What are you buying today?

[Gregmal]

7 hours ago, petec said:

 

Interesting. What caused you to pull the trigger?

He is a great investor and giving him a 30% or whatever discount to NAV, while he’s seemingly committed to repurchases, with an eventual US listing on the horizon….just seems to be too much of a head start if you have a longer term passive horizon.
 

Even his “errors” I think people exaggerate. He was right fundamentally about Herbalife, it’s other stuff that got him in trouble. Valeant he was also largely right about the business model of acquire and then raise prices. So many fortunes were made with that model, it just got too big and became large enough to draw widespread scrutiny which toppled it and made the whole model flip. His hedge trades are great. I also think he has a penchant for bottom ticking great businesses and additionally, selling Netflix so soon IMO showed great humility and willingness to concede which is exactly what you want from a manager, independent of whether it was the right or wrong move. So I just think it’s too lopsided and he seems like he’s got 20 good years left in him which works for me.

Edited February 4 by Gregmal

[dipod]

On 2/2/2024 at 5:33 PM, Gregmal said:

For better or worse, I’ve been buying A LOT of Perishing Square last couple weeks. Tax stuff be damned. 

You sure you want to be investing in something that is perishing??  

[petec]

17 hours ago, Gregmal said:

He is a great investor and giving him a 30% or whatever discount to NAV, while he’s seemingly committed to repurchases, with an eventual US listing on the horizon….just seems to be too much of a head start if you have a longer term passive horizon.
 

Even his “errors” I think people exaggerate. He was right fundamentally about Herbalife, it’s other stuff that got him in trouble. Valeant he was also largely right about the business model of acquire and then raise prices. So many fortunes were made with that model, it just got too big and became large enough to draw widespread scrutiny which toppled it and made the whole model flip. His hedge trades are great. I also think he has a penchant for bottom ticking great businesses and additionally, selling Netflix so soon IMO showed great humility and willingness to concede which is exactly what you want from a manager, independent of whether it was the right or wrong move. So I just think it’s too lopsided and he seems like he’s got 20 good years left in him which works for me.

 

Agreed. It is a core position for me. I would add that it's basically a collection of royalties - collectively it is a very cash generative portfolio. And he does something I can't replicate in the hedges, which are executed very well. 

[thowed]

Nothing to disagree with on PSH (but my god I wish he'd stop the political nonsense on Twitter).

 

Will just add that the Discount got to 38% late October, and has come in this year to 27%, so maybe not optimal time to buy right now, though 27% discount in any other scenario pretty decent.

[fareastwarriors]

Add to BTI and CLPR

[Castanza]

HQI 

[thowed]

31 minutes ago, Castanza said:

HQI 

 

I'm struggling to understand the price here.  I would have thought it would be doing better in this environment.  Did they mess up one of their acquisitions?

[Castanza]

2 hours ago, thowed said:

 

I'm struggling to understand the price here.  I would have thought it would be doing better in this environment.  Did they mess up one of their acquisitions?

Yeah not sure either….haven’t seen any news regarding the acquisition and not sure we’ll hear anything till next earnings call. Hopefully some more insider buying shows up soon. 
 

1% position for me currently so figured I’d average down a bit. 
 

 

[Kizion]

On 2/5/2024 at 1:13 PM, thowed said:

Nothing to disagree with on PSH (but my god I wish he'd stop the political nonsense on Twitter).

 

Will just add that the Discount got to 38% late October, and has come in this year to 27%, so maybe not optimal time to buy right now, though 27% discount in any other scenario pretty decent.

 

While it's correct that the stock is currently discounted by 27% from NAV, the key point (according to me) to consider is the potential for growth. If you purchase the stock now at $48.5, and with the NAV being $66.15 (as per 31/1), you're looking at a potential increase of 36%. However, it's worth noting that this potential gain is indeed not as high as it has been in previous months.

