What are you buying today?

[Longtermlens]

11 minutes ago, WFF said:

More BRK, and FRPH and starting position in CLPR under 8. 

Also more BRK and FRPH. Added some KKR. 

[Gregmal]

Had to interrupt my golf outing to do some trades! Took about a 7% position in GLD. Looks like a good hedge position with multiple ways to win over the next 2 months between China and the US government shutdown issues. 

 

Added a few VWTR, FRPH, JOE, VICI. Shorted some CLF Jan $17 puts, waiting for mid week to hit up some weeklies. Closed some BRG swing position from last week. 

[fareastwarriors]

BRK.B, FRPH, JBGS

[Spekulatius]

Little adds in LMT, FISV, ATVI, BTI and VTRS.

 

New position in MXCT (MoatslikeKodak introduced this biotech / platform company on Twitter).

 

(I bought some shares when he first posted about MXCT a few weeks ago, but sold them when they run up)

[gokou3]

BTI

[ANP301191]

Picked up some AMZN, BRK.B, GOOGL and XLF during the day. Started a new position in Nippon Electric Glass.

[Zemergefen]

First timer here

 

Been following the forum for the last two months, am enjoying and learning much. so this is a lot of fun!!

Hopefully I could contribute as well to this great community .

 

Added some BABA yesterday, making it a 5% position.

Edited September 21, 2021 by etai

[Dynamic]

Welcome to the CoBF, @etai.

 

I took delivery of some BRK.B that was put to me after the close on Friday. I'm expecting more this Friday unless it closes over $280 - the strike price of the puts I wrote. I estimate about $272.05 effective price with all the puts I've written in the last 2 months (ignoring capital gains tax on the puts that expired worthless where I kept the premium).

 

[Dave86ch]

Added a few 9988hk, ~15% of my portfolio

[Gregmal]

Shorted some CLF 9/24 $19 puts for 40c

[cubsfan]

On 5/11/2021 at 10:49 AM, cubsfan said:

More BOMN - 24.60

 

Sold all BOMN @ 36 on Barron's bump

[Head of Roller coasters]

Added some Vontier. 

[Gregmal]

51 minutes ago, cubsfan said:

Sold all BOMN @ 36 on Barron's bump

Man BOMN is your bitch huh? What'd you do 20 to 45 and now rebuy the bottom at 24 and pluck $10 in a few months? Too bad theres no options. 

[cubsfan]

^ Ha - yeah, so far so good.  I do like these guys. It is thinly traded, so the Barons bump was timely.

And being an early stage growth company, it's a little tough to value. But they do have some nice

initiatives with DFH IPO, perhaps Skyharbor, and the fiber biz.   

 

I'm in DFH too - and it's a little painful. They dumped a good % of holdings - but hey, they're smarter

than me!

 

I hope I get another shot at BOMN! Will let you know.

[Gregmal]

COMP and FRG

[cubsfan]

^  Hmmm... a software company selling at 1X sales?

 

That sounds promising.

 

I think I need to check this out.

[fareastwarriors]

3 hours ago, Gregmal said:

COMP and FRG

 

What's the theme here for COMP and Z? Continued strong demand for housing?

[Spekulatius]

20 minutes ago, cubsfan said:

^  Hmmm... a software company selling at 1X sales?

 

That sounds promising.

 

I think I need to check this out.

P/S=1 is a b it misleading, because a lot of revenues are essentially a pass through expense. You should look at a gross margin multiple when comparing this with high margin (~80%) software business. COMP margins are more in the 20% ballpark.

 

If interested, The MF Industryfocus podcast has discussed COMP in a very recent episode.

 

[Gregmal]

12 minutes ago, fareastwarriors said:

 

What's the theme here for COMP and Z? Continued strong demand for housing?

There's some winner take all dynamic as well. Few industries are more ripe for disruption than RE brokerage. Z owns the internet(which the internet is a pretty important theme over the past couple decades). 1 in 40 is the number you need to know there. Thats how many people transact in RE without ever using Z in the process. Or in other words, its virtually impossible to avoid them. From there its just about the ecosystem, engagement, and automation of the process. Ibuying is just a call option, but could be significant as well. Having done dozens of transactions over the years, its a pain in the ass. Z is the only real player who can seize this opportunity IMO.

 

COMP has the funding to do some damage as well. But I view them more as just a tiger running wild in the old ecosystem, which if you're willing to spend, is pretty easy to conquer. Poach agents or buyout smaller shops, undercut listings. Utilize some automation and advertising. Softbank knows a thing of two about throwing money at ideas....COMP is a smaller position but worth keeping an eye on well below its IPO price. 

