Share your Portfolio 2024

[This2ShallPass]

On 1/11/2024 at 12:12 PM, TwoCitiesCapital said:

2% Freddie Mac preferred 

I have Fannie and Freddie stock. Followed Ackman's advice, buy them and put it in a drawer and don't look for many years. Which is a better play stock or preferred? I know Berkowitz owns the preferred, but there are so many of them I didn't know which one to get.

 

Btw, what's going on w Fannie and Freddie, they're up ~150% in the past year?

 

[TwoCitiesCapital]

29 minutes ago, This2ShallPass said:

I have Fannie and Freddie stock. Followed Ackman's advice, buy them and put it in a drawer and don't look for many years. Which is a better play stock or preferred? I know Berkowitz owns the preferred, but there are so many of them I didn't know which one to get.

 

Btw, what's going on w Fannie and Freddie, they're up ~150% in the past year?

 

 

Yea, have been holding/adding since 2012. Has dwindled from a 10% position to a 2% over that time as this has taken way longer than I thought, the courts haven't been as kind as I thought, and I've allocated quite a bit more to other positions over time (and those positions have grown). 

 

I have more confidence in the preferred given any value accruing to the common, requires certain assumptions on capital levels, how that is split between debt/equity, and the timing. And I have no ability to know the outcome for any of those three variables. 

 

But if the common is worth $0.01, then my preferred are worth at least $50 and I'll 7-10x my investment at minimum. 

 

As far as the run-up? Seems to be a 'Trump trade' as a bet on the outcome of the presidency. Not that Trump was particularly great for them last time around, but he's probably better than Biden if you want to see this handled. 

 

 

[This2ShallPass]

4 hours ago, TwoCitiesCapital said:

I have more confidence in the preferred given any value accruing to the common, requires certain assumptions on capital levels, how that is split between debt/equity, and the timing. And I have no ability to know the outcome for any of those three variables. 

 

But if the common is worth $0.01, then my preferred are worth at least $50 and I'll 7-10x my investment at minimum. 

 

 

Thanks. I have been following this through Berkowitz's letters for a few years but only got in about a year back, <1% position. Which preferred would you buy? Both pfd and common can only be in the money if they end the conservatorship and couldn't common go much higher 10-100x? pfd is more gtd return though..

 

4 hours ago, TwoCitiesCapital said:

As far as the run-up? Seems to be a 'Trump trade' as a bet on the outcome of the presidency. Not that Trump was particularly great for them last time around, but he's probably better than Biden if you want to see this handled. 

Wasn't that guy Berkowitz's college roommate supposed to help during Trump presidency, never happened..

 

[TwoCitiesCapital]

14 hours ago, This2ShallPass said:

 

Thanks. I have been following this through Berkowitz's letters for a few years but only got in about a year back, <1% position. Which preferred would you buy?

 

 

I purchased the ones that had the largest discount to notional that traded regularly enough for me to establish a position. At the time, that was FMCCJ and that is what I still own. 

 

There are other more liquid shares at higher valuations as well as different coupons which some have theorized may make a difference in damage calculations and potential recoveries, but I haven't speculated about any of that. 

[orthopa]

I still hold a large fannie position. All preferred. I would stay away from common. As much as this investment has been based on the kindness of others to work out in the end alot more kindness needs to be given to common then preferred. 

 

Govt Senior Preferred Shares and Warrants will dilute common. 99.9 of new common will likely be gov's but ultimately priced by market. In Calabria's recent book he discussed treasury was ok with their SPS  shares and Junior preferred converting to common in new co at same haircut if any.  Any "haircut" will be priced by market with new equity on convertion. 

 

Preferred being redeemed at Par not unrealistic. Small hair cut possible. That gives FNMAS 6x is here. No way common is worth $8+ a share after dilution behind SPS, warrants (not to mention liquidation preference that continues to build but most likely a give back of gov. 

 

Run the numbers, stay away from common. 

[Eldad]

On 2/1/2024 at 4:39 PM, Spekulatius said:

@cknucks regarding APD - did you see the very marginal dividend increase? It’s only a bit more than 1% and traditionally, APD raised their dividend by 10% annually. The current raise is much smaller. I may be reading tea- leaves here, but I think there is a decent chance that their outlook disappoints or that there is an issue with their ongoing investments.

 

Good call Spek. Down 15% today. Digging in. 

[gfp]

2 minutes ago, Eldad said:

Good call Spek. Down 15% today. Digging in. 

 

(re: APD) - my friend works for their division that makes huge heat exchangers for LNG facilities down in Florida and that division is just killing it.  Unfortunately it is a small part of the overall company.  That division will build a lot of hydrogen infrastructure as well, but today it is primarily LNG.

[Spekulatius]

11 minutes ago, gfp said:

 

(re: APD) - my friend works for their division that makes huge heat exchangers for LNG facilities down in Florida and that division is just killing it.  Unfortunately it is a small part of the overall company.  That division will build a lot of hydrogen infrastructure as well, but today it is primarily LNG.

Should have monetized my “unique insight” better. Thought  about buying some short dated puts but those things work maybe 1/3 or 1/4 times for me, so left it alone.

 

I  very much like the industrial gas business. It’s like having a small royalty on industrial growth  Each semiconductor fab build in the US will consume technical gases as long as they operate. This is a structurally advantaged business because once a supply is locked in, the customers rarely switch and the suppliers are highly concentrated. (Air Liquide, Lind, APD, Nippon Sanso (Matheson in the US) ). Those business will grow for decades and likely more than the GDP.