[Luke]

Bought some Mitsubishi Corp on cheap margin, having buffett as largest owner while the company still trading cheap is fine for me

[thowed]

13 hours ago, Castanza said:

Yeah not sure either….haven’t seen any news regarding the acquisition and not sure we’ll hear anything till next earnings call. Hopefully some more insider buying shows up soon. 
 

1% position for me currently so figured I’d average down a bit. 
 

 

Thanks - I need to do a bit more work on it to build conviction, as there's a lot that's interesting with it.

[Paarslaars]

9 hours ago, Kizion said:

 

While it's correct that the stock is currently discounted by 27% from NAV, the key point (according to me) to consider is the potential for growth. If you purchase the stock now at $48.5, and with the NAV being $66.15 (as per 31/1), you're looking at a potential increase of 36%. However, it's worth noting that this potential gain is indeed not as high as it has been in previous months.

 

That's assuming the discount to NAV ever closes... big assumption to make in my opinion but I guess it does offer some downside protection.

[Gregmal]

9 minutes ago, Paarslaars said:

 

That's assuming the discount to NAV ever closes... big assumption to make in my opinion but I guess it does offer some downside protection.

Don’t think it matters. Ackman is one who reliably outperforms and occasionally does something heroic. If there was no ego and no stock buyback; I probably wouldn’t own this. But take those two things and give it 5-10 years…you’re gonna make a fortune.

[valueventures]

Bought a bit more JOE

[nwoodman]

2 hours ago, Gregmal said:

Don’t think it matters. Ackman is one who reliably outperforms and occasionally does something heroic. If there was no ego and no stock buyback; I probably wouldn’t own this. But take those two things and give it 5-10 years…you’re gonna make a fortune.

Not sure about a fortune but the discount to NAV offers some margin of safety here.  I have a completely unsupported thesis that these capital allocators actually come into their prime after 50.  Picked up some last night in Amsterdam at the open.

 

Buybacks, no shorting policy and considerable skin in the game make the fees marginally more palatable. Above all they will do "stuff" for good or bad but on balance good, where I simply lack the expertise. 

 

Base case for me is low double digit returns and no closing of the discount to NAV.  Anything beyond that is a bonus.

[nwoodman]

12 hours ago, Luca said:

Bought some Mitsubishi Corp on cheap margin, having buffett as largest owner while the company still trading cheap is fine for me

Impeccable timing @Luca.  Well done

[Gregmal]

When you look at what Ackman owns, it’s hard to conclude that he ll diverge significantly from the broader market in a bad way. If the overall market does poorly, he could do the same. During this time period though, he has proven to make great decisions either clipping the down move, or bottom ticking great businesses.
 

Conversely, if the market does well, so will most of his holdings. So I just view it as the premier way at the moment to get market+ type alpha without having to think twice. Buybacks will work wonders over elongated periods of time. This is also something you can really crank up the allocation on during those drawdowns. 

[Luke]

5 hours ago, nwoodman said:

Impeccable timing @Luca.  Well done

This was on my shrine luck letter at a temple in japan today, added to my Mitsubishi position this morning

[Paarslaars]

9 hours ago, Gregmal said:

Don’t think it matters. Ackman is one who reliably outperforms and occasionally does something heroic. If there was no ego and no stock buyback; I probably wouldn’t own this. But take those two things and give it 5-10 years…you’re gonna make a fortune.

 

Well that's just it, you have to look at this correctly. Kizion's assumption that you could have an easy 36% due to the discount to NAV is wishful thinking in my opinion. Now that this is irrelevant to the thesis which is based on Ackmans performance, I agree with.

 

Actually I have to admit that if he does buybacks, the discount to NAV is a positive thing and it might shrink.

Edited February 7 by Paarslaars

[Kizion]

1 hour ago, Paarslaars said:

 

Well that's just it, you have to look at this correctly. Kizion's assumption that you could have an easy 36% due to the discount to NAV is wishful thinking in my opinion. Now that this is irrelevant to the thesis which is based on Ackmans performance, I agree with.

