What are you buying today?

[WFF]

13 hours ago, tnp20 said:

@WFF

 

Care to share your thesis on 1658.HK ? I am curious ....I kind of came across this today via a different route.

 

I am looking at Ping An after a recent sell off and remembered some mention of Li Lu/Himalaya possibly owning it. I look at the 2021 Annual report for Ping An to see if he owned it but it does not show up, its possible that Ping An is so big that he is not a top 10 shareholder (usually they list only top 10 in the annual reports).

 

However, he did get listed as a 6% holder on the Postal Savings bank of China annual report (2020 and 2021). He seems to have increased the stake slightly from 2020 to 2021 and ofcourse the recent slide has me curious.

 

Is the slide purely due to this mortgage non-payment issues ? Its hard to believe such a huge drop over some $20M HKD exposure...would appreciate your thoughts.

The largest retail bank, with lowest cost of deposit with no legacy loan issue.  It used to be a deposit bank that doesn’t make any loans, usually to support government infrastructure.   The market that it service has a high moat, people that are getting wealthier would likely continue to bank with PSBC (because it is in lower tiers and it doesn’t make much sense to build a branch).  The amount they make align with the big 4 banks, due to agency fees paid to the Postal Service.  However, a clause should be activated in the next 12 months ( my estimate) to re-rate the agency fee downward, powering its earnings.  The stock trades already at 5x P/E, about a 6% dividend, with higher loan provisions then it’s counterparts.   All stack to the upside I think. 
 

The sell off consist mainly recession fears in China, the zero-covid policy is causing great economic harm and thus far there hasn’t been much relaxing of the policy.  The second, is the housing/mortgage concerns that started last year, the fear is developers failing, and people not paying their mortgages.  
 

This for PSBC is overblown, their biggest loan is to the railway (which I believe is like 20-30%),  the developers exposure is minimal and haven’t dug deeper into the mortgages but I venture these are related to unfinished homes by the developers not regular home mortgages.  But since they don’t have big exposure to developers, I am deducing that exposure to unfinished homes are limited as well, they are usually done in conjunction, and are given special access to mortgages as part of their agreement with developers.  

 

In all, the bank is still trying to boost its lending, especially to the sannong and green initiatives as promoted by common prosperity.  The declining environment might actually decrease overall risk for us as it goes on sale, but also for the bank, as they are underwriting for assets that are deflated.  

[tnp20]

WFF, thanks for sharing the details.

 

http://www.aastocks.com/en/stocks/analysis/stock-aafn-con/01658/HK6/NOW.1197458/all

 

Seems the mortgage risk related to non-payment is very small....still I need to correct my earlier post ...its about US$20M exposure not HK$20M.

 

From what I am reading the housing situation (outside the mortgage repayment issue) is stabilizing...

 

https://www.bbvaresearch.com/en/publicaciones/china-what-media-sentiments-tell-us-about-chinas-financial-vulnerabilities/

 

click on the Report(Pdf)

 

But I think housing market will remain a drag over the balance of the year to growth....

Another negative is consumers have been deleveraging lately rather than getting more loans and this may be due to shocks from zero covid policies with consumers being conservative going forward in case full zero covid policy returns.

 

The zero covid policy is transforming into Dynamic zero covid policy which is more akin to what Japan did and Japan had very low infection rates just by continual and mass testing but without a lock down. If track and trace and constant testing allows business operations to continue without too much disruption, and with policy support, the situation will be stable to improving though case numbers may go up for BA.5 variant in the short term. If there is a lock down, I see it as more regional and targeted like Macau lock down ...its more to stop the explosive growth rather than any covid  going forward. They also have their own antibody and antiviral treatments now that are 80% effective in preventing deaths. Not using western Vaccines and Pfizer antivirals was a unnecessary face saving policy that wasted time whilst they waited for the chinese versions but we are there now. But its china and whatever stupid stuff Xi decides happens.... 