Edited September 22, 2021 by Gregmal

[cubsfan]

^ Thanks to both of you for the great comments.

[Gregmal]

Yea commission are generally reported on a gross basis which is misleading because they are typically paid out on a % basis with the smallest end going to the firm. So a listing that does $30k gross best case has a dual representation, 60-70% can be paid out to the agents meaning for the reported figure only $10k or so is true revenue. Had a ton of people bring me small boutique financial/stock brokerage firms and be like "1x sales"...but if you're paying branch offices 90% of revenue its really more like 10x. The good thing though about this model is the overhead is typically lower as the higher the agent payout the more of the cost burden they typically bear. 

[Spekulatius]

I am it doubting the need for disruption, but COMP is pretty much supporting  a plain vanilla agent model, as well as Z actually when you take out the I-buying part. the only disruption here is RDFN.

 

Both RDFN and Z are now betting the farm on ibuying, which to me seems like poor low ROE business model. make a little money when the market is strong, lose a lot when the market turns sour. Another my cup of tea.

 

I also think that once those guys really get big in ibuying, there is going to be a lot of scrutiny on cornering the markets, but I doubt we ever get that far in the near term future.

[Gregmal]

Initially that was probably were I stood on the ibuying. But if you can leverage your size and issue at will with notes, shares, or cheap debt, thats fairly big. So whats the risk if you're raising lets say $500M and then buying 1,000 SFH with solid fundamental data supporting it at a 10-20% discount to market? This is effectively what theyre doing once you remove all the sales speak around "adjustments". And further, if you're buying these in cash or fixed debt, and the markets not "on fire", is the risk really that big? How do they lose a lot? How many times has the overall housing market gone down 25%+? Maybe a handful of times over like the last 50 years? Its not like theyre owning these at 5% down. Cash or largely funded by long term fixed rate debt. Carry cost for a home is maybe 5% a year tops assuming its vacant? So whats the ballpark on what losing a lot" actually means? Well, not really a lot. 

 

Frankly, this model, as well as similar ones from guys like Blackrock, make it far easier to dominate the market over time, especially if there's pullbacks. Of course you cant do this if you're small, but Z is the biggest fish and once you really start seeing the access to capital relative to what buying slugs of well located homes costs, it gets wild. Think about what would happen to home prices if BRK or AMZN decided to issue 5-10% of its market cap in shares to go on a SFH buying spree? You can literally buy entire towns in some of the best located neighborhoods in NY/NJ for a few billion. 

[Gregmal]

The simplified bull thesis on Z is basically theyre going to turn the long, arduous home buying/selling process into something that resembles buying/selling on eBay. One stop shop. THEY will become the real Home Depot. Where you can transact like you trade stocks. They will eat the middle stuff which if largely automated or outsourced can be hugely lucrative. Anyone who's done a deal can tell you all the absolute bullshit fees and costs the title companies take down and then of course the agent commissions. So on one end they'll have a huge inventory of homes purchased with 2% debt, notes, stock issuance. You can rent or buy from inventory through the click of a button. And all the money thats made through the transactions, which is tons! goes to the bottom line because they can offer it cheaper than anyone else, while providing the buyer and seller unmatched convenience. 

[KPO]

2 hours ago, Spekulatius said:

I am it doubting the need for disruption, but COMP is pretty much supporting  a plain vanilla agent model, as well as Z actually when you take out the I-buying part. the only disruption here is RDFN.

 

Both RDFN and Z are now betting the farm on ibuying, which to me seems like poor low ROE business model. make a little money when the market is strong, lose a lot when the market turns sour. Another my cup of tea.

 

I also think that once those guys really get big in ibuying, there is going to be a lot of scrutiny on cornering the markets, but I doubt we ever get that far in the near term future.

This is kind of my thinking as well, which is why I owned Redfin for a period of time. As I watched SoftBank Vision fund plow money into Opendoor, which now has a ~$12B valuation, then Compass ($5.5B), and read about EXP ($7B) and now several other venture stage companies I put it in the too hard pile. Definitely a great opportunity for disruption, but it seems like that’s well known, and can all these valuations be justified? Is it a winner takes all business or does it just become a more fragmented industry with slightly lower aggregate commissions?  If the game is a race to the bottom on commissions, I don’t get the current valuations. I also don’t see Warren & the incumbents going down without a fight. 

 

BTW, on ibuying, this hasn’t worked well in autos yet, but I do appreciate Vroom buying a sports car from me after driving it for 14 months during the pandemic at almost 20% above what I paid for it.