gfp Posted January 31 Posted January 31 Honestly I feel like my growing position in Sky Harbour is sounding fairly contrarian lately given all the hate I have heard on it (which I love!) and a complete unwillingness for even "real estate investment people" to look at the economics of their projects. Cost of capital questions and equity dilution risks have just been largely answered. Quotes from their all-star CEO Francisco in the recent press release like this: They have been masters of raising hundreds of millions of dollars to develop their pipeline without issuing material equity. Subordinated bonds at 6% replace equity in the deals and skyrocket the return to equity on each project. But yeah - totally hated because [SPAC, BOC people, ground leases aren't fee-simple, Airport infrastructure companies only change hands at 6% cap rates because Airport real estate is more rare than beachfront property, SPAC, SPAC, SPAC..]
Spekulatius Posted January 31 Posted January 31 (edited) 2 hours ago, gfp said: Honestly I feel like my growing position in Sky Harbour is sounding fairly contrarian lately given all the hate I have heard on it (which I love!) and a complete unwillingness for even "real estate investment people" to look at the economics of their projects. Cost of capital questions and equity dilution risks have just been largely answered. Quotes from their all-star CEO Francisco in the recent press release like this: They have been masters of raising hundreds of millions of dollars to develop their pipeline without issuing material equity. Subordinated bonds at 6% replace equity in the deals and skyrocket the return to equity on each project. But yeah - totally hated because [SPAC, BOC people, ground leases aren't fee-simple, Airport infrastructure companies only change hands at 6% cap rates because Airport real estate is more rare than beachfront property, SPAC, SPAC, SPAC..] Since ai know follow them more closely, I can say for certain that for a startup , they are very good at financing their business. the recent ~6% interest bond issue being one example, That’s very cheap capital for a startup. Being born as a SPAC is not relevant any more 5 years after inception. It just means it was likely overpriced to being with, which is now irrelevant. Edited January 31 by Spekulatius
Masterofnone Posted January 31 Posted January 31 3 hours ago, gfp said: Honestly I feel like my growing position in Sky Harbour is sounding fairly contrarian lately given all the hate I have heard on it (which I love!) and a complete unwillingness for even "real estate investment people" to look at the economics of their projects. Cost of capital questions and equity dilution risks have just been largely answered. Quotes from their all-star CEO Francisco in the recent press release like this: They have been masters of raising hundreds of millions of dollars to develop their pipeline without issuing material equity. Subordinated bonds at 6% replace equity in the deals and skyrocket the return to equity on each project. But yeah - totally hated because [SPAC, BOC people, ground leases aren't fee-simple, Airport infrastructure companies only change hands at 6% cap rates because Airport real estate is more rare than beachfront property, SPAC, SPAC, SPAC..] Would you please hush up for a bit so that this can go back to the mid 8's and I can build an actually substantial position? I'm trying to sit on my hands and wait for the next -4% day, OK?
gfp Posted January 31 Posted January 31 59 minutes ago, Spekulatius said: Since ai know follow them more closely, I can say for certain that for a startup , they are very good at financing their business. the recent ~6% interest bond issue being one example, That’s very cheap capital for a startup. Being born as a SPAC is not relevant any more 5 years after inception. It just means it was likely overpriced to being with, which is now irrelevant. Those 6% subordinated bonds, effectively forced to be called at 5 years, were massively oversubscribed in a very weak week for corporate bond issuance and they upsized the offering from $100m to $150m after receiving $450m in bids. As you probably well know, SKYH borrows almost entirely in the tax free muni market. The JPM warehouse facility, at $200m (up sizable to $300m in the future 'subject to credit approval') was floating -to- fixed swapped to 4.73% for 5 years (also tax exempt to JPM despite being a loan and not a bond offering - very innovative, flexible and low cost capital.) The initial equity requirement for draws on this facility was satisfied with the contribution of a wholly owned campus in Camarillo (CMA) that Sky had purchased for cash earlier. They later added Bradley to the equity component of the borrowing base. You can tell they are doing everything in their power to minimize equity issuance at these prices which they see as a very high cost of capital despite the market not 'getting it' so far. SKYH's CFO came from JPM and was the expert in these type of