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It's time to harvest gains and move to sensibly priced securities. I am hoping if I throw out a few ideas I hold that are still investable others will do the same.

 

GD defense contractor going for 13-14x earnings. Long term cannibal.

 

MO tobacco, 8.5% yield and PE of 9.

 

ELF.to life insurer at half of book with management eating shares to close the gap.

 

Other ideas?

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Taylor Devices (TAYD) - no debt, almost half of market cap is in cash, good backlog, profitable, 0.9 P/B

Smith & Wesson (SWBI) - forward P/E < 6, betting on continued strong demand

RMRM - Discount price to book with most of book in cash

 

There are others, but I'm trying to establish a position and they're not very liquid, so I don't want to share them yet.

 

Generally I think gold\silver miners are a decent bet as well as natural gas pipelines.

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FMBL trades 0.77x book, 11-12x earnings, and has 2x+ the amount of capital to be well capitalized, and has close to $10B $8B of deposits across just 25 branches, 40 ish % of which are non interest bearing. The attraction of FMBL is a function of how much one values safety and over capitalization of that excess capital will never be returned to you. I value it because even if never returned it makes the earnings stream safer.

 

Staying with the theme of illiquid overcapitalized SoCal family go’s, LAACZ seems reasonable to me. Whether you think PMV is $3K/share or $4K plus, $2500/ share = 4% yield growing at mid single digits with an option on some kind of change.

 

Even hair cutting Apple, Berkshire continues to be very reasonable priced.

 

In a world where SPACs trade at 20% premium, EQC at 93-100 cents of NAV offers reasonably priced optionality.

 

BSM and DMLP offer close to 10% yields with direct exposure to hydrocarbon price/volume with low to no leverage. Can still be bad investments though if production collapses.

 

I actually think GOOG and FB, even MSFT are not unreasonably priced. Not cheap, certainly some tax  and regulatory risk, but, not crazy to me.

 

Multi family REITs (including non urban) are at 5 caps and can borrow at 1-3% and have low leverage.

 

What I don’t understand about the 50%+ cash crowd is I think there are plenty of securities out there that are highly likely to preserve amd grow purchasing power over time out there. I don’t think any of the above will CAGR at 15% for the next 10 years, but I’d be surprised at less than say 6% (unless say EQC doesn’t find a deal).

 

 

 

 

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FMBL trades 0.77x book, 11-12x earnings, and has 2x+ the amount of capital to be well capitalized, and has close to $10B of deposits across just 25 branches, 40 ish % of which are non interest bearing. The attraction of FMBL is a function of how much one values safety and over capitalization of that excess capital will never be returned to you. I value it because even if never returned it makes the earnings stream safer.

 

Staying with the theme of illiquid overcapitalized SoCal family go’s, LAACZ seems reasonable to me. Whether you think PMV is $3K/share or $4K plus, $2500/ share = 4% yield growing at mid single digits with an option on some kind of change.

 

Even hair cutting Apple, Berkshire continues to be very reasonable priced.

 

In a world where SPACs trade at 20% premium, EQC at 93-100 cents of NAV offers reasonably priced optionality.

 

BSM and DMLP offer close to 10% yields with direct exposure to hydrocarbon price/volume with low to no leverage. Can still be bad investments though if production collapses.

 

I actually think GOOG and FB, even MSFT are not unreasonably priced.

 

Multi family REITs (including non urban) are at 5 caps and can borrow at 1-3% and have low leverage.

 

What I don’t understand about the 50%+ cash crowd is I think there are plenty of securities out there that are highly likely to preserve amd grow purchasing power over time out there. I don’t think any of the above will CAGR at 15% for the next 10 years, but I’d be surprised at less than say 6% (unless say EQC doesn’t find a deal).