[Eldad]

2 hours ago, Spekulatius said:

Should have monetized my “unique insight” better. Thought  about buying some short dated puts but those things work maybe 1/3 or 1/4 times for me, so left it alone.

 

I  very much like the industrial gas business. It’s like having a small royalty on industrial growth  Each semiconductor fab build in the US will consume technical gases as long as they operate. This is a structurally advantaged business because once a supply is locked in, the customers rarely switch and the suppliers are highly concentrated. (Air Liquide, Lind, APD, Nippon Sanso (Matheson in the US) ). Those business will grow for decades and likely more than the GDP.

I had to get a little at $218

[maxthetrade]

On 2/1/2024 at 11:39 PM, Spekulatius said:

regarding APD - did you see the very marginal dividend increase? It’s only a bit more than 1% and traditionally, APD raised their dividend by 10% annually.

 

Great call! As you mentioned this is a pretty decent business, at the right price I'd like to own a chunk for the long term.

[Spekulatius]

3 hours ago, Eldad said:

I had to get a little at $218

I also bought a few shares at the same price towards the close. I have to say I did not like management answers in the CC at all. His answer regarding the smallish dividend raise was downright strange and somewhat concerning.

 

 

 

Really, the dividend is dependent on the share price based on a target yield? I have not heard that one before, except with some badly managed MLP’s. Anyways, may not matter long term and it’s a business I understand well. I think a couple years from now, this will be larger and more profitable, but near term, things could be a bit choppy.

 

Edited February 5 by Spekulatius

[gfp]

Wow, yeah that is a horrible answer.

[BG2008]

On 1/2/2024 at 9:37 AM, thepupil said:

 

 

 

 

ROIC is a surprisingly large position for you. Any specific reason? @thepupil

[Spekulatius]

17 hours ago, gfp said:

Wow, yeah that is a horrible answer.

The more I read his CC transcript answers, the less I like Ghasemi , the APD CEO.

 

Her is for example how he defends the cost inflation with their Louisiana project. his answer is basically, we make double digit return and a double digit return on $7B is better than a double digit return on $4.5B Capex. Granted some of the cost increase is just increase in scope, but still, the logic alone gives me shivers. There are other things in the latest conference call that give me second thoughts like the back loaded guidance which assume an extremely sting 2nd half after guiding down Q2 below the prior year. Ai think chances are high they don’t make their earnings target this year.

 

 

(I sold my few shares pre market today, putting APD back in my watchlist.)

[Eng12345]

 

 

This was a good exercise in forcing myself to build out my spreadsheet...realizing I'm not nearly as concentrated as I like to think I am. The last 4 lines are general index funds or dry powder waiting. 

[dwy000]

37 minutes ago, Eng12345 said:

 

 

This was a good exercise in forcing myself to build out my spreadsheet...realizing I'm not nearly as concentrated as I like to think I am. The last 4 lines are general index funds or dry powder waiting. 

Just FYI, you have DSGR in there twice. 

[Eng12345]

Thanks this is why when I start a spreadsheet I try to finish it. Also why I'm not an accountant - I thought things balanced p well with my expectations, ha. 

 

[kh812000]

20%  PAYO

20%  LSXMK

15%   EXPE

15%   ACLS

10%  META

10%  NSIT

10%   BRK.B

 

[jks327]

As of this morning:

STLA 11.83%

MLI 10.36%

WIRE 10.28%

STM 9.87%

TOL 9.86%

DHI 9.45%

VSH 9.38%

TEX 9.15%

CCRN 4.28%

BRK/B 4%

GS 3.78%

OSK 2.99%

FLEX 1.17%

EGRX 1.08%

RELL .9%

SCSC .83%

WY .65%

NKLA .01%

 

Read about it here:

https://veldstrategies.com/2024/02/19/january-24-letter/

[gfp]

13 minutes ago, jks327 said:

As of this morning:

STLA 11.83%

MLI 10.36%

WIRE 10.28%

STM 9.87%

TOL 9.86%

DHI 9.45%

VSH 9.38%

TEX 9.15%

CCRN 4.28%

BRK/B 4%

GS 3.78%

OSK 2.99%

FLEX 1.17%

EGRX 1.08%

RELL .9%

SCSC .83%

WY .65%

NKLA .01%

 

Read about it here:

https://veldstrategies.com/2024/02/19/january-24-letter/

 

So is this a new fund you started and fully invested all of it in January 2024?  Didn't waste much time getting fully invested.

[jks327]

Research started in April 2023, not much interested in keeping cash in an investment account!

Edited February 20 by jks327

[james22]

On 1/1/2024 at 5:19 PM, james22 said:

40%  BRK

 

20%  IT (VITAX)

20%  SV (VSIAX)

 

10%  Energy/Utilities (VGELX)

 

10%  ITT (VFIUX)

 

 

35% BRK

 

15% MSTR

 

15% IT (VITAX)

15% SV (VSIAX)

 

10% Energy/Utilities (VELX)

 

10% ITT (VFIUX)

[gfp]

13 minutes ago, jks327 said:

Research started in April 2023, not much interested in keeping cash in an investment account!

 

Seem like your track record will be influenced to a great degree by whether or not January 2024 was a good time to go from zero to fully invested in US stocks.  Sounds like this isn't a fund?  Good luck, I do hope it works out well for you and I like to see the meaningful position sizes.

[jks327]

I figure that in the following decades it'll even out.  Strictly speaking a hobby for now but supported by incredible mentors.  Dress for the job you want, not the job you have.

Edited February 20 by jks327
clarity

[WayWardCloud]

6 hours ago, james22 said:

15% MSTR

 

Would love to hear more about this!