Private Activity Bonds so I'm sure he still has a contact or two over there. They have also done a few more expensive, small financings in recent weeks with Yorkville, which had tiny equity "vig" kickers for the lender - but this type of borrowing is extremely flexible unlike the bond offerings which have to be used on specific assets within the specific group underlying the bonds. They inflected to cash-flow run rate break even and going forward they should be able to recycle some internally generated equity to meet future equity funding requirements. They would like to see the shares trade above $11.50 a year from now as it would raise the final equity capital they will likely ever need to raise from the markets. Much later, they can drop stabilized campuses down into a REIT if they choose. The hardest part of the entire funnel is getting the ground leases. The rest could be theoretically farmed out, although they won't do that. They are very difficult to compete with at this point. Some of these signed leases took 7+ years of work to get and there is no developable land left for a competitor. They try to get the longest ground leases they can get (with options) but they vary with each negotiation. The fist renewal of the hangar leases after the initial lease term has been averaging very attractive increases in rent and everything steps up with annual escalators from there. NNN leases. Fuel revenue for their home based clients as a kicker. And opportunities for a few minor add on services. You gotta love when your clients are at the very very tippy top of the K-shaped economic situation and if only one or two happen to notice that you've got a hell of a business niche they are certainly sophisticated enough to look into the investment thesis. The fact that EVERYONE is bearish and it's a laughing stock on "Value Investors Club" is icing on the cake.
UK Posted February 1 Posted February 1 8 hours ago, gfp said: Those 6% subordinated bonds, effectively forced to be called at 5 years, were massively oversubscribed in a very weak week for corporate bond issuance and they upsized the offering from $100m to $150m after receiving $450m in bids. As you probably well know, SKYH borrows almost entirely in the tax free muni market. The JPM warehouse facility, at $200m (up sizable to $300m in the future 'subject to credit approval') was floating -to- fixed swapped to 4.73% for 5 years (also tax exempt to JPM despite being a loan and not a bond offering - very innovative, flexible and low cost capital.) The initial equity requirement for draws on this facility was satisfied with the contribution of a wholly owned campus in Camarillo (CMA) that Sky had purchased for cash earlier. They later added Bradley to the equity component of the borrowing base. You can tell they are doing everything in their power to minimize equity issuance at these prices which they see as a very high cost of capital despite the market not 'getting it' so far. SKYH's CFO came from JPM and was the expert in these type of Private Activity Bonds so I'm sure he still has a contact or two over there. They have also done a few more expensive, small financings in recent weeks with Yorkville, which had tiny equity "vig" kickers for the lender - but this type of borrowing is extremely flexible unlike the bond offerings which have to be used on specific assets within the specific group underlying the bonds. They inflected to cash-flow run rate break even and going forward they should be able to recycle some internally generated equity to meet future equity funding requirements. They would like to see the shares trade above $11.50 a year from now as it would raise the final equity capital they will likely ever need to raise from the markets. Much later, they can drop stabilized campuses down into a REIT if they choose. The hardest part of the entire funnel is getting the ground leases. The rest could be theoretically farmed out, although they won't do that. They are very difficult to compete with at this point. Some of these signed leases took 7+ years of work to get and there is no developable land left for a competitor. They try to get the longest ground leases they can get (with options) but they vary with each negotiation. The fist renewal of the hangar leases after the initial lease term has been averaging very attractive increases in rent and everything steps up with annual escalators from there. NNN leases. Fuel revenue for their home based clients as a kicker. And opportunities for a few minor add on services. You gotta love when your clients are at the very very tippy top of the K-shaped economic situation and if only one or two happen to notice that you've got a hell of a business niche they are certainly sophisticated enough to look into the investment thesis. The fact that EVERYONE is bearish and it's a laughing stock on "Value Investors Club" is icing on the cake. Thanks! But what kind of upside do you see here, if everything goes right, including the sentiment:)?