 

Yup. Bottom line is owning assets is better than not owning them. Many of the cash folks also seem to be worried about inflation too lol. Makes no sense. People always say shit like "price is what you pay..." or whatever and then refer to 1999 or 2008, but at this point many of them have been saying that, and been wrong for almost a decade, or put another way, 1/3 of the normal persons investing life cycle. I have over and over again found it prudent to be respectful of, but largely bet against "the exceptions to the rule" when it comes to investing because exceptions are rare and the closer we are to them the less likely they are to happen. You can hedge these exception to the rule risks quite easily and cheaply as well, further mitigating them. Its why 2011 Q3 was a gift(just using an example). Everyone thought it was GFC 2.0 and large scale defaults where just around the corner....they weren't. Because we just had that 2 years prior and everyone was prepared for it. Its why the fear of "the next wave" of covid never really materialized in the markets and kept people under invested...

 

I say this as someone who is as bearish on some big parts of the market as Ive ever been, and have probably a 20% or so short exposure through various baskets and trades. But I also still have very reasonable long exposure. If you cant find anything to invest in for long period of time, you should just buy the index or ETF because the truth is that a reasonable market participant can almost always find something out there thats worth investing in.

 

And yea, multi family REITs IMO are probably the ultimate cover all your bases, undervalued, will do well/get an adjustment multiple boost value play out there right now. Theyre a no brainer but people miss them because of false narratives and the fact that theyre also not going to be doing 50-100% in a year.

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FMBL trades 0.77x book, 11-12x earnings, and has 2x+ the amount of capital to be well capitalized, and has close to $10B $8B of deposits across just 25 branches, 40 ish % of which are non interest bearing. The attraction of FMBL is a function of how much one values safety and over capitalization of that excess capital will never be returned to you. I value it because even if never returned it makes the earnings stream safer.

 

Staying with the theme of illiquid overcapitalized SoCal family go’s, LAACZ seems reasonable to me. Whether you think PMV is $3K/share or $4K plus, $2500/ share = 4% yield growing at mid single digits with an option on some kind of change.

 

Even hair cutting Apple, Berkshire continues to be very reasonable priced.

 

In a world where SPACs trade at 20% premium, EQC at 93-100 cents of NAV offers reasonably priced optionality.

 

BSM and DMLP offer close to 10% yields with direct exposure to hydrocarbon price/volume with low to no leverage. Can still be bad investments though if production collapses.

 

I actually think GOOG and FB, even MSFT are not unreasonably priced. Not cheap, certainly some tax  and regulatory risk, but, not crazy to me.

 

Multi family REITs (including non urban) are at 5 caps and can borrow at 1-3% and have low leverage.

 

What I don’t understand about the 50%+ cash crowd is I think there are plenty of securities out there that are highly likely to preserve amd grow purchasing power over time out there. I don’t think any of the above will CAGR at 15% for the next 10 years, but I’d be surprised at less than say 6% (unless say EQC doesn’t find a deal).

 

Laacz is a great cash/bond alternative if you don't run a fund.  Since I run a fund, I decided to not want to sit around and wait for a K-1 form to be mailed to me in Mid March

 

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It's time to harvest gains and move to sensibly priced securities. I am hoping if I throw out a few ideas I hold that are still investable others will do the same.

 

GD defense contractor going for 13-14x earnings. Long term cannibal.

 

MO tobacco, 8.5% yield and PE of 9.

 

ELF.to life insurer at half of book with management eating shares to close the gap.

 

Other ideas?

 

All the defense contractors are cheap - NOC and even the blue chip LMT. I have added to LMT recently. I own GD as well, but too a bit off as I think they NOC and LMT are even better deals right now.

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Berry Global - Scale plastic packaging at 8x P/FCf and 8x EBITDA is very reasonable when they can borrow at 1-2%

Alexanders - NYC office with 8 year lease to Bloomberg is very reasonable. Probably 50 cent dollar. 

