rukawa Posted March 3, 2020 Share Posted March 3, 2020 I would love people to share undervalued investments that they believe have be affected by the expectation of large Corona outbreak. The underlying idea being that a large corona outbreak is unlikely to do permanent damage to any company so why not buy companies on sale. Link to comment Share on other sites More sharing options...
Gregmal Posted March 3, 2020 Share Posted March 3, 2020 I would love people to share undervalued investments that they believe have be affected by the expectation of large Corona outbreak. The underlying idea being that a large corona outbreak is unlikely to do permanent damage to any company so why not buy companies on sale. MSG Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 3, 2020 Share Posted March 3, 2020 spy. Link to comment Share on other sites More sharing options...
undervalued Posted March 4, 2020 Share Posted March 4, 2020 Airlines Link to comment Share on other sites More sharing options...
Spekulatius Posted March 4, 2020 Share Posted March 4, 2020 Energy. It’s already down on the ground and now it gets a swing with a baseball bat to the head. Link to comment Share on other sites More sharing options...
thepupil Posted March 4, 2020 Share Posted March 4, 2020 At a point, I will probably buy HST. All hospitality REITs trade cheap to NAV. HST is the most liquid, least levered, only IG rated one (it’s blue chippy REIT to the core), and owns some very high quality assets that they recently overpaid for. Trades like $300K / key when a lot of their asset base is worth much more. Unless things improve much more quickly than I expect, i will wait a while. Not that much cheaper than when I took a look at it a few months ago and passed. Link to comment Share on other sites More sharing options...
finetrader Posted March 4, 2020 Share Posted March 4, 2020 Live Nation-LYV Link to comment Share on other sites More sharing options...
undervalued Posted March 4, 2020 Share Posted March 4, 2020 Is the strategy to buy basket of these companies' LEAP, 1 year LEAP vs 2 year LEAP? Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 4, 2020 Share Posted March 4, 2020 Is the strategy to buy basket of these companies' LEAP, 1 year LEAP vs 2 year LEAP? now would be cheaper than a couple of weeks ago certainly. this is an interesting idea to ladder leaps in the midst of a correction Link to comment Share on other sites More sharing options...
Paarslaars Posted March 4, 2020 Share Posted March 4, 2020 Anheuser-Busch InBev :) Link to comment Share on other sites More sharing options...
thepupil Posted March 4, 2020 Share Posted March 4, 2020 At a point, I will probably buy HST. All hospitality REITs trade cheap to NAV. HST is the most liquid, least levered, only IG rated one (it’s blue chippy REIT to the core), and owns some very high quality assets that they recently overpaid for. Trades like $300K / key when a lot of their asset base is worth much more. Unless things improve much more quickly than I expect, i will wait a while. Not that much cheaper than when I took a look at it a few months ago and passed. https://ir.hosthotels.com/static-files/da439e04-a444-4d19-b247-8fb6cc7fc639 https://ir.hosthotels.com/static-files/8ad80617-ef9d-41b2-955a-f4c94e529d2d just to follow up here, it's more like $260K / room now. HST has issues pre-corona such as wage inflation due to enhanced border security generally tight labor market, and more secular threats from airbnb and other new hotel type of offerings (the ones where newbuild apartments/condos leas their unsold/leased inventory as hotels for example). it was and is a popular HF short (6% of float) due to its abundant liquidity, presumed lack of takeover optionality (too big, highest median pay in the S&P500, will never sell). HST goes out of its way to highlight that its top 40 assets (63% of EBITDA) are a different animal than the rest of its assets and they are right. these do $37K / EBITDA per room and $362 RevPar. To give an anecdotal example of how things have shifted, they bought 3 hotels from Hyatt for $1 billion ($700K / key), so at the current price you are buying at a very significant haircut to that print. They bought the Don Cesar for $600K / key and have since brought EBITDA/Key up to $50K. they bought a South Beach hotel for $1.4 million a key and $600mm+! Now they probably overpaid for those trophies, but if anyone knows thepupil well, they know he loves to buy trophies for less than what others overpay. Paying $260K for something that in a good year makes $50K of EBITDA isn't half bad (Don Cesar). Paying $260K for a hotel on the beach that does $400+revpar probably works too. If I could buy a condo on the beach in MAui or Amelia Island or NAples for $260K, I'd do that too. Or in San Francisco, or downtown San Diego on the water. the