 

 

 

 

 

 

Edited July 17, 2022 by tnp20

[Spekulatius]

I think a housing decline could be a bigger deal than it appears right now. The mortgage payment strike is just symptom and not the root cause of the disease. It have no idea where this goes.

I agree that PSBC looks attractive here despite above, I think it’s a way better bet than Alibaba, if yiu feel inclined to invest in China.( I dont have a position).

Edited July 17, 2022 by Spekulatius

[lnofeisone]

Bought some DIS (add), JOE (add), MSGE (add), INTC (starter), and MU (starter). 

[Gregmal]

Been adding to HTL between 1.5-1.6 CDN last week or so 

[no_free_lunch]

Logistec $LGT-B.TO.  Canadian based logistics operators with heavy port operations.  Long history back to the 60's and share holders have done well for themselves.  Trading very cheap right now despite their history.  Results were strong, even throughout the pandemic.  Not something I am an expert on but it feels like a Canadian value gem. 

 

Interested if anyone here knows them or has any opinions. 

 

Small float so you need to be patient to buy them and put in a reasonable limit order.

Edited July 18, 2022 by no_free_lunch

[CorpRaider]

GOOOOOOOG-EL [Heroically resists urge to make a down 95%/split joke] 

Edited July 18, 2022 by CorpRaider

[Red Lion]

Bought back my 7/22 BX and KKR puts for a nice fast profit. Figured no reason to hold these through earnings release on Thursday for bx. 

Edited July 19, 2022 by RedLion

[kh812000]

More  Semiconductors.  ON, AEHR, MU

[GordonGekko69]

On 7/17/2022 at 4:28 PM, tnp20 said:

WFF, thanks for sharing the details.

 

http://www.aastocks.com/en/stocks/analysis/stock-aafn-con/01658/HK6/NOW.1197458/all

 

Seems the mortgage risk related to non-payment is very small....still I need to correct my earlier post ...its about US$20M exposure not HK$20M.

 

From what I am reading the housing situation (outside the mortgage repayment issue) is stabilizing...

 

https://www.bbvaresearch.com/en/publicaciones/china-what-media-sentiments-tell-us-about-chinas-financial-vulnerabilities/

 

click on the Report(Pdf)

 

But I think housing market will remain a drag over the balance of the year to growth....

Another negative is consumers have been deleveraging lately rather than getting more loans and this may be due to shocks from zero covid policies with consumers being conservative going forward in case full zero covid policy returns.

 

The zero covid policy is transforming into Dynamic zero covid policy which is more akin to what Japan did and Japan had very low infection rates just by continual and mass testing but without a lock down. If track and trace and constant testing allows business operations to continue without too much disruption, and with policy support, the situation will be stable to improving though case numbers may go up for BA.5 variant in the short term. If there is a lock down, I see it as more regional and targeted like Macau lock down ...its more to stop the explosive growth rather than any covid  going forward. They also have their own antibody and antiviral treatments now that are 80% effective in preventing deaths. Not using western Vaccines and Pfizer antivirals was a unnecessary face saving policy that wasted time whilst they waited for the chinese versions but we are there now. But its china and whatever stupid stuff Xi decides happens.... 

 

 

 

 

 

 

[Gregmal]

Adds to AIV, JOE, VRE. Watch those rates. In 2013 I bought my first property. It was a big deal apparently that at the time the 10 year surged to a whopping 3%. My mortgage rate was 4.25%. So….spreads have a long way to come in. Or they’re pricing in much higher 10 year already. Should they come back in…housing goes nuclear. So much for the whole bear case on housing which so far has been…drum roll….mortgage volume decreases, second tier assets see maybe 10% price declines, and overall prices continue set records while class A stuff was unaffected and demand still off the charts….once again, they cry wolf and it’s a nothing burger. 

