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High risk/reward investments

Cod Liver Oil

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We are mostly long term long oriented conservative investors but we like to have 5-10% of the portfolio in special situations or high r/r skews. It keeps you fresh.

I have followed Nam Tai Property (NTP/NTPIF) for a awhile.  It is hairy AF with rogue Chinese executives, the Kaisa bankruptcy, an American HF activist (Oasis) and a Caribbean court:


We bought a block from DB right before they delisted. Now we are buying more in the expert market.  The stock is $1.50. NAV estimates are between $18 and $30.

Oasis has a $5 cost basis and is winning legally as they try to make this thing work. This may be more of an intellectual exercise for most people but it is fascinating.

Peter Kellogg has been involved for years:





It will be somewhere between a zero and a 10x. Kelly would actually say to make a sizable bet here. Ill keep it at 100 bp.





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  • Cod Liver Oil changed the title to High risk/reward investments

WE warrants. 4 years left, truly pennies. Simple theory, remote work is here to stay. Remote work will lead to lower office rentals. Office landlords will need to figure out ways to adjust (convert to residential, flexible rental models, etc.). WeWork has the infrastructure to manage buildings and do flexible demand. Who knows how much they can earn (too hard to figure out pile) but I visited a couple of offices and they are packed. 

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LYLT -spinoff, most value is the Air Miles loyalty program in Canada. Launched around $30, down to $2.50 or so. Lost a big partner almost right away, had cost overruns, and their other business (grocery promotions in Eastern Europe/Middle East) got killed by inflation/war in Ukraine).


P/S is a small fraction. Quite a bit of debt that the former parent put in a US holdco, which makes it non-deductible for Canadian taxes. They have $600MM in trust to cover future air miles redemptions and just renewed contracts with some of their largest partners (other than the big grocery chain who quit). Easily could be BK or 10x.

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  • 2 months later...
  • 2 months later...
On 12/4/2022 at 10:48 AM, Stuart D said:


PBR out of the Money calls. The Brazilian index trades at a 5-10% dividend yield. If PBR trades at a 10% yield, every OTM option is in the money. At a 5% yield, all options are 10-100+ baggers. If oil rips…. the numbers get silly.


Pbr floated the possibility of repurchasing shares. There is only ~$70b of market cap. The Government own’s ~$25b and fcf was $40b.


The calls could be very attractive if they get aggressive on the buyback.

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On 11/30/2022 at 10:13 AM, Gregmal said:

I like VAL warrants. Its the classic post BK forgotten about turd with a muddied name from prior life cycles. Well positioned, ripping tits, and you have more than half a decade to watch it for pennies.


A friend of mine has a bunch of those.  Not because of your thesis, but because he had a bunch of the common that got wiped out in the bankruptcy and those out-of-the-money warrants were all that was left after the restructuring.  I looked at the common when he had them and after the bankruptcy reorg and decided to pass since those floaters are the last things to turn in an oil price boom and the first to collapse. I hadn't thought about the warrants, though.  I'll take a look. Thanks for the tip. 

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  • 6 months later...

I've been toying with buying this but haven't pulled the trigger and probably won't.  STHO is a spinout from SAFE,  it trades at $11 despite every share of STHO owning one share of SAFE which is trading at $16.75, and having roughly $6.50 in tangible book value on its own. The obvious play is to short one share of SAFE for every share of STHO to lock in a (momentary) profit of 100%. And SAFE at $16.75 has fallen a lot (probably in part to others shorting it to hedge this deal) to the point where it's probably fairly valued so maybe you don't need to short at all.  But thats as far as the good news goe


The bad news is that STHO is a slow motion real estate liquidation that has very high expenses and manager fees. I can't figure out how they can actually turn any of that $6.50 into a shareholder distribution, they are burning cash at a rapid pace. It wouldn't matter if they would dividend SAFE shares out to shareholders, but I can't see them doing it. If they end up in bankruptcy it might look like fraudulent conveyance and It looks to me like they may sell the SAFE shares over time to fund the liquidation, and can't figure out how to model exactly how large the losses will be. I have an email into investor relations but no response, so I thought I'd throw it out here in case anyone has a different/better perspective on the opportunity here. 

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