INDUS - Former Griffin, is trading at NAV.  But you get the optionality that the CEO and new chairman maybe able to turn this into a multi-bagger

Most multi-family REITS

GOOG/FB - Don't own any, but very reasonable

ASPEN - Very affordable online nursing with high gross margin growing 40% topline a year trading at 3x next year revenue. 

Berkshire, Fairfax (Although I don't own any)

Howard Hughes is probably worth $150 and trades at $80.  Will like long time for market to agree with me

ANGI is reasonable - It's a good call option on if they can build a market place for home repair, recommend smaller allocation 1-3% and see if it "right tail" for you

Univar - About 8.5x 2022/2023 P/FCF after they fully integrate the acquisition of Nexeo

 

There are plenty of still very cheap and reasonable stocks out there.

 

 

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FFH. Shares continue to trade at a historically low valuation band (P/BV). Lots of tailwinds.

 

1.) underwriting results are looking up - hard market has arrived

2.) investment results are looking up

- Fairfax’s equity portfolio is heavy in cyclicals (Stelco, Resolute, Eurobank ) which are spiking; also heavy in emerging market stocks (Quess, Fairfax India, IIFL quartet) which are increasing nicely; turnaround plays like Blackberry are also spiking; Atlas is chugging away. Digit is chugging away.

3.) asset sales: risk on sentiment should help Fairfax accelerate number of divestitures in 2021

- proceeds of $750 million from Riverstone UK sale coming in Q1

4.) $10 dividend (3% yield) is coming Jan 21

 

Key risks: total debt/growth in debt during 2020; status of final mystery short position; management doing something unexpected/dumb.

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Ingles Markets: A regional supermarket chain. Bulk of B/S consists of PPE (asset play). GP Margin expansion (narrow moat). Normalize P/E ~8-9. Using cash to payoff notes @5%. Family-owned. No earnings call (only Wells and Gabelli in prior calls)

 

Tiptree: 0.5 P/B. Wonderful asset in Fortegra (consistent underwriting margin). cash bal>Market cap. Hard assets earning yield of 4-5%. Sign. insider ownership. Biggest con: questionable capital allocation (not aggressive in buybacks)

 

 

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It's time to harvest gains and move to sensibly priced securities. I am hoping if I throw out a few ideas I hold that are still investable others will do the same.

 

GD defense contractor going for 13-14x earnings. Long term cannibal.

 

MO tobacco, 8.5% yield and PE of 9.

 

ELF.to life insurer at half of book with management eating shares to close the gap.

 

Other ideas?

 

LICT may interest you.  Very conservatively capitalized (particularly for its industry), decent current free cash flow yield and Gabelli controls capital allocation (buybacks).

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As someone who is 40% cash or so, I really appreciate the thread. I think the businesses I was buying in 2020 are pehaps higher quality on the average, but the price:value ratio has really gone out of whack. I will particularly look into the multi-fam REITs. I am not so great in the REIT space, are these best held in tax-deferred accounts due to the divs/distributions?

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As someone who is 40% cash or so, I really appreciate the thread. I think the businesses I was buying in 2020 are pehaps higher quality on the average, but the price:value ratio has really gone out of whack. I will particularly look into the multi-fam REITs. I am not so great in the REIT space, are these best held in tax-deferred accounts due to the divs/distributions?

 

Yes, Reits are best in tax deferred accounts.

 

Lots of good suggestions in this thread.

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It's time to harvest gains and move to sensibly priced securities. I am hoping if I throw out a few ideas I hold that are still investable others will do the same.

 

GD defense contractor going for 13-14x earnings. Long term cannibal.

 

MO tobacco, 8.5% yield and PE of 9.

 

ELF.to life insurer at half of book with management eating shares to close the gap.

 

Other ideas?

 

Along the lines of MO, which I own - Imperial Brands (IMBBY) - equal metrics, slightly more dividend, wide moat.

 

Also - HBI - 4% dividend, great operator, out of Target - but into Amazon. Nice Price/Cash Flow metrics. Great brand. Minor Fashion Risk.

