What are you buying today?

[KPO]

NSRGY

[Xerxes]

Bought IAC

 

figured the total laggard ought to have at least some of its assets revalued to the upside with the rate reduction regime … and even perhaps, I dare say, closing that discount.  

[cash_incinerator]

On 9/17/2024 at 8:34 PM, cubsfan said:

 

I can't argue with your criticism. The Terminex acqusition has been a rough one - employee retention has been a real problem. So yeah, it may end up with new management if they can't fix it. Fundamentally, RTO is a dominate business (along with Orkin) that should be earning higher returns once back office systems and duplicate systems are consolidated. It's all about route density and scale. The disparity between Orkin valuation & RTO is much too great.

 

No much excited about the residentail business, but the commercial business is much larger and very lucrative.  The non-US business ought to grow in the 5+% range with developing markets.

 

RTO has been a rollup machine and good with acquisitions - this one was big and difficult.

 

There's been some discussion of RTO here as well:

 

https://thecobf.com/forum/topic/20901-your-largest-equity-buy-in-the-last-three-months-islong-term-buys-mostly/page/6/#comment-579309

 

I really dont like rto and own rol, but too expensive to add to here.  Rto has never worked for shareholders, I don't see a reason that would change going forward.  Big acquisitions are tough and they rarely work.  This seems to be no exception.  I personally think value investors skew towards turnarounds and that it's a super unhealthy habit.  The last 10 years has taught me the winners keep on winning.  Rto is fellas.

[SongDonkey.AI]

18 minutes ago, cash_incinerator said:

I personally think value investors skew towards turnarounds and that it's a super unhealthy habit.

Great observation!

[villainx]

1 hour ago, cash_incinerator said:

I personally think value investors skew towards turnarounds and that it's a super unhealthy habit.

 

@SongDonkey.AI beat me to it.  I was just about to say the same thing.  ... As I do have a starter position in RTO.  

Edited September 24 by villainx

[KPO]

40 minutes ago, villainx said:

 

@SongDonkey.AI beat me to it.  I was just about to say the same thing.  ... As I do have a starter position in RTO.  

I tend to agree with the notion that big acquisitions are risky and value investors (is there such a thing as an investor not seeking value BTW) do gravitate towards turnarounds. That said, everything has a price (including no growth businesses like SIRI), and at $24 this one largely discounts the Terminix acquisition.
 

If you look at the history of WM & RSG they had very rough periods, integration issues, etc. but have been great investments the last 15+ years. RTO has similar levers to pull, and Trian being involved is a bonus.  I don’t have a huge position here, but it doesn't seem particularly risky at this valuation. 

[Gregmal]

Yea the hot takes are generally and directionally wrong. It’s a case of a tremendous business, thats being poorly managed with awful integration of a large merger. With the merger integration past the halfway point, a credible activist present, and time on your side, that’s the trade. Nothing to marry or get too into the weeds over. 

[dipod]

NVDA puts as a minor trading position. 

[UK]

3 hours ago, Gregmal said:

Yea the hot takes are generally and directionally wrong. It’s a case of a tremendous business, thats being poorly managed with awful integration of a large merger. With the merger integration past the halfway point, a credible activist present, and time on your side, that’s the trade. Nothing to marry or get too into the weeds over. 

 

Current CEO started in 2013 when the share was trading at 100 GBp and over next 10 years it went up more than 6x, not including dividends. Does anyone has any evidence it was or is poorly managed outside Terminix? Which I agree, was a controversial decision, perhaps bad, but is only halway through its integration, not even outside its original timeline, not sure you already can call it (integration of not so good acquisition) awful either. The Terminix is surely looks like more awful than expected:), especially considering the price paid, but this looks like sunk cost or temporary issue and if fixed, is not this exactly a business you should want to marry? If its true that RTO is considered better place to work than Apple in GB and its NPS so high, why is everybody talking that it is and was undermanaged for ages?

 

Edited September 24 by UK

[Dinar]

29 minutes ago, UK said:

 

Current CEO started in 2013 when the share was trading at 100 GBp and over next 10 years it went up more than 6x, not including dividends. Does anyone has any evidence it was or is poorly managed outside Terminix? Which I agree, was a controversial decision, perhaps bad, but is only halway through its integration, not even outside its original timeline, not sure you already can call it (integration of not so good acquisition) awful either. The Terminix is surely looks like more awful than expected:), especially considering the price paid, but this looks like sunk cost or temporary issue and if fixed, is not this exactly a business you should want to marry? If its true that RTO is considered better place to work than Apple in GB and its NPS so high, why is everybody talking that it is and was undermanaged for ages?

 

I think if you look at the results, their organic revenue growth was always below Rollins in the last decade, even before Terminix, so either poorly managed or there is something structural.  

[Gregmal]

41 minutes ago, UK said:

 

Current CEO started in 2013 when the share was trading at 100 GBp and over next 10 years it went up more than 6x, not including dividends. Does anyone has any evidence it was or is poorly managed outside Terminix? Which I agree, was a controversial decision, perhaps bad, but is only halway through its integration, not even outside its original timeline, not sure you already can call it (integration of not so good acquisition) awful either. The Terminix is surely looks like more awful than expected:), especially considering the price paid, but this looks like sunk cost or temporary issue and if fixed, is not this exactly a business you should want to marry? If its true that RTO is considered better place to work than Apple in GB and its NPS so high, why is everybody talking that it is and was undermanaged for ages?

