Your largest equity buy in the last three months is...(long term buys mostly)

[gfp]

This one's for @dealraker

https://www.cnbc.com/2024/08/29/dollar-general-shares-crater-20percent-as-retailer-cuts-outlook-blaming-financially-constrained-customers.html

[Gregmal]

7 minutes ago, gfp said:

This one's for @dealraker

https://www.cnbc.com/2024/08/29/dollar-general-shares-crater-20percent-as-retailer-cuts-outlook-blaming-financially-constrained-customers.html

@dealraker has shared his thought DG before. Not a fan IIRC lol

[Gregmal]

Anyhow, went through the ytd blotters cuz I really havent bought much this year and the only sizable buys recently were RTO around 27 which was by far the biggest new position and then adding to existing Fairfax around 1060. Been a boring but productive year so far. 

[dealraker]

1 hour ago, gfp said:

This one's for @dealraker

https://www.cnbc.com/2024/08/29/dollar-general-shares-crater-20percent-as-retailer-cuts-outlook-blaming-financially-constrained-customers.html

DG seems to be in a panic mode of growth to solve its issues.  There's another company that I think is in the same mode, but it is very skilled at what I call "sales and stretch" - living off inflated stock prices and creative accounting.  Yawl probably know what I'm referring to.  Time is the issue, these things can go decades before the true colors are revealed.  

[gfp]

I had thought I had nothing to add on this thread since "kept adding to Fairfax" is hardly groundbreaking on this forum, but I forgot that Nelnet was this year - January to February and then huge purchases on 2/28 as it just kept going lower that day.  Avg. cost is $84.755 but I think I lightened up on a few of the highest basis shares first so that is probably not my average basis for the original position.

 

Jack in the Box isn't nearly as significant, and I have traded around the position a bit - but that one will need to perk up this week to stay in my good graces.  

[Red Lion]

OWL. One of the only positions I’ve added to this year. 

[DooDiligence]

7 hours ago, gfp said:

7 hours ago, gfp said:I had thought I had nothing to add on this thread since "kept adding to Fairfax" is hardly groundbreaking on this forum, but I forgot that Nelnet was this year - January to February and then huge purchases on 2/28 as it just kept going lower that day.  Avg. cost is $84.755 but I think I lightened up on a few of the highest basis shares first so that is probably not my average basis for the original position.

 

Jack in the Box isn't nearly as significant, and I have traded around the position a bit - but that one will need to perk up this week to stay in my good graces.  

Re: JACK, we’ve heard a lot of announcements for multi-unit developments. Franchisee’s are given 18 months to get going. Should take maybe 10-12 weeks to build out and open a store once site selection is done. I’ll give them a q or 2 to put up some unit growth. Small slot machine position from last May.

 

https://www.jackintheboxfranchising.com/blog/how-much-time-open-my-franchise

Edited August 29 by DooDiligence

[SafetyinNumbers]

 I have been buying Strathcona Resources SCR.TO. It’s 91% controlled by Waterous Fund. Fairfax happens to be one of the LPs and I calculated their position is ~14.5m shares although that might be net of performance fees.
 

It’s an oil sands play trading at ~60% of NAV and growing production 5%+/yr. At US$80 oil it has a ~14% FCF yield. They just initiated their inaugural dividend at $0.25/q and plan to return the rest of the FCF as special dividends or via buybacks.
 

Despite having a $6b+ market cap it’s not in the S&P/TSX Composite. They can increase the float by issuing shares for an acquisition or by passing through shares to their LP holders. I expect them to choose the latter. While there may be some flow back from liquidity seeking LPs, I expect value centric holders like Fairfax will simply hold on to their shares.
 

Given the low valuation, high dividend yield and tight float, the index add could have an outsized impact. I think the stock is cheap because it’s not in the benchmark, is not very liquid and the fear of secondaries from Waterous all of which have nothing to do with intrinsic value and will be solved sooner rather than later.

[UK]

15 hours ago, gfp said:

This one's for @dealraker

https://www.cnbc.com/2024/08/29/dollar-general-shares-crater-20percent-as-retailer-cuts-outlook-blaming-financially-constrained-customers.html

 

Boy this gives me some PTSD from my early experience of investing in retail...these were also the first -50 to -80 percent lessons, still remember nicely:)

[zzzyx]

NLOP - Net Lease Office Properties.  A bunch of commercial properties in wind down mode.  Tend to be more suburban than downtown.  Bought most of my stake under $25 but still adding a bit up at $30 as I find change in the couch.  Think we see more than $45 in 18 months.

[Jaygo]

Biggest adds this year have been Artis REIT and Mako Mining. Both around the end of February.

 

Real estate and gold. No need to ask my Macro feelings.

 

 

[SafetyinNumbers]

3 minutes ago, Jaygo said:

Biggest adds this year have been Artis REIT and Mako Mining. Both around the end of February.

 

Real estate and gold. No need to ask my Macro feelings.

