Best Investment Idea(s) for 2022

[jfan]

On 1/10/2022 at 12:27 PM, Gregmal said:

Just rattling off a few but stuff like FCX, CVX, CLF, BHP, SU, etc. Its not crazy at all to expect earnings to go up at least 50-100% over the next few years and you'll also get multiple expansion which, starting from a very low base, is all you'd need for some big wins. If AAPL can ride an earnings and rerating wave over 5 years so can XOM. Just depends on which cycle we're in. 

Just curious why the producers and not the associated royalty companies?

[Gregmal]

5 minutes ago, jfan said:

Just curious why the producers and not the associated royalty companies?

Wanna get some of the risk premium. Straddle the line between historically reckless and the reasonable. If shit goes parabolic even the awful and poorly run companies will have their day. But IMO the best risk reward is further out the risk curve. Royalty companies are inherently some of the highest quality vehicles and thus won't get the same type of inflection rerating. 

[jfan]

16 minutes ago, Gregmal said:

Wanna get some of the risk premium. Straddle the line between historically reckless and the reasonable. If shit goes parabolic even the awful and poorly run companies will have their day. But IMO the best risk reward is further out the risk curve. Royalty companies are inherently some of the highest quality vehicles and thus won't get the same type of inflection rerating. 

I understand your use of long-dated warrants and moving out on the risk premium spectrum to maximize your returns. Why did you choose this strategy instead of using margin or personal leverage to purchase the equity of the royalty companies especially those who are overcapitalized. 

[Gregmal]

59 minutes ago, jfan said:

I understand your use of long-dated warrants and moving out on the risk premium spectrum to maximize your returns. Why did you choose this strategy instead of using margin or personal leverage to purchase the equity of the royalty companies especially those who are overcapitalized. 

I dont really like to mess with margin+energy. The options are non recourse leverage and the bigger high quality stuff I think has the best mix of everything including a liquid options market. I can get good duration on the equity options and if Im wrong its not going to hurt too much. Same might apply similarly to the royalty companies although thats not my field of expertise and my objective here is just to catch a big move in the whole complex in the simplest and most efficient manner possible. I am certain somebody like @SharperDingaan, Kuppy or others who know energy inside and out can put on some wicked trades given whats about to unfold. I try to know my limitations. 

[SharperDingaan]

Dig around in the company (high quality only) issued warrants, NOT the market options/warrants. There are quite a few of them, and they are largely ignored as most folks look only at the stock price. Until the day the tide comes in ... then the stock price goes through the roof, and that lovely warrant looks cheap. 

 

Alternatively, play the convertibles. Sell at the conversion price when the tide comes in, buy back when the central bank raises rates, higher & sooner to combat inflation; help yourself as the market panics. Just be aware that your counterparty may well be a GS - and that their teeth are a lot bigger than yours!

 

SD

 

[SharperDingaan]

Depends on the warrant, and the market liquidity.

Example CVE. Pick an option market call, plug in the market price and the BS greek's, get the Vega value. Plug the greek's and the warrant strike price into BS, to get the theoretical value. Compare to the current price of the warrant. Most often the warrant will be cheaper than it should be, when everyone hates the name, the reverse when the name is a darling.

 

Primarily a market specific demand/supply thing, amplified by level of liquidity. The more frequent the trading in the warrant, the less price difference relative to the names option market. As the dog shit names typically don't have the liquidity or the option market, they always suffer a sellers market until there's some kind of 'event'. Little different to being in a distressed security.

 

Typically if/when that 'event' actually shows up, the 'squid' and its cousins aren't far behind!

Agency matters, and they will be pretty true to form.

 

SD

 

 

 

 

  

Edited January 11, 2022 by SharperDingaan

[lnofeisone]

2 hours ago, SharperDingaan said:

Depends on the warrant, and the market liquidity.

Example CVE. Pick an option market call, plug in the market price and the BS greek's, get the Vega value. Plug the greek's and the warrant strike price into BS, to get the theoretical value. Compare to the current price of the warrant. Most often the warrant will be cheaper than it should be, when everyone hates the name, the reverse when the name is a darling.

 

Primarily a market specific demand/supply thing, amplified by level of liquidity. The more frequent the trading in the warrant, the less price difference relative to the names option market. As the dog shit names typically don't have the liquidity or the option market, they always suffer a sellers market until there's some kind of 'event'. Little different to being in a distressed security.

 

Typically if/when that 'event' actually shows up, the 'squid' and its cousins aren't far behind!

Agency matters, and they will be pretty true to form.

 

SD

 

 

 

 

  

SD - thanks for this timely reminder. This is how OXY and its warrant traded a year ago or so. Easy to sell OTM calls to collect elevated premium until warrant becomes more popular. 

