13F Season and New or Outlier Positions

[FCharlie]

21 hours ago, Saluki said:

 

VALARIS caught my eye because I've been hearing about it for years. A friend of mine had a big position before it went bankrupt, and now he has warrants that his common was converted into. Then Kuppy was talking up his book on this after bankruptcy a while back. 

 

I don't know. This stuff doesn't have the same scrap value because a ship is just steel, but offshore stuff is tech with deteriotes quickly. And if you warm stack this stuff, it might cost like $80k a day when you aren't using it (that's what it costs SFL to maintain Hercules) but want it ready to deploy at any time.  If you cold stack it it's cheaper but it takes more time to deploy and the majors might be put off by it because when it's not in use and there is minimal maintenence it becomes a huge safety issue. 

 

Feels like it's too hard and your outcome depends on what happens with oil.  If anyone has thought harder about it and wants to chime in, feel free to chime in here or on the Valaris post, but probably too hard pile for me. 

Valaris is of my largest positions. I owned it pre bankruptcy but no where near the size of today. I think if 2020 hadn't happened most of the offshore drillers would have turned out really well but the negative oil prices and lack of travel demand in 2020 took the entire industry under with exception of Transocean, Today I basically have the same view I had pre bankruptcy but with far more confidence as $7 billion of debt is gone, oil demand is higher, and the offshore fleet is even smaller.

 

The view is have is this: 

1) There will never be another newbuild cycle

2) Oil demand is going to continue to grow no matter how much people wish it wasn't

3) Offshore is a critical part of oil supply and is too large to replace

4) There will be a shift away from shale and towards offshore because the breakeven is lower offshore and because offshore doesn't deplete at ridiculous rates (40%-70% in first year)

5)Utilization will remain high because of #1,#2, #3 and #4

6)Dayrates will probably reach record levels at some point in the future

7) Valaris only has 71 million shares and is allocating 100% of free cash flow to buybacks. They could easily buy back 2 million shares per quarter at these prices

8( If the stock doesn't rise dramatically there won't be any shares left long before the last rig is obsolete

 

As far as your point about offshore tech deterioration, if there are no more newbuilds going forward, then the current fleet will always be the most technologically advanced. Upgrades to rigs can happen and in a high utilization market Valaris can get their customers to pay for upgrades just as they get them to pay for mobilization. I realize this isn't the VAL board so I'm happy to talk over there or privately. 

 

 

 

 

[LC]

You've been beating the table on this a while now, @FCharlie

 

What is your expected timeframe here? I own a little tracker but what do you see changing the market's opinion and when do you see that happening?

[Dalal.Holdings]

20 minutes ago, FCharlie said:

 

7) Valaris only has 71 million shares and is allocating 100% of free cash flow to buybacks. They could easily buy back 2 million shares per quarter at these prices

8( If the stock doesn't rise dramatically there won't be any shares left long before the last rig is obsolete

 

 

 

 

Every time I see someone talk about VAL FCF and buybacks, I go to check the cash flows statement in the quarterly/annual SEC filings and I see either 1) negative FCF (true for three years in a row now: 2022, 2023, and 2024 10-Ks) or zero buybacks (true for most recent 10-Q).

 

Every. Single. Time.

[Marco Van Basten]

13 hours ago, Spekulatius said:

I found their cement buy 5233 more interesting.

Who bought Berkshire or Gates?  5233 apparently has a US cement & aggregates business, great catch.  Did you do the work?  Thank you.

[Eldad]

1 hour ago, FCharlie said:

Valaris is of my largest positions. I owned it pre bankruptcy but no where near the size of today. I think if 2020 hadn't happened most of the offshore drillers would have turned out really well but the negative oil prices and lack of travel demand in 2020 took the entire industry under with exception of Transocean, Today I basically have the same view I had pre bankruptcy but with far more confidence as $7 billion of debt is gone, oil demand is higher, and the offshore fleet is even smaller.