 

 

I bought some Mako the last few days too. It’s my second biggest position after Fairfax but that’s probably way too big for most people. If one doesn’t have any gold exposure it’s worth a look as it’s professionally run unlike a lot of other gold miners that are run by promoters. They have a producing mine in Nicaragua with high free cash flow and it can be invested at high returns investing in another scalable project in Guyana following their recent acquisition of Goldsource. 
 

Mako will keep doing accretive deals whether as the target or the buyer in order to increase production, cash flow and liquidity. Liquidity is the holy grail for gold stocks because it means admission to GDXJ and other sector ETFs which will force price indifferent buying which is needed when the shareholder base is mainly value generalists who don’t like buying on upticks.

[Jaygo]

11 minutes ago, SafetyinNumbers said:

I bought some Mako the last few days too. It’s my second biggest position after Fairfax but that’s probably way too big for most people. If one doesn’t have any gold exposure it’s worth a look as it’s professionally run unlike a lot of other gold miners that are run by promoters. They have a producing mine in Nicaragua with high free cash flow and it can be invested at high returns investing in another scalable project in Guyana following their recent acquisition of Goldsource. 
 

Mako will keep doing accretive deals whether as the target or the buyer in order to increase production, cash flow and liquidity. Liquidity is the holy grail for gold stocks because it means admission to GDXJ and other sector ETFs which will force price indifferent buying which is needed when the shareholder base is mainly value generalists who don’t like buying on upticks.

 

I have some physical gold and without being an outright gold bug I am very in tune to the devaluation of currency.

I look at gold as money and Mako as Money in the ground plus. 

 

In my younger more adventurous youth I bid on an abandoned railway in Algoma Ontario. 640 Acres with 2.3 km of raised rail bed totaling some crazy number of tons of gravel like 50-60 thousand that would be super easy to scoop up and load into trucks. The property was dead flat with amazing access along the entire length. I figured scoop up the gravel and sell it then keep the land as a kicker. The offer was stiffly rejected because of my financing clause and the bank basically laughed at me. 

 

Anyway the deal was supposed to work out as each ton of gravel was going to net me $4 bucks after me digging and second party hauling. 20 years later it would net me roughly $13.00/ton today because just like gold the price of gravel inverses the devaluation of currency.

 

I look at Mako kind of like a gravel pit. Each ton they dig up and process nets them in the area of $300.00 ( my wild ass guestimate) That beats the hell out of any gravel pits around here plus you always have the potential of deals being done to increase the value.

 

I love natural resource investment but rarely do it as the industry is ripe with fraud and shady characters. I am slowly settling into feeling comfortable with Mako if only because the CEO is open and seems rational.

 

[SafetyinNumbers]

42 minutes ago, Jaygo said:

 

 

I love natural resource investment but rarely do it as the industry is ripe with fraud and shady characters. I am slowly settling into feeling comfortable with Mako if only because the CEO is open and seems rational.

 

Agreed on Akiba’s reasoning and transparency. Wexford Capital’s effective control position is also a big reason why I’m willing to own as much as I do. They created Diamond Back Energy FANG and listed it back in 2012 and it’s compounded at 20%+ since.
 

What I didn’t expect is that the stock would still be trading almost 25% below where they LAST raised money in 2020 to build the mine in the first place. Wexford bought the majority of that issue at C$4.00 and just recently added 500k shares at C$3.50. 

 

The multiple contraction is pretty astounding especially in the context of the gold price moving up almost 40% since then, the mine being built and cheaply acquiring a high return project in what might be one of the best mining jurisdictions in the world.

 

The best case scenario is that MKO’s shareholder base can attract a few more investors that think long term and give the BOD a low cost of capital to grow accretively. The number and quality of opportunities grow exponentially once the currency is rerated. That can potentially happen with a GDXJ addition. It’s got the market cap but doesn’t trade enough because it’s so far away from intrinsic value. 

[Eldad]

Terravest 0 to 8% in 2024

 

Teqnion 0 to 4% in 2024

 

Lumine 0 to 1% in 2024 (for some stupid reason I sold my spun shares and then got to rebuy for twice the price)

[thowed]

@Eldad Am with you on Terravest.  Teqnion is in my too-hard pile, or tbh I don't believe in the management - feels like too much Buffett-esque platitude style over substance.  Lumine I am also with you, though fear I may have bought at too high a price - but fingers crossed!

[StevieV]

On 8/30/2024 at 3:31 PM, SafetyinNumbers said:

Agreed on Akiba’s reasoning and transparency. Wexford Capital’s effective control position is also a big reason why I’m willing to own as much as I do. They created Diamond Back Energy FANG and listed it back in 2012 and it’s compounded at 20%+ since.
 

What I didn’t expect is that the stock would still be trading almost 25% below where they LAST raised money in 2020 to build the mine in the first place. Wexford bought the majority of that issue at C$4.00 and just recently added 500k shares at C$3.50. 

 

The multiple contraction is pretty astounding especially in the context of the gold price moving up almost 40% since then, the mine being built and cheaply acquiring a high return project in what might be one of the best mining jurisdictions in the world.