 

I just think it’s a waste of time even getting caught up in a lot of this. Ya know the “it’s not ROL”…duh…ROL trades at 50x this trades at 15x. “Management hasn’t executed”…duh, it shows and that’s why an activist is in here. “The business is based on roll ups”…duh, but the future doesn’t have to be. 
 

Like these are all waste of breath arguments at the current valuation with the potential catalyst backdrop. It’s like arguing about growth and asset sales and terminal valuations on eBay last year. Who cares. All else equal you’re not gonna lose your shirt and you’ve got some interesting upside optionality. Just hang around for a bit and see where it goes.

[cubsfan]

^^^ Well put.  "Good things happen to Cheap Stocks" .. Steve Romick, FPA

[shhughes1116]

10 minutes ago, Gregmal said:

I just think it’s a waste of time even getting caught up in a lot of this. Ya know the “it’s not ROL”…duh…ROL trades at 50x this trades at 15x. “Management hasn’t executed”…duh, it shows and that’s why an activist is in here. “The business is based on roll ups”…duh, but the future doesn’t have to be. 
 

Like these are all waste of breath arguments at the current valuation with the potential catalyst backdrop. It’s like arguing about growth and asset sales and terminal valuations on eBay last year. Who cares. All else equal you’re not gonna lose your shirt and you’ve got some interesting upside optionality. Just hang around for a bit and see where it goes.

Peltz has a reasonable track record with activism and a reasonable track record in the UK.  Not sure why folks would focus on the rear-view mirror when the activist investor is clearly not going to settle for the status quo of the last 5 years. 

[Gregmal]

3 minutes ago, shhughes1116 said:

Peltz has a reasonable track record with activism and a reasonable track record in the UK.  Not sure why folks would focus on the rear-view mirror when the activist investor is clearly not going to settle for the status quo of the last 5 years. 

Exactly and if nothing else continued poor execution enhances the odds of favorable actions being taken 

[villainx]

The stuff highlights the lever that can help though. 

[Spekulatius]

This is a classical case where you need an activist. 
 

On the topic of FI I f management a bit of keep away, I would agree with this, but I think they really have proven that they have no cause what they are doing in the US. Current management bought this, so I don’t buy excuses here. 
 

Now it’s the time to do a change because post season is pretty much done, so if management is booted now, the new management can put some things in motion for next season over winter. Otherwise there a risk that we get that we get another tardy trading update late ins print that ahem things yet didn’t not work out again, excuses of this and that and the stock is dead for another year.

 

Also, I want to point out that the people who create a mess are rarely the best people to fix it.

I still have a very small starter position in this because of above concerns but I think this is a fixable situation- it’s not like we are trying to send humans to Mars here.

[MMM20]

I am buying SNDL up to a core position. I think it's a fat pitch and looking for pushback.

 

Edited September 26 by MMM20

[wisowis]

On 9/9/2024 at 4:36 PM, mananainvesting said:

Bought $FEC.TO - Odd Lot Tender Opportunity. 

 

 

 

 

 

Frontera to Amend Substantial Issuer Bid to Remove the Preferential Acceptance of Odd Lots

 

https://www.prnewswire.com/news-releases/frontera-to-amend-substantial-issuer-bid-to-remove-the-preferential-acceptance-of-odd-lots-302259270.html

[spartansaver]

2 hours ago, wisowis said:

 

Frontera to Amend Substantial Issuer Bid to Remove the Preferential Acceptance of Odd Lots

 

https://www.prnewswire.com/news-releases/frontera-to-amend-substantial-issuer-bid-to-remove-the-preferential-acceptance-of-odd-lots-302259270.html

No skin in the game, but didn't know a company could do this. Ouch.

[mananainvesting]

9 hours ago, wisowis said:

 

Frontera to Amend Substantial Issuer Bid to Remove the Preferential Acceptance of Odd Lots

 

https://www.prnewswire.com/news-releases/frontera-to-amend-substantial-issuer-bid-to-remove-the-preferential-acceptance-of-odd-lots-302259270.html

Yeah, sucks. First time seeing this (not that I have been doing this for long), but yeah, crazy that they did it.

[moneyball]

Over last two days have been increasing my china exposure. Hard to buy stocks and materially increase positions that in some cases are up 50% from some cost basis trades, but think that there is a real chance that risk adjusted returns have increased and despite material performance, high quality companies are cheapest in the world. 

 

Still have some struggle with how much China exposure to have though because of some of the risks we all know.

[Paarslaars]

JD and PDD.

[Ross812]

I've been looking at Tencent, PDD, and JD. I decided to take the advice from the China thread and use KWEB. I sold 10 puts expiring next week from $35 down to $30 this morning. I still might add some PDD. 

[Libs]

On 9/26/2024 at 4:54 AM, MMM20 said:

I am buying SNDL up to a core position. I think it's a fat pitch and looking for pushback.

 

 

I'm in, seems like a good trade. Thanks for the idea.

 

 

 

 

[MMM20]

6 minutes ago, Libs said:

 

I'm in, seems like a good trade. Thanks for the idea.