 

The view is have is this: 

1) There will never be another newbuild cycle

2) Oil demand is going to continue to grow no matter how much people wish it wasn't

3) Offshore is a critical part of oil supply and is too large to replace

4) There will be a shift away from shale and towards offshore because the breakeven is lower offshore and because offshore doesn't deplete at ridiculous rates (40%-70% in first year)

5)Utilization will remain high because of #1,#2, #3 and #4

6)Dayrates will probably reach record levels at some point in the future

7) Valaris only has 71 million shares and is allocating 100% of free cash flow to buybacks. They could easily buy back 2 million shares per quarter at these prices

8( If the stock doesn't rise dramatically there won't be any shares left long before the last rig is obsolete

 

As far as your point about offshore tech deterioration, if there are no more newbuilds going forward, then the current fleet will always be the most technologically advanced. Upgrades to rigs can happen and in a high utilization market Valaris can get their customers to pay for upgrades just as they get them to pay for mobilization. I realize this isn't the VAL board so I'm happy to talk over there or privately. 

 

 

 

 

Just starting to look at this. This is old ESV ensco correct? Why do you prefer it over Seadrill or NE. They all seem to be following the buyback playbook. First Eagle has a big piece of NE. Did L get any of new NE after bankruptcy?  

[FCharlie]

1 hour ago, LC said:

You've been beating the table on this a while now, @FCharlie

 

What is your expected timeframe here? I own a little tracker but what do you see changing the market's opinion and when do you see that happening?

I don't know if I'd call it beating the table but I have definitely been long and wrong for a while now. I wish I knew what or when the market's opinion will change but I don't. With that said, I don't feel any less optimistic about this than I did last summer when VAL was at all-time highs. The market never cares about something that is more than a few quarters away and for the last few quarters all they seem to care about is white space on the calendar. If I had to guess what will change the market's opinion I think simply continuing to contract at solid dayrates, filling in white space, and buying back stock. I personally just don't worry because by the time the market cares they might be paying double the price. My higher cost basis purchases have turned out to be a dud but I've bought wayyy more in the last six months. Like most of my other large positions, the longer this takes the higher the upside. 

[FCharlie]

14 minutes ago, Eldad said:

Just starting to look at this. This is old ESV ensco correct? Why do you prefer it over Seadrill or NE. They all seem to be following the buyback playbook. First Eagle has a big piece of NE. Did L get any of new NE after bankruptcy?  

Ensco, Rowan, and Atwood minus most of the debt.  I do own NE, just not as much. I prefer the buyback to the dividend, but I definitely own NE. 

 

I don't believe Loews ever got back into offshore. I always wondered why because they used to brag about how they had received many multiples of their investment from DO through dividends alone

[Eldad]

5 minutes ago, FCharlie said:

Ensco, Rowan, and Atwood minus most of the debt.  I do own NE, just not as much. I prefer the buyback to the dividend, but I definitely own NE. 

 

I don't believe Loews ever got back into offshore. I always wondered why because they used to brag about how they had received many multiples of their investment from DO through dividends alone

That’s right they had DO and not NE. Thanks

[FCharlie]

2 hours ago, Dalal.Holdings said:

 

Every time I see someone talk about VAL FCF and buybacks, I go to check the cash flows statement in the quarterly/annual SEC filings and I see either 1) negative FCF (true for three years in a row now: 2022, 2023, and 2024 10-Ks) or zero buybacks (true for most recent 10-Q).

 

Every. Single. Time.

You are like a guy who at 4am tells the early riser who's excited for morning that it's been dark all night and will probably never be morning again ever. In my experience, that doesn't work well with investing. 

[Dalal.Holdings]

19 minutes ago, FCharlie said:

You are like a guy who at 4am tells the early riser who's excited for morning that it's been dark all night and will probably never be morning again ever. In my experience, that doesn't work well with investing. 

 

Here are your own words:

 

Quote

They could easily buy back 2 million shares per quarter at these prices

 

 

The answer is no, they can't because they don't have enough free cash flow (and in the past 3 years it's less than zero).

 

In my experience, waiting for false dawns doesn't work well with investing

[Gamecock-YT]

37 minutes ago, FCharlie said:

You are like a guy who at 4am tells the early riser who's excited for morning that it's been dark all night and will probably never be morning again ever. In my experience, that doesn't work well with investing. 

a bit rich from someone saying there will never be a new build cycle again ever…..

