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What are you buying today?


LowIQinvestor

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I try to be as transparent as possible but sometimes for liquidity purposes need to be a little bit discreet, especially with stuff with big spreads and limited liquidity like these. But generally speaking, I'm in the March-June timeframe and in various strikes from $125 down to $80, a few kamikazes below that but mainly 80-125. Ive also put on some minor exposure via a straight short of the common.

 

Every day I wake up I become more and more convinced we are currently in the later stages of a bubble in several prominent market places, and it seems most people are in an Enya video. Perhaps I'm losing it though.

 

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have been buying RMRM, a closed end fund that is mid-conversion to a commercial MREIT. 

 

The basic situation -  It is trading sub 50% of book value ($19.17) as of last measurement period (11/30) and the portfolio is now 65% commercial mortgages underwritten AFTER covid. 

 

When it completes the REIT conversion and ramps up the dividend, it will get on investors radar and the price will go up.  I estimate +20% yield potential from today's price.  In terms of price targets, even 80% book value is a nice return from the current level. 

 

However, for me it is mostly an incentive play - I believe RMR the manager will treat this vehicle right and use it to help improve their reputation as their growth prospects and run-rate EBITDA has been badly hit by the poor trading values of their managed REITS.  I could see RMRM being used to acquire TRMT in a way that is accretive to the remaining (RMRM) entity.   

 

Really enjoy this trade (regardless of success) as it creates a nice test case in my overall hypothesis that RMR CEO is making real changes that will enhance trading values of all the RMR entities (and RMR itself).  Risk of course is more (and more severe) shut downs that hurt commercial real estate and that I am wrong on my reading of future incentives/behavior by management.

 

Short blog post and comments here: 

 

https://seekingalpha.com/instablog/1117597-nat-stewart/5524937-rmr-and-rmr-managed-companies-are-coiled-springs

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I bought a huge amount of Desktop Metals today (symbol DM). 3d printing.

This is going to print me money. Exchange is having problems with the symbol but I bought several thousand shares.

This is a gift!

 

Looked at the stock chart. Remember laughing at Chamath's "2025 Ebitda prediction". This is insane.

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Every day I wake up I become more and more convinced we are currently in the later stages of a bubble in several prominent market places, and it seems most people are in an Enya video. Perhaps I'm losing it though.

 

 

Ditto.  But I also know that these things usually go on much longer than I think, and it's excruciating sitting it out while the party keeps going.  I need the Great Winfield to help me!

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Bought a starter in AMT, rolled a few VIX calls, and shorted some ARKG.

 

Greg:

Re ARKG....the July 2021 puts offer 10/1 if ARKG retraces to March re-Covid levels ($34). I own some July 21 $65's. Pretty good risk / reward for some gambling money.

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Bought a starter in AMT, rolled a few VIX calls, and shorted some ARKG.

 

Greg:

Re ARKG....the July 2021 puts offer 10/1 if ARKG retraces to March re-Covid levels ($34). I own some July 21 $65's. Pretty good risk / reward for some gambling money.

 

Thanks for the heads up. Yea I planned to take a look at the options and some of the similar loony tune ETFs over the weekend. At quick glance the options did seem quite reasonably priced. I also was surprised to see near 0 borrow cost on ARKG, which, while exciting, is currently holding an extraordinary number of stocks that have done 100%+ in a couple of weeks. This is also smack in the middle of what is seasonally a very strong stretch for biotech. Nov-Jan typically. So theres many ways this can shed 15-50% over the next quarter or two, on scenarios ranging from just a simple correction, to a full blown bubble pop...or at least I think/hope.

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Bought a starter in AMT, rolled a few VIX calls, and shorted some ARKG.

 

Greg:

Re ARKG....the July 2021 puts offer 10/1 if ARKG retraces to March re-Covid levels ($34). I own some July 21 $65's. Pretty good risk / reward for some gambling money.