[Spekulatius]

On 1/5/2022 at 7:38 AM, Aurel said:

I looked at JST.DE some time ago. (pre-COVID) They offer truck and trailer components. Selling mostly to the big OEMs.

 

Decent Management and looks like they already recover from the pandemic. But quite some debt, so not really cheap thow.

JST.DE (truck trailer etc) seems like a great business, but it is also somewhat expensive. It appears they dominate their niche.

 

I think SHA.DE (Schaeffler) may be a better bet than LEONI risk adjusted. Somewhat levered but profitable. Family controlled which could be an issue. Statistically cheap, but hasn't been a great performer since IPO.

[jfan]

Thanks @SharperDingaan and @Gregmal for the insights! Much appreciated.

[Aurel]

On 1/12/2022 at 3:23 PM, Spekulatius said:

JST.DE (truck trailer etc) seems like a great business, but it is also somewhat expensive. It appears they dominate their niche.

 

I think SHA.DE (Schaeffler) may be a better bet than LEONI risk adjusted. Somewhat levered but profitable. Family controlled which could be an issue. Statistically cheap, but hasn't been a great performer since IPO.

I took a first glance at SHA.DE and agree: It looks more interesting then JST.DE, if you take the valuation into account. Not sure about the owners-family, but the management looks decent to me. Their debt looks a lot, but manageable to me.

I will dig deeper and maybe grab some shares. Thanks for bringing this up.

The insiders like to buy at these prices, too:

https://www.insider-alarm.de/schaeffler-ag/

Edited January 13, 2022 by Aurel

[D33pV4lue]

On 12/25/2021 at 2:59 PM, competitive-advantage said:

Great idea to have a talk about 2022 opportunities. My circle of competence is tech and especially social media/advertising, so thats what I stock to.

 

I also like

- Snap (so many opportunities going forward)

- Twitter (strong position on media and with celebrities)

But I’m waiting for them to have stable ROI, financials etc.

 

And I have 50% in Facebook (same reasons as Alphabet)

 

What makes you think twitter can successfully monitize their platform? By succesfully I mean as efficient and profitable  as Google and FB. 

 

SNAP is interesting in this space... suprisingly they are best at driving app downloads but the ability of FB to copy all of their inovative features scares me off. 

[Spekulatius]

14 minutes ago, D33pV4lue said:

 

What makes you think twitter can successfully monitize their platform? By succesfully I mean as efficient and profitable  as Google and FB. 

 

SNAP is interesting in this space... suprisingly they are best at driving app downloads but the ability of FB to copy all of their inovative features scares me off. 

I am optimistic on Twitter too, have a position and adding to it. I like that they have a real CEO now, for the first time basically. Maybe it makes a difference. I do agree that eyeballs are hard to monetize on Twitter.

[competitive-advantage]

6 hours ago, D33pV4lue said:

 

What makes you think twitter can successfully monitize their platform? By succesfully I mean as efficient and profitable  as Google and FB. 

 

SNAP is interesting in this space... suprisingly they are best at driving app downloads but the ability of FB to copy all of their inovative features scares me off. 

I don’t think. I’m waiting for it to happend. I believe I will make more money on waiting for it to happend then to bet and win sometimes.

I understand that it could be misunderstood in a 2022 thread.

Edited January 13, 2022 by competitive-advantage

[KPO]

From today’s quote of around $12.25, on a risk adjusted total shareholder return basis (i.e. including dividends), LUMN seems interesting given the various spin events during the year that will help clean up the balance sheet. 

Edited January 14, 2022 by KPO

[Dave86ch]

19 hours ago, Spekulatius said:

I am optimistic on Twitter too, have a position and adding to it. I like that they have a real CEO now, for the first time basically. Maybe it makes a difference. I do agree that eyeballs are hard to monetize on Twitter.

Imo the problem is more related to the user base than to the CEO.

[IceCreamMan]

16 hours ago, Dave86ch said:

Imo the problem is more related to the user base than to the CEO.

 

What's the problem with the user base?

[Spekulatius]

9 minutes ago, IceCreamMan said:

 

What's the problem with the user base?

Twitters user base is fine, even I am there. The problem is more how it’s used - the users aren’t exactly going there looking for something to shop.

[competitive-advantage]

12 hours ago, Spekulatius said:

Twitters user base is fine, even I am there. The problem is more how it’s used - the users aren’t exactly going there looking for something to shop.

In many cases the ideal situation is that people shop/search for something like on Google. Facebooks ads works fine too if you just target large audiences of +100.000 users (just age/gender/area for instance. It surprised me that these audiences often worked better than really specific audiences. It gave the platform more people to test/optimize against.