moatrep Posted February 1 Posted February 1 (edited) Paypal is an easy 10% return adjusted for inflation, plus possibilities of an overshoot to the upside with growth above inflation (forecast of 4 to 5 percent growth per annum on income). Similar to facebook 2 years ago. Just the big network effects of his 400m users and low capex should give you some safety (you just need to make 12.5$ per user). Facebook of 2.5b users just needed to make 12.5$ as well to justify a 15 percent yield when it was at 90$... I bought but sold too early, this time I will be ready to hold. PD: They have used all their income in the last 4 years to buy back shares. So in that aspect they beat facebook that was throwing their income away in the metaverse. Edited February 1 by moatrep
gfp Posted February 1 Posted February 1 (edited) 6 hours ago, UK said: Thanks! But what kind of upside do you see here, if everything goes right, including the sentiment:)? I don't know, that's not how I invest. It's a moving target. How much upside do I see on Fairfax? $100? Infinity? It's a function of time. I worry about the downside and usually end up with oversize positions and start to shrink the position as the investment works well (starting with the highest cost shares) and then keep my lowest basis shares as long as I can to defer the tax on the lowest basis shares. Only when something screams to me loud enough, like Biglari for a few weeks there, do I rip off the bandaid and pay the tax on those low basis shares. With something like Berkshire or Fairfax I may never sell the lowest basis shares. Edited February 1 by gfp
DooDiligence Posted February 1 Posted February 1 57 minutes ago, gfp said: I don't know, that's not how I invest. It's a moving target. How much upside do I see on Fairfax? $100? Infinity? It's a function of time. I worry about the downside and usually end up with oversize positions and start to shrink the position as the investment works well (starting with the highest cost shares) and then keep my lowest basis shares as long as I can to defer the tax on the lowest basis shares. Only when something screams to me loud enough, like Biglari for a few weeks there, do I rip off the bandaid and pay the tax on those low basis shares. With something like Berkshire or Fairfax I may never sell the lowest basis shares.
frommi Posted February 1 Posted February 1 (edited) Someone mentioned it already, but I also think REITs will rip higher in 2026. Lower interest rates are a double whammy: you get yield compression plus lower interest costs. A lot of REITs were just treading water the last five years while still growing cash flow and paying dividends. I see SILA, AHH, and CHCT as especially interesting, but there are a lot of promising options. Even AMT with its nearly 4% dividend yield and 7%+ growth looks good. Or NNN, NXRT, O, and WPC. Edited February 1 by frommi
gfp Posted February 1 Posted February 1 It's probably just my market, but everybody in my town with multifamily wants to sell and there is practically no bid on the other side. Rent growth is still negative to zero despite articles claiming nationwide trends are starting to inflect back towards positive low single digits. I'm sure some markets are tight and have nice weather and competent leadership and are doing A-OK. I'll take airport real estate for multibillionaires given a choice.
lnofeisone Posted February 1 Posted February 1 17 hours ago, gfp said: Those 6% subordinated bonds, effectively forced to be called at 5 years, were massively oversubscribed in a very weak week for corporate bond issuance and they upsized the offering from $100m to $150m after receiving $450m in bids. As you probably well know, SKYH borrows almost entirely in the tax free muni market. The JPM warehouse facility, at $200m (up sizable to $300m in the future 'subject to credit approval') was floating -to- fixed swapped to 4.73% for 5 years (also tax exempt to JPM despite being a loan and not a bond offering - very innovative, flexible and low cost capital.) The initial equity requirement for draws on this facility was satisfied with the contribution of a wholly owned campus in Camarillo (CMA) that Sky had purchased for cash earlier. They later added Bradley to the equity component of the borrowing base. You can tell they are doing everything in their power to minimize equity issuance at these prices which they see as a very high cost of capital despite the market not 'getting it' so far. SKYH's CFO came from JPM and was the expert in these type of Private Activity Bonds so I'm sure he still has a contact or two over there. They have also done a few more expensive, small financings in recent weeks with Yorkville, which had tiny equity "vig" kickers for the lender - but this type of borrowing is extremely flexible unlike the bond offerings which have to be used on specific assets within the specific group underlying the bonds. They inflected to cash-flow run rate break even and going forward they should be able to recycle some internally generated equity to meet future equity funding requirements. They would like to see the shares trade above $11.50 a year from now as it would raise the final equity capital they will likely ever need to raise from the markets. Much later, they can drop stabilized campuses down into a REIT if they choose. The hardest part of the entire funnel is getting the ground leases. The rest could be theoretically farmed out, although they won't do that. They are very difficult to compete with at this point. Some of these signed leases took 7+ years of work to get and there is no developable land left for a competitor. They try to get the longest ground leases they can get (with options) but they vary with each negotiation. The fist renewal of the hangar leases after the initial lease term has been averaging very attractive increases in rent and everything steps up with annual escalators from there. NNN leases. Fuel revenue for their home based clients as a kicker. And opportunities for a few minor add on services. You gotta love when your clients are at the very very tippy top of the K-shaped economic situation and if only one or two happen to notice that you've got a hell of a business niche they are certainly sophisticated enough to look into the investment thesis. The fact that EVERYONE is bearish and it's a laughing stock on "Value Investors Club" is icing on the cake. I like SKYH and been steadily picking up shares. I think 2027 is when a lot of numbers will start to inflect and show up and shares will trade up then. 2026, IMO, will be a flat year but you can still make money selling puts and just wait.
