What are you buying today?

[Dinar]

25 minutes ago, Gregmal said:

December calls give you time for that and then the spinoff is included. I'm more concerned with a delay than cost overruns. Even another $300M is a rounding error against the NAV. However, having construction drag on into 2024+ would be a nightmare. 

Greg, if you do not mind, could you please lay out your NAV calculation for MSGE?  Thank you.

[Gregmal]

Networks $1B if they dont own the digital, $2.5B if they do...still dont think anyones figured this out although the company has said they do. 

Garden $2B worst case just cuz everyone else uses it. Likely way higher

Rockettes $800m

Tao $400m

air rights $500m

other venue+scrap $500m

Sphere $1.3B

 

You dont even need to do work here. Its over $100 with ease. You have zero liquidity or BK risk. Its a bizarre setup because it seems after $60 broke all you have to do is scream Sphere and another 10% comes off even though right now you arent even paying for it. Look at the recent headlines on Tao, spinoff, acqusitions...Sphere has been planned for almost a decade but its popular to just throw off speculation that everything they do is "to fund the Sphere"...employees showed up at work today "to fund the Sphere". Spinoff "to fund the Sphere". Revised spinoff..."to fund the Sphere". Tao "to fund the sphere"..The hysterics control the narrative right now for sure. 

 

Same with Networks. Rust Belt RSNs are crappy assets. But owning the overall content and streaming rights is hotter than even and demanding massive numbers. Networks isnt Rust Belt baseball, but like Sphere, everyone just screams melting ice cube and we get into negative EV territory.  

 

 

Edited January 13, 2023 by Gregmal

[dealraker]

This morning about 10 bought even more of BAC and WFC.  LOL!  Have added about 10,000 shares of BAC in the last few weeks.  Doubt I've had any co-conspirators on these "deals"!  

[maxthetrade]

46 minutes ago, dealraker said:

Have added about 10,000 shares of BAC in the last few weeks.  Doubt I've had any co-conspirators on these "deals"!  

 

Added some BAC and LEAPS as well.

[WayWardCloud]

2 hours ago, Gregmal said:

December calls give you time for that and then the spinoff is included. I'm more concerned with a delay than cost overruns. Even another $300M is a rounding error against the NAV. However, having construction drag on into 2024+ would be a nightmare. 

What happens to calls during a spinoff? I've never held derivatives during one.

[Gregmal]

3 minutes ago, WayWardCloud said:

What happens to calls during a spinoff? I've never held derivatives during one.

They just reflect the original entity. Sometimes annoying to track depending on ratios but by all means its reflective of if you owned the underlying today. 

[WayWardCloud]

Just now, Gregmal said:

They just reflect the original entity. Sometimes annoying to track depending on ratios but by all means its reflective of if you owned the underlying today. 

Thanks so much. Wondering how the calls on Newco can be traded if they don't add up to lots of 100s

[backtothebeach]

8 minutes ago, WayWardCloud said:

What happens to calls during a spinoff? I've never held derivatives during one.

Usually the option contracts are adjusted, and you have the right to buy 100 shares of the old company plus shares of the spinco at the spin off ratio.

The contracts also get a new ticker symbol and become quite illiquid.

[texual]

ATVI

[Luke]

Bought some Tencent 

[Gregmal]

Add to INDT and starter in RFP on the dip to 21.20. Not really sure why. 5% margin still works. 

[gfp]

now look what you went and did to RFP

[Gregmal]

16 minutes ago, gfp said:

now look what you went and did to RFP

Haha yea. I dunno. But it’s gonna close sooner than later and 70c-$1 for up to $5 upside in totally market neutral fashion seems like solid use of borrowed monies lol

[Luke]

Added to Micron

[Saluki]

Added a little more STNG again today.  I've been nibbling when it dips below $50. They've been buying back a lot of stock in the past month and if their average charter stays at what it was in Q4 (no guarantees) they will hit $20 EPS because of the operating leverage according to the conf call.  It could go the other way, but with all the disruptions to supply going on in the world I'm willing to roll the dice. 

[Spekulatius]

Bought just a little of $DFS pre-market because I really liked the results, despite the headline of their customers showing weakness.

 

Many positives like strong earnings, resumption of buybacks strong capital ratios etc.