 

Thanks for the heads up. Yea I planned to take a look at the options and some of the similar loony tune ETFs over the weekend. At quick glance the options did seem quite reasonably priced. I also was surprised to see near 0 borrow cost on ARKG, which, while exciting, is currently holding an extraordinary number of stocks that have done 100%+ in a couple of weeks. This is also smack in the middle of what is seasonally a very strong stretch for biotech. Nov-Jan typically. So theres many ways this can shed 15-50% over the next quarter or two, on scenarios ranging from just a simple correction, to a full blown bubble pop...or at least I think/hope.

 

One reason biotech has seasonal strength Nov-Jan is the JP Morgan Biotech conference in early January. Biggest conference of the year - inevitably lots of deals/partnerships/asset JVs are announced. I somehow doubt the virtual version will have quite as many catalysts for small biotechs this year.

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have been buying RMRM, a closed end fund that is mid-conversion to a commercial MREIT. 

 

The basic situation -  It is trading sub 50% of book value ($19.17) as of last measurement period (11/30) and the portfolio is now 65% commercial mortgages underwritten AFTER covid. 

 

When it completes the REIT conversion and ramps up the dividend, it will get on investors radar and the price will go up.  I estimate +20% yield potential from today's price.  In terms of price targets, even 80% book value is a nice return from the current level. 

 

However, for me it is mostly an incentive play - I believe RMR the manager will treat this vehicle right and use it to help improve their reputation as their growth prospects and run-rate EBITDA has been badly hit by the poor trading values of their managed REITS.  I could see RMRM being used to acquire TRMT in a way that is accretive to the remaining (RMRM) entity.   

 

Really enjoy this trade (regardless of success) as it creates a nice test case in my overall hypothesis that RMR CEO is making real changes that will enhance trading values of all the RMR entities (and RMR itself).  Risk of course is more (and more severe) shut downs that hurt commercial real estate and that I am wrong on my reading of future incentives/behavior by management.

 

Short blog post and comments here: 

 

https://seekingalpha.com/instablog/1117597-nat-stewart/5524937-rmr-and-rmr-managed-companies-are-coiled-springs

 

RMRM looks really interesting.  Thanks for the idea.

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Adding more ATTO on a retest of the breakout at $12ish.

 

I'm not very technically inclined but that seems like an important level.

 

More importantly to me, the move from $10ish to $12ish, took the EV/EBITDA multiple from 3.7x to 3.9x so there seems like a lot more room to run if multiples can expand or if investors can gain more confidence in the numbers after they report Q4 or if Goldman finally updates their estimates.

 

ATTO bonds are trading in the high 90s (due in 2022) so a bit of a disconnect between equity and debt persists. The equity is significantly less liquid than the bonds which might help explain the disconnect.

 

https://finra-markets.morningstar.com/BondCenter/BondTradeActivitySearchResult.jsp?ticker=FATNL4525153&startdata-ipsquote-timestamp=12%2F15%2F2019&enddata-ipsquote-timestamp=12%2F15%2F2020

 

Added more ATTO today

 

Tiny market cap but big company.

 

They reported a strong Q3 and will likely again in Q4. Goldman, one of the three analysts didn’t update estimates post earnings last month so the forward EBITDA consensus is way too low. I think he’s either embarrassed or indifferent (ATTO reported $45m in EBITDA and GS was at $18m). Either way, consensus 2021E EBITDA is only $158m, while the three estimates are $114m, $174m and $185m. For 2022E, the consensus is $171m with Goldman at $138m and the other estimate at $204m.

 

Throwing out Goldman’s stale estimates, ATTO is trading at 3.7x EV/EBITDA.

 

Competitor Concentrix (CNXC) was just listed on the Nasdaq after spinning out of Synnex and it trades at ~9x EBITDA making, ATTO quite accretive for an acquisition. Slide 31/32 in their analyst meeting deck make a pretty good case to buy Atento to solve for growth in emerging markets and for accretive acquisitions.

 

https://ir.concentrix.com/static-files/6c895513-f519-46ce-9566-5c33ca93a8dc

 

I think this deal happens within two years which will be after ATTO management gets margins up to its target of 15% and the stock price is much higher.

 

At 8x EBITDA on the consensus 2022E number of $204m, yields a target of $70 vs the current price of $10.45.

 

Lots of room to be wrong in between those numbers and still be happy. In fact, I think the EBITDA estimates are too low so I see upside beyond that.

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