Cod Liver Oil Posted February 1 Posted February 1 (edited) Coupang seems a good test case for the "governmental shake down theory" (GSDT). The theory states that if your CEO is being shaken down or pantsed for public humiliation by government (ideally Asian), your stock will outperform for the next couple of years. I asked Gemini but did not get good data on companies getting pilloried. Edited February 1 by Cod Liver Oil
dipod Posted February 2 Posted February 2 On 2/1/2026 at 11:45 AM, Cod Liver Oil said: Coupang seems a good test case for the "governmental shake down theory" (GSDT). The theory states that if your CEO is being shaken down or pantsed for public humiliation by government (ideally Asian), your stock will outperform for the next couple of years. I asked Gemini but did not get good data on companies getting pilloried. Can confirm. This theory works well lol.
Sweet Posted February 2 Posted February 2 (edited) We should have a thread for contrarian people. I’ve seen a few people making predictions this week that almost perfectly timed short term tops and bottoms. These people are often loud. Edited February 2 by Sweet
Longnose Posted February 2 Posted February 2 27 minutes ago, Sweet said: We should have a thread for contrarian people. I’ve seen a few people making predictions this week make several predictions that almost perfectly timed short term tops and bottoms. These people are often loud. Name Shame! Name Shame! haha
Sweet Posted February 2 Posted February 2 26 minutes ago, Longnose said: Name Shame! Name Shame! haha No names - but let’s just say it’s same people talking confidently about things just getting it wrong time and time again.
Gregmal Posted February 2 Author Posted February 2 3 minutes ago, Sweet said: No names - but let’s just say it’s same people talking confidently about things just getting it wrong time and time again. Oh there’s a list lol Shhhhhh
Paarslaars Posted February 3 Posted February 3 I'm still long SILJ (with leaps), seems rather contrarian now everyone thinks silver has topped. Miners will still be printing money though, doesn't matter if Silver is 70$, 100$ or 130$, their cost basis is around 30$.
formthirteen Posted February 3 Posted February 3 RELX, owner of LexisNexis (Legal) and Elsevier (Science). Down 10% today because "AI". Division Primary Brand AI Disruption Risk Why? Legal LexisNexis Low/Medium High proprietary data barrier; lawyers require cited sources (no hallucinations). Scientific Elsevier Medium "Open Access" movement threatens data exclusivity; AI summarizes papers well. Risk LexisNexis Risk Very Low Data is unique/private (e.g., insurance claims, fraud identities); hard for public AI to replicate.
formthirteen Posted February 3 Posted February 3 14 hours ago, formthirteen said: PYPL Perfect example of why it's not a good idea to be contrarian before earnings in today's market. -16%.
rogermunibond Posted February 3 Posted February 3 (edited) These are piker contrarian ideas. A contrarian idea is going long CVNA in late 2022. Or long EOSE in late 2024. Completely hated, dog sh*t stock, that nobody thought had any chance. What's your real contrarian idea? Something so contrarian you'd be embarrasses to voice it. Edited February 3 by rogermunibond
formthirteen Posted February 3 Posted February 3 2 minutes ago, rogermunibond said: What's your real contrarian idea? Something so contrarian you'd be embarrasses to voice it. G***r?
rogermunibond Posted February 3 Posted February 3 17 minutes ago, Whensthepaintdry? said: Ha so something like Fubo? YEAH - though honestly see no path for FUBO
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