 

Actually I have to admit that if he does buybacks, the discount to NAV is a positive thing and it might shrink.

 

Where did I mention that? I stated that there's a potential upside of 36%. To me, focusing on the discount makes no sense. Thus, if one needs to 'value' something, it should be the upside, not the discount. When I invest $100 in PSH, I own the equivalent of $136 of the stocks in his portfolio (for example, CMG). Therefore, I invested in PSH because I wanted to own some of the shares in its portfolio at a cheaper rate than buying them directly. Plus, he's a much better investor. He will, as Gregmal mentioned, steer the ship better than I ever could.

Edited February 7 by Kizion

[Paarslaars]

Must have misunderstood you then, seems like we're on the same page. 

My bad.

[Ross812]

On 2/5/2024 at 9:30 PM, Castanza said:

Yeah not sure either….haven’t seen any news regarding the acquisition and not sure we’ll hear anything till next earnings call. Hopefully some more insider buying shows up soon. 
 

1% position for me currently so figured I’d average down a bit. 
 

 

Some of HQIs staffing segments are in a recession right now. Warehouse staffing levels are a leading indicator, question is does the trend reverse? Also, Look into how they manage their workers comp. I'm comfortable with it, but they are taking some lumps right now. Next quarter could be rough.

 

The company that is managed well and is a good long term hild. With that said, I've been trading around a 4% core position. Bought down to $12.50, sold some at $16, buying more now. 

 

 

[aws]

I own a decent amount of PSH as well. The way I've looked at it is, the discount to NAV is basically enough to zero out the 1.5% management fee. Meaning the accretive aspect of the buybacks and dividends at such a big discount replace the NAV that is spent on the fee. I'm not sure what I would do with the position if the discount narrowed significantly, but that's unlikely to be an unpleasant scenario.

[thepupil]

this is similar to how I view things, with a little help from low cost leverage and discount, a buyback/divvy reinvestment of 3% of NAV more or less cancels out the fees such that gross return should be quite close to the net return. 

 

this is why a consistent divvy/buyback is so important with discounted NAV vehicles. it acts as a self-correcting mechanism by which the discount allows for accretion to offset other factors which weigh on NAV growth. It does not guarantee a closing of the discount but does help with per share value growth.  

 

 

Edited February 7 by thepupil

[Viking]

CFP.TO

 

Back under C$15. Canfor is trading at about $250/1,000 board feet of capacity. West Fraser recently made a purchase at C$900/1,000 board feet. Not really an apples to apples comparison but i think it is at least a little instructive. Time to dust off my old files on lumber companies.

 

US just increased duties on Canadian softwood lumber. Canfor was hit especially hard; that is likely what is causing the stock to sell off more than peers. Higher duties just might cause the permanent closer of capacity in central BC to accelerate - which would be supportive of higher prices down the road. Something to monitor. 
 

It is pretty much a given that central banks will be cutting rates, likely around mid year. What sector should benefit the most? Housing.
 

Demand: Canada has a serious housing shortfall. My guess is the US also will need to increase the amount they are currently building in the coming years.

 

Supply: lumber production will continue to decline in BC. Yes, it will continue to increase in the US South. Higher imports of lumber from Europe could be a risk; something to monitor. But an increase in new housing starts might start to tighten the market. It will depend on how much new home starts increase as rates start to come down.

 

Why Canfor? It looks to me to be the cheapest of the big boys. West Fraser is the best managed (IMHO). This is a trade for me; not a long term hold.
 

The problem? No near term catalyst. Might be dead money for a while. And the stock could continue to fall. I view it as a 6-12 month hold/trade. I am in no hurry. 
 

The payoff? Lumber is one of the most volatile commodities. Up and down. If a catalyst shows up the whole sector will rocket higher.

 

Interfor releases earnings after close of business Feb 8. Probably will not be great. 

Edited February 7 by Viking