[rolling]

Recently returned to US market:

CRM

LSXMA

BRK-B 

GOOGL

Initially I had also chosen META but today realized that I would rather have more GOOGL and traded one for the other.

edit: A shares, not C shares.

Edited July 21, 2022 by rolling

[ourkid8]

I rolled some of my gains from RFP into ATCO.  

Edited July 21, 2022 by ourkid8

[FCharlie]

GTE-   50% Free Cash Flow yield at current prices.

[Gregmal]

Finally bought a FAANG. Fuck Snapchat and Twitter, both bs companies. META is too dominant and too cheap. 

[CorpRaider]

I thought you Hodl'd the Goog?  

Edited July 22, 2022 by CorpRaider

[Gregmal]

7 minutes ago, CorpRaider said:

I thought you Hodl'd the Goog?  

Nah I painfully kicked it earlier in the year. It hurt so bad saying goodbye to the GOOGs, MSFTs, WMs, and COSTs, but thats part of the reason it was time for them to go. FB or EBAY gets you your cash back a whole lot quicker if we need to rely on real earnings and not multiple expansion. 

[CorpRaider]

4 minutes ago, Gregmal said:

Nah I painfully kicked it earlier in the year. It hurt so bad saying goodbye to the GOOGs, MSFTs, WMs, and COSTs, but thats part of the reason it was time for them to go. FB or EBAY gets you your cash back a whole lot quicker if we need to rely on real earnings and not multiple expansion. 

Yeah I follow that logic.  

[Red Lion]

3 hours ago, Gregmal said:

Finally bought a FAANG. Fuck Snapchat and Twitter, both bs companies. META is too dominant and too cheap. 

 

I'm short $175 PUTS expiring today, so looks like I'll be buying META today too. 

[n.r98]

4 hours ago, Gregmal said:

Finally bought a FAANG. Fuck Snapchat and Twitter, both bs companies. META is too dominant and too cheap. 

What's the gameplan? Is it a dejavu trade like last Q or more a mid/lt hold.

[Gregmal]

15 minutes ago, n.r98 said:

What's the gameplan? Is it a dejavu trade like last Q or more a mid/lt hold.

Only buying things right now that I’d hold for at least 2-3 years, PSTH aside. It’s a starter position at 174, if we get better prices I’d like to make it bigger. Feel like 174 is a great entry for a starter. Unlike the other fangs this is truly hated and truly cheap. Advertising has become a duopoly. So it should work under any number of circumstances.

[changegonnacome]

2 hours ago, Gregmal said:

Advertising has become a duopoly. So it should work under any number of circumstances.

 

Yep I agree on the digital advertising front - curious thing this cycle is that in the last recession digital advertising was like 13% of total ad budgets i think.....Google escaped unscathed that time as aggregate budgets got slashed but its segment remained resilient......this time around digital ad spend is almost 50% of total ad spend........so today when ad budgets get slashed you cant not cut your digital spend and get where you need to be from a budgeting perspective you HAVE to cut GOOG & FB........some GOOG holders are going to be shocked & stunned to find it not growing its top line 20% YoY & dump IMO....I think its the best god damn business in the world and pray and hope it gets cheap-ish. 

[Gregmal]

Yea on an absolute basis I’d much rather own Google. But FB is like half the valuation and I am a little more optimistic about metaverse project than most. It’s almost like Sphere where everyone is so negative it’s more than priced in. Plus, again, not a popular stance, but I love the autistic founder hellbent on destroying anyone challenging him. Zuck is a warrior who’s demonstrated an ability to create tremendous value.

[sleepydragon]

Google just announced they have a new board member who used to be a senior partner at Goldman. That to me a bearish news. This guy belongs to the group of managers at GS after 2008 who enriched themselves in the name of cost cutting and driving efficiency yet lose tons of profit generating employees to JPM. It’s possible he got the skill that google needs, which is cost cutting.

 

[Gregmal]

Bought some slight OTM Aug 2 VIX calls.