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Corona Resistant Investments


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I’ll start - ASPU is my largest holding - it’s a nursing training school growing very rapidly (growth rates of 30-50%). People will need more nurses in case of an outbreak. Further - most of the program are online or mostly online. Using a 15 times EBITDA multiple (which is reasonable or even conservative for a company with such growth) I believe the share price goes beyond $25 within the next couple of years. They are also the low cost provider - they offer all programs at significant lower prices than competitors - which could help in a recession.

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HTL- pre released FY 2019 numbers were outstanding and held an investor day the week. This is a gem

 

PCYO- currently building out last real developmental area in Denver MSA. Own all the water to service that area. No debt, valuation still doesnt factor in much more than it did a couple years ago. Their only assets are in this area.

 

FRPH- why are we at $45 again? Who cares. Disciplined capital allocators and great select group of assets here.

 

Also think GRBK is grown into a real solid company here. Mainly sunbelt real estate developer. Sure, economic constraints could hurt housing, but I dont think so. Mortgage rates are extremely low and you dont even need money or job to get a mortgage anymore. Greenbrick also exercises quite a bit of discipline with respect to where and how they build.

 

Comcast- just cheap and not going anywhere. These types of businesses arent going to 0.

 

AYR Strategies- just delivered strong results and probably would have been up 30-40% if the market wasn't getting obliterated. They basically own the pot markets in MA and Nevada

 

 

Yup, Im talking my book.

 

 

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***HTL- pre released FY 2019 numbers were outstanding and held an investor day the week. This is a gem

 

PCYO-

FRPH-

Also think GRBK

Comcast-

AYR Strategies-...

Speaking of under-appreciated tailwinds and resistance to trends, just in case you’re interested:

https://www.gmo.com/americas/research-library/chemical-toxicity-and-the-baby-bust/

You likely know Mr. Grantham and may have reserves about his style, ideology or conclusions.

My take: He’s often Malthusian and sometimes wrong and he may have reached a stage in his life where his desire to leave a more tangible legacy lets sentimentals take over fundamentals. But his score of being generally in the right direction for complex issues and paradigm shift questions makes it worthwhile to read what he has to say IMO. I’ve found him to be a helpful source of restraint on unbridled optimism. A compromise suggests that there may be long term value in fertility-enhancing devices and solutions then.

I may end up removing Bayer from my watchlist too.

 

 

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Usual suspects - everything that is not good for you:

 

Guns (perhaps defense), booze, cigarettes, crappy food (Domino’s pizza) and perhaps add social networks to that list (FB). perhaps AMZN as people avoid stores and buy online.

 

And yes people will watch more TV. NFLX stock is up, but the rest is down, might be an opportunity. CMCSA has some exposure in their theme park business and if Olympics get cancelled (NBC has the rights). I bought more this Friday regardless. The bulk of their cash flow (broadband, TV) should be fine, especially TV in an election year.

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Guest cherzeca

the most important unspoken variable to this recommendation thread is timeframe.  for example I could make a case that if the corona crisis completely dissipates in the next 6 months (as I believe it will) then buying now a nurse training school (ASPU) is buying high and, if you sell in six months to one year, selling lower. 

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the most important unspoken variable to this recommendation thread is timeframe.  for example I could make a case that if the corona crisis completely dissipates in the next 6 months (as I believe it will) then buying now a nurse training school (ASPU) is buying high and, if you sell in six months to one year, selling lower.

 

What exactly is the draw to this particular nursing school (both from an investment and education perspective). What do they do that is so special? Nursing schools seem to be a dime a dozen. There are multiple schools in almost every metropolitan area. If you go to the local hospitals you will find the nursing staff is often highly comprised of local graduates who have done their precept there.

 

 

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Guest cherzeca

***HTL- pre released FY 2019 numbers were outstanding and held an investor day the week. This is a gem

 

PCYO-

FRPH-

Also think GRBK

Comcast-

AYR Strategies-...

Speaking of under-appreciated tailwinds and resistance to trends, just in case you’re interested:

https://www.gmo.com/americas/research-library/chemical-toxicity-and-the-baby-bust/

You likely know Mr. Grantham and may have reserves about his style, ideology or conclusions.

My take: He’s often Malthusian and sometimes wrong and he may have reached a stage in his life where his desire to leave a more tangible legacy lets sentimentals take over fundamentals. But his score of being generally in the right direction for complex issues and paradigm shift questions makes it worthwhile to read what he has to say IMO. I’ve found him to be a helpful source of restraint on unbridled optimism. A compromise suggests that there may be long term value in fertility-enhancing devices and solutions then.

I may end up removing Bayer from my watchlist too.

 

from GMO link:  "The damaged children, as the back-up data shows, are not just affected in their reduced fertility. The male children are on average less male in almost every way than in the past, and both male and female children are less robust going forward: they are more likely to have heart disease, cancer, and other afflictions, especially autoimmune problems. This damage is carried through their entire lives, ensuring that on average their life expectancies have also been reduced..."

 

this imo is gibberish. at best it is correlation, and I am being very generous. anecdotally, btw, I am not less male in almost every way.

 

edit:  I am also not less robust but that might be TMI

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the most important unspoken variable to this recommendation thread is timeframe.  for example I could make a case that if the corona crisis completely dissipates in the next 6 months (as I believe it will) then buying now a nurse training school (ASPU) is buying high and, if you sell in six months to one year, selling lower.