whole company trades for 8.5x EBITDA (which will obviously collapse soon). Given the giant freaking sensitivity and the fact that I'd expect some of their hotels to go unprofitable and revenue to be down 80% for the next q's, I am not interested here, despite what is likely a "good price" over the long term if you think these types of properties have a reason to exist. I do. One can't get married or have a conference in an Airbnb. The Ritz Carlton Amelia Island on the other hand is a great place to do those things. an interesting wrinkle is that HST is MAR's largest partner (their HQ's are located nextdoor to each other, as HST is the PropCo from old MAR from You Can Be a Stock Market Genius). HST is embarking on a big capital program where they invest heavily in a lot of their MAR assets. MAR gave them various performance guarantees that happen to coincide with Corona. I don't think this is that important, but just find it interesting that MAR (as the sexy asset light franchisor) may experience significant costs from this. HST extremely modest IG rated (less than 2x) debt trades for 90-180 bp spread and less than 3% all-in yields. in terms of debt/cost of capital/liquidity, its the SPG of hotels. a starter position is warranted soon. Link to comment Share on other sites More sharing options...
rukawa Posted March 5, 2020 Author Share Posted March 5, 2020 Sorry I must be a moron but hotels go for 260K a room?! Really. Wow. And that is considered cheap? I would have never imagined that. Link to comment Share on other sites More sharing options...
thepupil Posted March 5, 2020 Share Posted March 5, 2020 What do you think it cost to build a hotel in San Francisco, San Diego, Maui, Naples, Amelia, South Beach, etc? The replacement cost (which doesn’t matter if you think Airbnb kills the industry or that corona means no one will travel again) is probably $400-$500K/room across the whole company, higher in many individual cases. If you can rent out a room for $400/night or a wedding costs $60K of F&B at your hotel, or a conference, or can obviously be quite profitable to own one of theses assets. That said, they are cyclical and capital intensive, of course. https://www.bizjournals.com/sanfrancisco/blog/2015/04/hotel-construction-san-francisco-million-per-room.html And this is for Waikiki high rise not Maui on the beach https://www.hawaiibusiness.com/waikiki-construction-refreshes-hotels/ Carey also notes that development in Waikiki – particularly away from the beach – is hampered by cost constraints. “If you want to build a high-rise hotel,” he says, “the rule of thumb is you need to get a dollar of average-daily-rate for every $1,000 of construction costs. In Waikiki, it probably cost, at a minimum, $350,000 to $500,000 a key to build a high-rise hotel, which, using traditional underwriting, suggests you need $350 to $500 a night in average rate to make a pure hotel. There are very few locations that enable that kind of underwriting.” It’s this calculation, he says, that explains the paucity of new hotel projects. Link to comment Share on other sites More sharing options...
rukawa Posted March 7, 2020 Author Share Posted March 7, 2020 Seems like corona virus hasn't really done much so far to individual stocks. Carnival has gone down about 50% and trading at a 6 p/e which is cheap but not that cheap considering how directly its impacted them. Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 7, 2020 Share Posted March 7, 2020 cruises may have a long impact period. spy is down 13%. I like spy. if you can find an individual name down, say , 25%, that isn't directly linked to covid19, then fine. but cruise lines down 50% is not enough at least for me given direct linkage to covid19, if I can get diversified down 13%. just my viewpoint Link to comment Share on other sites More sharing options...
Pelagic Posted March 8, 2020 Share Posted March 8, 2020 cruises may have a long impact period. spy is down 13%. I like spy. if you can find an individual name down, say , 25%, that isn't directly linked to covid19, then fine. but cruise lines down 50% is not enough at least for me given direct linkage to covid19, if I can get diversified down 13%. just my viewpoint Cruises have long (perhaps unfairly https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm) been associated with norovirus outbreaks aboard. I don't think the cruising public will punish cruise ship operators for covid19 months/years after the coronavirus hysteria is over any more than they have in the recent past for the occasional norovirus outbreak aboard. The lure of a cheap vacation in the tropics is too much for most to pass up. And oil is down big and likely going lower as OPEC+ falls apart so a major cost for cruise operators just got reduced. Link to comment Share on other sites More sharing options...