[sfbm21]

On 1/17/2023 at 4:06 PM, Gregmal said:

Haha yea. I dunno. But it’s gonna close sooner than later and 70c-$1 for up to $5 upside in totally market neutral fashion seems like solid use of borrowed monies lol

How much is the CVR worth here ?

[sleepydragon]

Bought NTDOY last week.

Bought GE today 

[Dinar]

Sold Feb 17 2023 MANU 23 strike puts for $1.25 each.  

[StubbleJumper]

19 hours ago, sfbm21 said:

How much is the CVR worth here ?

 

Nobody knows.  Maybe $0, maybe as much as US$6/sh.

 

The CVR is basically a claim on the potential refund of ~US$500m of duties that RFP has deposited with the US government, divided by about 76m shares.  The theory goes that the US and Canada will eventually successfully negotiate a softwood lumber deal and some or all of the duties will be refunded.  But, there is no guarantee that there will be a negotiated agreement and there is no guarantee that a duty refund will be part of an agreement.

 

In the end, if 100% of the duties are refunded, the RFP CVR could be quite a profitable investment if a guy could buy it for 25 cents or 50 cents.  But, the uncertainty of whether those CVR will be worth anything at all, or when the CVR will actually be disbursed means that I don't really want to pay much for them.

 

As an example, suppose you believe that there is a 50% probability that the US government will ultimately refund 50% of that US$500m, but you suspect that they'll screw around for so long that it won't happen for three more years.  In that case, you wouldn't want to pay more than ~$1 for the CVR ie, (50% likelihood x 50% refund x US$6)/ (1 + discount rate)^3

 

If they get really cheap at some point in the next few weeks, I'll probably buy some shares.  But, I really don't want to pay very much as the likelihood, magnitude and timeframe of the payment are uncertain.

 

 

SJ

[gfp]

Good summary StubbleJumper.  Also it is important to point out that in addition to the potentially very long wait, these CVRs will not be trade-able like some other CVRs have been in the past.  So you are a 'stuck-holder' with whatever capital you allocate to this CVR.

[SharperDingaan]

This is no different to a near bankrupt company selling its tax-loss carryforward via a reverse takeover; simply substitute lumber duty for tax loss. Best case immediate use; a tax-loss goes for no more than 12-15% of its nominal value, and discounts at 25%+. Add to that, an additional 40% liquidity discount if you try to exit in volume.

 

The CVP is really a LEAP with a payoff profile very similar to a long dated zero coupon bond; big difference being that it's an equity, and there is no maturity date. Excellent trading sardine on the ongoing gyration of US/CDN lumber duties, and excellent for a TFSA wherein all trading gains will be tax free. But you're swing trading at 5-10% of value, and selling at 60-70%; maybe 2-3x every 3-4 years. Lots of volatility, lots of drama/story, but not for everyone.

  

Quite a bit different to what the SA article would like you to believe.

 

SD

 

[gfp]

But this CVR won't trade.  There is nothing to trade.  

[StubbleJumper]

20 minutes ago, gfp said:

But this CVR won't trade.  There is nothing to trade.  

 

Yep.  If you buy Resolute to get the CVR, you are stuck with it for some unknown period and cannot sell it or transfer it.  Maybe you are stuck with it for 6 months, maybe a year, maybe 5 years.  Nobody can say.  Maybe it ends up being a zero.

 

This is of particular importance if people elect to use @SharperDingaan's approach of holding the CVR in a Tax Free Savings Account or some other tax-advantaged account.  Those CVRs will use up tax-advantaged "space" for some unknown period of time, so you need to apply a healthy discount rate to your estimate of the ultimate cashflow.  So, maybe a 10% annual discount rate if you are going to use TFSA space, possibly for years on end?

 

 

SJ

[SharperDingaan]

Think more along the lines of RFP shareholders dumping their CVRs immediately upon receipt, for whatever they can get, while they can get it; the CVR gets bought into the TFSA at close to zero. 9 months later the 'story' changes, and it is slowly bled out of the TFSA at 3-4x what was paid for it. TFSA capital rises, it doesn't fall.

 

The underlying assumption is receipt of a single terminal payment at some unknown future date. Most would expect that it would actually just be Domtar paying back redirected duties (from use of the prepayment) - and only after Domtar has exhausted its own tax shields. 25% for the 'if/when' risk is conservative!

 

Not for everyone.

 

SD