And this worked great even with campaigns like eye operations and fertility services.

 

I assume Twitter could get a problem because marketing companies choose the safe option. They don’t want to sell and educate people about a platform if it does not give +80% good campaigns.

It’s a disaster to setup a campaign that don’t have the ability to use the ad budget as quickly as expected.

It’s the same reason why Bing Ads never became popular in the online marketing companies I worked in.

And that’s why I’m waiting for good news about Twitter ads.

People also doubted about Facebook Ads in the beginning, so lets see what the future brings.

[Spekulatius]

@competitive-advantage I am no expert in online ad marketing, but it was clear that Twitters ad targeting was atrocious. it basically was no better than blanket TV ads. So most ads were just blanket ads and image campaigns . It looks to me as a user as they have been slowly improving this.

 

My thesis is that the bar is low and TWTR is cheap by some metrics - for example they are trading at 5x revenues right now. Also, Twitter didn’t really have a real CEO, Jack was in it half heartedly and quite frankly, I don’t think he knows how to run a real business (he has vision and is a good founder). I did start buying into TWTR only after he left. I don’t know much about the new CEO but suspect that pretty much anybody can do better than Jack at this point.

Edited January 15, 2022 by Spekulatius

[CafeB]

On 1/2/2022 at 9:29 PM, CafeB said:

On 1/2/2022 at 4:20 PM, Spekulatius said:

For economy sensitive plays, I think car/ truck suppliers here are worth a look. They are not great business, and have been hit hard by first COVID-19 and then the semi shortage .

 

Interesting. Another beneficiary of unconstrained auto production might be upfitters, such as PLOW :

 

Another beneficiary might be LEG, although auto <20%: 2021 guidance: "Volume expectations changed to mid-single-digit from mid-to-high-single-digit growth primarily from lower volume in Automotive as a result of semiconductor shortages impacting global auto production"

[Dave86ch]

 

On 1/15/2022 at 4:30 AM, IceCreamMan said:

 

What's the problem with the user base?

 

On 1/15/2022 at 4:42 AM, Spekulatius said:

Twitters user base is fine, even I am there. The problem is more how it’s used - the users aren’t exactly going there looking for something to shop.

 

This.

Imo ppl on twitter are less emotional and more intellectual and at least they try to articulate and share thoughts.

Other platforms are populated only by mindless scrollers with an attention span of 2ns, the ideal targets for advertisers.

In fact the other platforms are more utilized by woman.

 

Edited January 16, 2022 by Dave86ch

[Dinar]

On 1/15/2022 at 12:06 PM, Spekulatius said:

@competitive-advantage I am no expert in online ad marketing, but it was clear that Twitters ad targeting was atrocious. it basically was no better than blanket TV ads. So most ads were just blanket ads and image campaigns . It looks to me as a user as they have been slowly improving this.

 

My thesis is that the bar is low and TWTR is cheap by some metrics - for example they are trading at 5x revenues right now. Also, Twitter didn’t really have a real CEO, Jack was in it half heartedly and quite frankly, I don’t think he knows how to run a real business (he has vision and is a good founder). I did start buying into TWTR only after he left. I don’t know much about the new CEO but suspect that pretty much anybody can do better than Jack at this point.

Spek, Twitter reminds me of the quote about Brazil - it is the country of the future and always will be.  Twitter, as Zuckerberg put is, is a clown car that drove into a gold mine.  The new CEO was CTO before and their technology was lousy.   They need first and foremost someone like Zuckerberg who understands how to run a business.  Keep in mind neither Elliott nor Silver Lake have been able to accomplish anything.  Convert issuance is crazy.    Yes, the fact that this property can be bought for $31bn is insanely cheap - in Zukerberg's hands it would be worth $200bn+.  In the hands of the current clowns... 

[IceCreamMan]

THRY

 

At 6-15x SaaS revenue, THRY is worth $30-76 today, and SaaS revenue is growing fast. If growth continues and the stock re-rates, $50/sh seems reasonable.

 

Posted more detail on the THRY thread.

[JRM]

On 1/2/2022 at 11:27 AM, JRM said:

Probably shouldn't listen to anything I say since I fell way short of the triple digit returns I'm seeing all over the place.  However, I'm positioning myself for 2022 in oil\natural gas and gold\silver in various ways.  Gold and silver still feels like a forgotten asset class left behind\obsoleted by Bitcoin.  It seems like a lot of people are left wondering why gold isn't "working".  Parts of these positions worked in 2021, but not the home run.

 

[fareastwarriors]

I can't help but to like Swedish Match more and more everyday.

 

https://www.swedishmatch.com/Investors/The-share/Shares-outstanding/