rukawa Posted March 8, 2020 Author Share Posted March 8, 2020 cruises may have a long impact period. spy is down 13%. I like spy. if you can find an individual name down, say , 25%, that isn't directly linked to covid19, then fine. but cruise lines down 50% is not enough at least for me given direct linkage to covid19, if I can get diversified down 13%. just my viewpoint Cruises have long (perhaps unfairly https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm) been associated with norovirus outbreaks aboard. I don't think the cruising public will punish cruise ship operators for covid19 months/years after the coronavirus hysteria is over any more than they have in the recent past for the occasional norovirus outbreak aboard. The lure of a cheap vacation in the tropics is too much for most to pass up. And oil is down big and likely going lower as OPEC+ falls apart so a major cost for cruise operators just got reduced. Honestly I don't think cruises are that cheap and I really really don't understand the appeal. Link to comment Share on other sites More sharing options...
Guest cherzeca Posted March 8, 2020 Share Posted March 8, 2020 cruises may have a long impact period. spy is down 13%. I like spy. if you can find an individual name down, say , 25%, that isn't directly linked to covid19, then fine. but cruise lines down 50% is not enough at least for me given direct linkage to covid19, if I can get diversified down 13%. just my viewpoint Cruises have long (perhaps unfairly https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm) been associated with norovirus outbreaks aboard. I don't think the cruising public will punish cruise ship operators for covid19 months/years after the coronavirus hysteria is over any more than they have in the recent past for the occasional norovirus outbreak aboard. The lure of a cheap vacation in the tropics is too much for most to pass up. And oil is down big and likely going lower as OPEC+ falls apart so a major cost for cruise operators just got reduced. a lot of this public perception, even if wrong. I found out that airlines have very effective air filtration systems that are designed to filter pathogens. they should advertise this more because most people think airlines have stale air and thus unhealthy air. I dont see that cruise ships have this in their air circulation systems. even if they do, you can bleach down the inside of an airplane more easily than a cruise ship. again, all of this analysis is costly (hard to know likely effects) and it all comes out in the wash with a sale in aisle 3 on diversified names like spy Link to comment Share on other sites More sharing options...
thepupil Posted March 8, 2020 Share Posted March 8, 2020 cruises may have a long impact period. spy is down 13%. I like spy. if you can find an individual name down, say , 25%, that isn't directly linked to covid19, then fine. but cruise lines down 50% is not enough at least for me given direct linkage to covid19, if I can get diversified down 13%. just my viewpoint Cruises have long (perhaps unfairly https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm) been associated with norovirus outbreaks aboard. I don't think the cruising public will punish cruise ship operators for covid19 months/years after the coronavirus hysteria is over any more than they have in the recent past for the occasional norovirus outbreak aboard. The lure of a cheap vacation in the tropics is too much for most to pass up. And oil is down big and likely going lower as OPEC+ falls apart so a major cost for cruise operators just got reduced. Honestly I don't think cruises are that cheap and I really really don't understand the appeal. I am not a buyer of cruises, but a simplistic analysis of Carnival says its cheap if you think this does not permanently change the industry's supply / demand/profitability/pricing power. Has made about an average 10%-11% (I did not precisely calc this and just eyeballed it) or so ROE since 2005 and it trades for 0.7x book. If you assume it gets to its historical ROE and is worth book to a slight premium in say 3-4 years (note that the range in the past 5 years is like 1.4x-2.0x pre-corona) then you could make some decent dough. So while I'm not a buyer (I'd rather buy less directly affected stuff for slighlty more expensive prices to "normalized" earnigns/asset value whatever), I can understand the appeal as a mean reversion play. When you compare to other stuff that's down 20% or 30% and may have already been cheap before, I can't be enticed to buy something so directly in the bullseye of this. I can see the appeal in the short term for bears: high fixed costs, probably some construction committments, may even need to raise some capital, etc. etc. Do you think that if this kills 0.2% of infected people under 30 and is gone in a year or 2, that college kids aren't going to go on a spring break cruise? according to my 5 second google, only 30% of carnivals customers are over 55 (this is surprising to me). Link to comment Share on other sites More sharing options...
