book write now...

 

Thanks for sharing.  I've owned XPLT for years and agree it seems reasonably priced despite the run up over the last year.  Given your interest in FRPH and CTO, have you looked at Howard Hughes?  It's been written up enough that I'm sure you know the story.  I own it for the underlying asset quality (Ward Village and the Seaport in particular, but also the Texas and Las Vegas MPCs, which I believe is a business model that improves over time as the development matures).

 

I don't know whether it's cheap right now, but Old Dominion Freight Lines (ODFL) has long interested me as a high quality, well run business, and it's also down significantly from its highs.

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered).  I've also seen you post about FRPH, which I've followed for some time.  Any others that you believe are particularly attractive right now?

 

Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size;

 

NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX...

 

Can get into more detail later but didn't want to write a book write now...

 

Thanks for sharing.  I've owned XPLT for years and agree it seems reasonably priced despite the run up over the last year.  Given your interest in FRPH and CTO, have you looked at Howard Hughes?  It's been written up enough that I'm sure you know the story.  I own it for the underlying asset quality (Ward Village and the Seaport in particular, but also the Texas and Las Vegas MPCs, which I believe is a business model that improves over time as the development matures).

 

I don't know whether it's cheap right now, but Old Dominion Freight Lines (ODFL) has long interested me as a high quality, well run business, and it's also down significantly from its highs.

 

HHC is probably front and center on the buy list. I always seem to have an over-concentration in RE stuff and as a result have put off buying it. I have also felt it was a tad overrated(maybe ahead of itself is a better choice of words) the past couple years but do agree; as of right now it's served it's time in the penalty box and should do well from here.

 

More broadly speaking though, it just seems everywhere I look you can find good businesses now trading at low-mid teens multiple and many in the single digits. The tax cuts are a big reason, but even rolling them back, I see many opportunities to own things that years ago traded much higher. Coming back to HHC, 5 years ago it traded around 110... GM ex-Cruise trades at like 2-3x. NXP 8x despite being square in the middle of some major trends. GOOG now looks like AAPL a few years ago. It just seems like the market is saying all these things are going to hell. If things stay the same or even tail off moderately I think there's outsized gains to be had. I could always be wrong though.

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If you like CLF you might want to take a look at LIF.TO. Big down day today and could easily distribute $3-$4 next year on a $26.xx stock price. They have some of the same drivers as CLF (N.A. iron ore, high quality premiums, pellets) but a lot of the value is from a royalty interest, which lowers their downside.

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is

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Stocks I find cheap:

 

Automobile suppliers LEA, MGA, DLPH, HLE.DE

Cars: FCAU, GM, BMW3.DE

Insurance:  FFH.TO, RE, AIG(?)

Utilities/pipes : ENB

Semi : NXPI, possibly many others

Banks : GS, UBS (?), LYG, BCS

Europe: KRN.DE, SIEGY and many others...

Chemicals: EMN, BASFY

 

The selloff reminds me more of 2015/16 than 2010-12. A lot of European stock are back to 2016 selloff levels and some back to 2013/14. My biggest concern is political/ trade issues  Russia, Saudi Arabia, China, Brexit, Italy and perhaps even more so that we have seen peak profit margins due to inflationary pressure from labor costs, material costs, energy costs, trade tariffs etc.

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is

 

Will also add that I get markets are bifurcated at the moment, but still think the U.S. has a ways to go for good value to be readily found

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If you like CLF you might want to take a look at LIF.TO. Big down day today and could easily distribute $3-$4 next year on a $26.xx stock price. They have some of the same drivers as CLF (N.A. iron ore, high quality premiums, pellets) but a lot of the value is from a royalty interest, which lowers their downside.

 

Thanks, will take a look.

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is

 

When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC.

 

If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years...

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is

 

When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC.

 

If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years...

 

Earnings grow until they don't.

 

I'm looking ahead. The tax cuts gave the U.S and extra boost, but we're likely at peak levels of profitability here.

 

The next 2-3 years will be significantly harder for the U.S. companies to continue profit growth - especially if the USD keeps rising. Add to that the rising interest costs as record amounts of debt are rolled at higher rates, and less of actually being qualified to deduct against profits and forward profit growth becomes difficult.

 

Then again, we went through and incredibly long earnings recession back in 2015 and no one cared so....maybe they won't this time either.

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A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

 

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is

 

When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC.

 

If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years...

 

Earnings grow until they don't.

 

I'm looking ahead. The tax cuts gave the U.S and extra boost, but we're likely at peak levels of profitability here.

 

The next 2-3 years will be significantly harder for the U.S. companies to continue profit growth - especially if the USD keeps rising. Add to that the rising interest costs as record amounts of debt are rolled at higher rates, and less of actually being qualified to deduct against profits and forward profit growth becomes difficult.

 

Then again, we went through and incredibly long earnings recession back in 2015 and no one cared so....maybe they won't this time either.

 

I guess part of my point is that even if growth stops, buying some of these businesses at 8-10x is pretty damn reasonable. Like you said, earnings went down in 2015... as long as they don't fall off a cliff, many appear to be bargains IMO. I don't see the fed boosting rates much further from here.

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I guess part of my point is that even if growth stops, buying some of these businesses at 8-10x is pretty damn reasonable. Like you said, earnings went down in 2015... as long as they don't fall off a cliff, many appear to be bargains IMO. I don't see the fed boosting rates much further from here.

 

What do you consider cheap for RE companies? Do you base in on cash flow or earnings?

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I guess part of my point is that even if growth stops, buying some of these businesses at 8-10x is pretty damn reasonable. Like you said, earnings went down in 2015... as long as they don't fall off a cliff, many appear to be bargains IMO. I don't see the fed boosting rates much further from here.

 

What do you consider cheap for RE companies? Do you base in on cash flow or earnings?

 

Most important for me is sum of part for RE, provided it's got an honest management and/or capital structure that would allow a third party to come in and take it. Cash flow is great, but can be hidden, earnings don't mean much IMO. Being able to have someone see a discount to SOTP and swing in and take it out are the margin of safety.

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