 

What exactly is the draw to this particular nursing school (both from an investment and education perspective). What do they do that is so special? Nursing schools seem to be a dime a dozen. There are multiple schools in almost every metropolitan area. If you go to the local hospitals you will find the nursing staff is often highly comprised of local graduates who have done their precept there.

 

If you have access you can read my writeup on SumZero:

https://sumzero.com/pro/research/ideas/16560

a lot of info there.

 

If I have to sum it up I'll say ASPU is special because they have low customer acquisition costs and because they are the low cost provider. Their degrees are in high demand and I expect that to continue and they are opening new campuses and expanding their programs. So far demand is exceeding supply and it is expected to continue as their degrees are 40% cheaper and the more expensive competitors are also fully booked as there are structural tailwinds.

This has been cheap before the Corona outbreak and had only fallen in price. I think that in the medium term (2-3 years) this will be a home run. This could work out great in 12 - 18 months as well.

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***HTL- pre released FY 2019 numbers were outstanding and held an investor day the week. This is a gem

...

...

https://www.gmo.com/americas/research-library/chemical-toxicity-and-the-baby-bust/

...

from GMO link:  "The damaged children, as the back-up data shows, are not just affected in their reduced fertility. The male children are on average less male in almost every way than in the past, and both male and female children are less robust going forward: they are more likely to have heart disease, cancer, and other afflictions, especially autoimmune problems. This damage is carried through their entire lives, ensuring that on average their life expectancies have also been reduced..."

 

this imo is gibberish. at best it is correlation, and I am being very generous. anecdotally, btw, I am not less male in almost every way.

 

edit:  I am also not less robust but that might be TMI

The conclusions, as phrased, are indeed stretched and likely go beyond the limitations described in the referenced studies.

The field of transgenerational effects and epigenetics is still in infancy.

But whatever the 'cause' (evolutionary, chemical or whatever) testosterone levels are going down and the trend is strong. Of course, objective individual results will vary but, on a market level and irrespective of viral spreads, demand for artificial assistance is likely to go up over time.

What is "TMI"? Too Much Internet? I looked up the acronym for possibilities and many options listed that could be tied to the low testosterone topic are derogatory.

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Guest cherzeca

too much information.

 

I find there is a tendency of some very smart money advisors to over theorize, find meta trends before anyone else and argue that this presents an investment opportunity.  I would put Grantham in this boat.  the "I will write a long essay about things that I see on the horizon that none of you see to show you how smart I am" bucket.  then there is a guy like teppler, who just looks at what there is for all of us to see, and decides smartly to do the things that we dont do.

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too much information.

 

I find there is a tendency of some very smart money advisors to over theorize, find meta trends before anyone else and argue that this presents an investment opportunity.  I would put Grantham in this boat.  the "I will write a long essay about things that I see on the horizon that none of you see to show you how smart I am" bucket.  then there is a guy like teppler, who just looks at what there is for all of us to see, and decides smartly to do the things that we dont do.

Thanks for the perspective. I assume you mean Tepper (David, not Jonathan Tepper who also tends to write about (interesting) stuff which may be irrelevant for the stock picker). Mr Grantham has been wrong (commodities price trends, mean reversion and profit margins, at least so far). His inputs (not his conclusions!), out of many, helped to opportunistically invest in the resource sector in 2015-6. However, he is one of the few people who have high testosterone levels (or who perceive themselves as such) who can publicly acknowledge that they have been wrong and he even apologized for previous publications that may have misled people, something rare in the public sphere.

---)Back to crowned virus resistant investments

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Guest cherzeca

too much information.

 

I find there is a tendency of some very smart money advisors to over theorize, find meta trends before anyone else and argue that this presents an investment opportunity.  I would put Grantham in this boat.  the "I will write a long essay about things that I see on the horizon that none of you see to show you how smart I am" bucket.  then there is a guy like teppler, who just looks at what there is for all of us to see, and decides smartly to do the things that we dont do.

Thanks for the perspective. I assume you mean Tepper (David, not Jonathan Tepper who also tends to write about (interesting) stuff which may be irrelevant for the stock picker). Mr Grantham has been wrong (commodities price trends, mean reversion and profit margins, at least so far). His inputs (not his conclusions!), out of many, helped to opportunistically invest in the resource sector in 2015-6. However, he is one of the few people who have high testosterone levels (or who perceive themselves as such) who can publicly acknowledge that they have been wrong and he even apologized for previous publications that may have misled people, something rare in the public sphere.

---)Back to crowned virus resistant investments

 

right, David.  street smart.  and btw, what does it mean to be street smart?  it means in part to be very careful to not let ideas run too far for too long...as in it is different this time (as in this covid19 is the "big one"). much of life is lived within a normal distribution, and if you are street smart, you recognize when the people around you are moving towards the tail...and then you take the edge that they have given you

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I'm not really thinking about things this short term, but if I did, seems to me like Costco is a good bet. If things get worse, everybody will go there to stock up, and if things go better than expected, the stock should recover.

 

I did too until the 10% bump on an assumed one off gain.

 

How come my stocks never get 10% gains on one off bs? j/k

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