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As someone who is 40% cash or so, I really appreciate the thread. I think the businesses I was buying in 2020 are pehaps higher quality on the average, but the price:value ratio has really gone out of whack. I will particularly look into the multi-fam REITs. I am not so great in the REIT space, are these best held in tax-deferred accounts due to the divs/distributions?

 

Yes, Reits are best in tax deferred accounts.

 

Lots of good suggestions in this thread.

 

Under current law REITs are pretty tax efficient in a taxable account as well, but I wouldn’t assume the 20% deduction lasts too long.

 

https://www.reit.com/investing/investing-reits/taxes-reit-investment

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Thanks for everyone's replies. I have looked at many of the ideas.  I just sold a bank stock, somehow it's near all time high and moved to AVB.

 

For anyone interested AVB is a multi-family REIT.  Has 4% dividend and is down some 30% y over y.  Good long term record of growing the dividend back into the 90s.  Geographic diversification seems excellent.  Average term to maturity is around 10 years.  It only pays out about 70% of affo so expect growth in future. Trades at below average affo multiple as do most of these type of REITs I assume.  I am no expert just reporting what I have found.

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I'd throw MRG in there as well on multi family. Trades at half of NAV and 30% discount to historical average. Good yield. High ownership from Sahi; who is an incredible operator. Basically a Sun Belt hybrid with some exposure to the recovery areas in Canada as well.

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Thanks for everyone's replies. I have looked at many of the ideas.  I just sold a bank stock, somehow it's near all time high and moved to AVB.

 

For anyone interested AVB is a multi-family REIT.  Has 4% dividend and is down some 30% y over y.  Good long term record of growing the dividend back into the 90s.  Geographic diversification seems excellent.  Average term to maturity is around 10 years.  It only pays out about 70% of affo so expect growth in future. Trades at below average affo multiple as do most of these type of REITs I assume.  I am no expert just reporting what I have found.

 

The above setup describes EQR and ESS though ESS is exclusively west coast and EQR is west coast plus NY heavy. If you take the 30% down and replace it with 10% and insert sunbelt/southeast for geography, then you are describing MAA and CPT. Given that multi family is more uniform and fungible than say malls or office (which are extremely asset specific), I think a basket approach makes sense as long as you trust mgt and want to own in the various geographies. There are obviously differences but the general set up for all of the blue chips is kind of the same.

 

Or you can go smaller/ more levered / family controlled with NEN/ CLPR. I sold my NEN at a 30 % loss in the throes of covid and bought the blue chips and haven’t looked back. Dabbled with CLPR.

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Morgyard isn't multifamily, it's heavy into office , retail, industrial as I recall.  However yes good operator.

 

Morguard Corp(MRC), and Morguard REIT(MRT) have all that stuff. North American(MRG) is pureplay residential and IMO the crown jewel that most people arent even aware of.

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Billy Boy Ackman just bought more of Howard Hughes Corp

 

I don't think that is necessarily true.  I think what you are seeing is rebalancing between funds and OTC put assignment.

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Billy Boy Ackman just bought more of Howard Hughes Corp

 

I don't think that is necessarily true.  I think what you are seeing is rebalancing between funds and OTC put assignment.

 

he got more shares put to him. he now owns 25% of the company, all in simple long stock form (no options/swaps).

 

“On January 6, 2021, the Reporting Persons restructured and rebalanced its investment in the Issuer,” according to the filing

On January 6, Pershing acquired shares via the obligation to purchase common shares pursuant to previously written and reported put options which expired on Jan. 6, the unwind of 3.5 million previously written and reported put options expiring in 2021, and the purchase of shares of common ctock, according to an amended 13D filing

The previous 13D/A filed on June 5, 2020 showing Pershing’s 19.9% stock ownership also referenced 32.5% beneficial ownership, an amount reflecting a case where all put options were exercised

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