[Dalal.Holdings]

3 minutes ago, Gamecock-YT said:

a bit rich from someone saying there will never be a new build cycle again ever…..

 

 

I moved the convo over to the VAL thread

[FCharlie]

2 minutes ago, Gamecock-YT said:

a bit rich from someone saying there will never be a new build cycle again ever…..

I've been saying that since probably 2018. If that changes, I'll reconsider my thesis here.

[Saluki]

This is a weird one.  Burry sold everything and deployed a small amount into Estee Lauder.  What is he doing with the rest? Is it macro call? 

 

https://www.dataroma.com/m/holdings.php?m=SAM

[gfp]

Just now, Saluki said:

This is a weird one.  Burry sold everything and deployed a small amount into Estee Lauder.  What is he doing with the rest? Is it macro call? 

 

https://www.dataroma.com/m/holdings.php?m=SAM

 

Who knows but there are quite a few categories of investments that don't show up on 13Fs and you can get a very inaccurate view of an investors portfolio from just looking at exchange traded US stocks.

[winjitsu]

1 minute ago, Saluki said:

This is a weird one.  Burry sold everything and deployed a small amount into Estee Lauder.  What is he doing with the rest? Is it macro call? 

 

https://www.dataroma.com/m/holdings.php?m=SAM

 

He's feeling bearish

[Saluki]

On 5/16/2025 at 2:47 PM, FCharlie said:

I've been saying that since probably 2018. If that changes, I'll reconsider my thesis here.

 

My understanding is that the Basel III changes made it harder, in terms of net capital charges, for banks to lend for stuff like ships (and I assume that includes offshore stuff), which is why a lot of the financing shifted to sovereign wealth funds. It could be that if we see another new build cycle, it might be political rather than ecomonical. Maybe someone who wants to provide the numerous jobs that shipbuilding entails, like China, will overbuild with attractive financial terms, to keep employment up for their country, even if it isn't great for the industry. 

[Saluki]

4 minutes ago, winjitsu said:

 

He's feeling bearish

 

Thanks. I refuse to use Twitter, or click on links to it because I don't want Elon to get the ad traffic

[Saluki]

His largest positions are most of the Mag 7, but with different weightings.

 

https://www.dataroma.com/m/holdings.php?m=TGM

 

I wonder if this is hugging the index, or just that these are the only profitable and growing companies lately. 

[Luke]

Guy spier sold a shit ton of stocks - did many investor leave him or is he going into cash? or did he buy something outside of the US with that money?

[Spooky]

4 hours ago, Luke said:

Guy spier sold a shit ton of stocks - did many investor leave him or is he going into cash? or did he buy something outside of the US with that money?

 

He's closing up shop.

[Luke]

1 hour ago, Spooky said:

He's closing up shop.

Yeah seems like it! 

[gfp]

Not sure where to put this post but here is a list of holdings for an investor in Spain that usually has some interesting ideas.  He has been in many of these names for a long time now but a good list to explore.  Definitely some overlap with the stocks covered on this message board but haven't seen them post here.  Maybe they lurk!

 

 

https://x.com/foso_defensivo

 

[Saluki]

I noticed Prem buying UnderArmour from the prior filings because they are 10%+ holder and have to report new purchases after a few days, but the thing that jumps out at me this quarter isn't a bunch of value guys jumping into the same stock, but rather how many of them haven't bought anything, or haven't bought anything and are selling, like Francis Chou and David Abrams.

[Longnose]

5 minutes ago, Saluki said:

I noticed Prem buying UnderArmour from the prior filings because they are 10%+ holder and have to report new purchases after a few days, but the thing that jumps out at me this quarter isn't a bunch of value guys jumping into the same stock, but rather how many of them haven't bought anything, or haven't bought anything and are selling, like Francis Chou and David Abrams.

I was a little surprised by this too.

 

I feel like i see all sorts of serious disconnects in the market. But the big "value" players are still scared on the sides. I mean i know AI is a real wild card and If we believe we are in a bubble and it starts to deflate even the disconnected value stuff will continue to deflate with the balloon.  But I'm not sold. I keep feeling like we got some serious tailwinds coming at the economy over the next few years.