 

The best case scenario is that MKO’s shareholder base can attract a few more investors that think long term and give the BOD a low cost of capital to grow accretively. The number and quality of opportunities grow exponentially once the currency is rerated. That can potentially happen with a GDXJ addition. It’s got the market cap but doesn’t trade enough because it’s so far away from intrinsic value. 

 

Do you think they are going to expand throughput at the Nicaraguan mine in the nearish-term?  That had been a priority for the company and seems to be on the back burner.  Not clear whether they are going to pick that back up concurrently with the new Guyana project.

 

Also, any estimate of total company production when Guyana is rolling?

 

The Goldsource acquisition was a significant positive IMHO.    Presumably they'll be doing more M&A, but no idea on the timing.

 

 

[SafetyinNumbers]

51 minutes ago, StevieV said:

 

Do you think they are going to expand throughput at the Nicaraguan mine in the nearish-term?  That had been a priority for the company and seems to be on the back burner.  Not clear whether they are going to pick that back up concurrently with the new Guyana project.

 

Also, any estimate of total company production when Guyana is rolling?

 

The Goldsource acquisition was a significant positive IMHO.    Presumably they'll be doing more M&A, but no idea on the timing.

 

 

Seems like Nicaragua expansion won’t happen until after Guyana is online. Total production should be > 100k when Guyana is up and running. I would expect more M&A. Mako could be the target or the acquirer depending on relative valuation to the counterparty.

[gfp]

1 hour ago, SafetyinNumbers said:

Seems like Nicaragua expansion won’t happen until after Guyana is online. Total production should be > 100k when Guyana is up and running. I would expect more M&A. Mako could be the target or the acquirer depending on relative valuation to the counterparty.

 

I fotget, @SafetyinNumbers - are you on the board of directors of an affiliate or another Wexford-affiliated junior miner?  I can't remember if it was you or which security it was.  Not Mako I assume.

[SafetyinNumbers]

2 minutes ago, gfp said:

 

I fotget, @SafetyinNumbers - are you on the board of directors of an affiliate or another Wexford-affiliated junior miner?  I can't remember if it was you or which security it was.  Not Mako I assume.

I’m on the board of Sailfish Royalty FISH.V. We have an effective royalty on Mako’s production in Nicaragua. Our major asset though is a royalty on Spring Valley, a development project in Nevada, where the operator is currently attempting to get approval for construction.

[gfp]

Thanks, Cheers!

[Dinar]

On 8/29/2024 at 8:12 AM, Gregmal said:

Anyhow, went through the ytd blotters cuz I really havent bought much this year and the only sizable buys recently were RTO around 27 which was by far the biggest new position and then adding to existing Fairfax around 1060. Been a boring but productive year so far. 

What is your thesis on Rentokil?  Do you think that they can turn around the Terminix business?  It seems that their organic revenue growth has been below inflation for at least five if not ten years.

[Gregmal]

10 hours ago, Dinar said:

What is your thesis on Rentokil?  Do you think that they can turn around the Terminix business?  It seems that their organic revenue growth has been below inflation for at least five if not ten years.

Couple things. It’s not expensive, at all, and it’s basically a duopoly. I also have a friend who was basically as high up on the food chain of the other pest control company as you can get who has hammered into my head that “pest control is a hell of a business”. Third, merger integration is always a timing gamble, but eventually someone fixes it in instances like this. 
 

So it was a number of things, coming together, at a time when everyone tried convincing themselves 5% CDs were better alternatives than equities at 20-25x, and I just couldn’t see how ROL could be such a great biz at 40x but RTO wasn’t worth 15x, and that’s kinda the gist. If it lingers at the current valuation long enough it will be taken out; almost with certainty. 

[CorpRaider]

14 hours ago, Gregmal said:

Couple things. It’s not expensive, at all, and it’s basically a duopoly. I also have a friend who was basically as high up on the food chain of the other pest control company as you can get who has hammered into my head that “pest control is a hell of a business”. Third, merger integration is always a timing gamble, but eventually someone fixes it in instances like this. 
 

So it was a number of things, coming together, at a time when everyone tried convincing themselves 5% CDs were better alternatives than equities at 20-25x, and I just couldn’t see how ROL could be such a great biz at 40x but RTO wasn’t worth 15x, and that’s kinda the gist. If it lingers at the current valuation long enough it will be taken out; almost with certainty. 

 

I'm in this with you.  Similar logic. I didn't get nearly a full position on before the Peltz pop and I'm having a hard time averaging up.  Brains are weird.  I should just bite the bullet.  One other favorable factor is the potential catalyst from Trian.  Seems likely to propose moving to a US listing, but maybe not, sometimes he's relatively chill/operational focused.

Edited September 3 by CorpRaider

[dealraker]

3 minutes ago, coc said:

 

How has this account been allocated compared to your overall wealth? (Eg., the 40% BRK/40%AJG and a smattering of 1/2% positions)

 

Looks like you had a one or two point edge on the market but with way less downside volatility - nice!

The two were not much alike.  Old Dominion and Progressive were by far the two largest in the IRA.