rukawa Posted March 13, 2020 Author Share Posted March 13, 2020 cruises may have a long impact period. spy is down 13%. I like spy. if you can find an individual name down, say , 25%, that isn't directly linked to covid19, then fine. but cruise lines down 50% is not enough at least for me given direct linkage to covid19, if I can get diversified down 13%. just my viewpoint Cruises have long (perhaps unfairly https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm) been associated with norovirus outbreaks aboard. I don't think the cruising public will punish cruise ship operators for covid19 months/years after the coronavirus hysteria is over any more than they have in the recent past for the occasional norovirus outbreak aboard. The lure of a cheap vacation in the tropics is too much for most to pass up. And oil is down big and likely going lower as OPEC+ falls apart so a major cost for cruise operators just got reduced. Honestly I don't think cruises are that cheap and I really really don't understand the appeal. I am not a buyer of cruises, but a simplistic analysis of Carnival says its cheap if you think this does not permanently change the industry's supply / demand/profitability/pricing power. Has made about an average 10%-11% (I did not precisely calc this and just eyeballed it) or so ROE since 2005 and it trades for 0.7x book. If you assume it gets to its historical ROE and is worth book to a slight premium in say 3-4 years (note that the range in the past 5 years is like 1.4x-2.0x pre-corona) then you could make some decent dough. So while I'm not a buyer (I'd rather buy less directly affected stuff for slighlty more expensive prices to "normalized" earnigns/asset value whatever), I can understand the appeal as a mean reversion play. When you compare to other stuff that's down 20% or 30% and may have already been cheap before, I can't be enticed to buy something so directly in the bullseye of this. I can see the appeal in the short term for bears: high fixed costs, probably some construction committments, may even need to raise some capital, etc. etc. Do you think that if this kills 0.2% of infected people under 30 and is gone in a year or 2, that college kids aren't going to go on a spring break cruise? according to my 5 second google, only 30% of carnivals customers are over 55 (this is surprising to me). I was comparing carnival to auto part suppliers like linamar which i did think were cheap at less than 6 times earnings. Carnival was at over 6 times earnings. Since my post its dropped significantly. Now its under 4. I now do consider it actually cheap even considering the crisis. Unless people stop going on cruises completely or they run into a cashflow problem. Haven't looked at their liquidity yet. Link to comment Share on other sites More sharing options...
UK Posted March 18, 2020 Share Posted March 18, 2020 How it is possible to explain that ADS or VIAC are both down -72 and -69 YTD with a pre corona PE ~2, when even AAL is down "only" -45 and trades at pre corona PE ~3. Is VIAC more corona sensitive than AAL? Link to comment Share on other sites More sharing options...
rukawa Posted March 24, 2020 Author Share Posted March 24, 2020 As far as I can see the stocks with the biggest cliff drops have been airlines and cruise companies. I don't know of any other companies that have seen such big hits. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 24, 2020 Share Posted March 24, 2020 Hotels stocks have gotten hit worse than airlines even. DRH is down from $10 to ~$3. Same with a lot of energy stocks. Link to comment Share on other sites More sharing options...
rukawa Posted April 17, 2020 Author Share Posted April 17, 2020 Following stocks look cheap. Found them with a PE >1 and PE <4 screen. This gave 150 stocks which had valueline reports...narrowed down to the following. Children's place looked particularly interesting...no debt, high returns on equity...very cheap. delta airlines alliance data systems Royal carribean, norweign, carnival viacom (VIAC) fiat diamond back eqm midstream enable midstream brinker international delek logistics dana incorporated designer brands discover capri holdings commercial vehicle conn inc comerica caleres amc networks giii aparell gap haiwaiian holdings husky energy kohl's corp macys mednax modine manufacturing movado marlin business pbf energy dave and busters children's place spirit airlines sally beauty signet jewellers spirit aerosystems texas capital united airlines unum group Link to comment Share on other sites More sharing options...
undervalued Posted April 18, 2020 Share Posted April 18, 2020 A few of them have threads in this forum, coincidence? Link to comment Share on other sites More sharing options...
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