What are you buying today?

[Dinar]

@Red Lion.  Yes, I am assuming that

a) the revenue synergies and cost synergies promised during the take-over and increased over time are achieved

b) company can improve operations in the existing business, before taking into account synergies (KCS had OR north of 80 if I am not mistaken).  One example is building a second bridge at Laredo for instance.

c) tail-winds from volume growth driven by: 1) return of manufacturing from the East to Mexico; 2) shift of truck volumes to rail (would happen faster under VP Harris) due to difficulty recruiting truck drivers and environmental pressures (rail is 3-4x more fuel efficient than trucks).

d) tailwinds on the expense side from technology - more frequent drone inspections for instance

e) Pricing power - you are a monopoly or duopoly.  So raise price at inflation + 0.5% per annum, and that translates into EBIT growth = inflation + 1% per annum.

 

One caveat to remember, replacement cap ex is probably a billion CAD higher per annum than depreciation so reported net income is overstated or exceeds free cash flow, however you want to call that.  

I think that regardless of who is in the White House, the business will do well.  On the one hand, it should do better under Trump as he guts regulation and gets people to invest again and forces more on-shoring.  On the other hand, Harris would probably put strong pressure on trucks for environmental reasons so that could be quite helpful.   

 

Don't beat yourself too much over CP, I think it has been a lousy investment over the past five years, unless I am mistaken.

[toughcall]

FRPH, new position for me. 

[Red Lion]

@Dinar

 

This is an excellent response. Thank you! 

[BG2008]

13 hours ago, fareastwarriors said:

 

hah I had some limit orders floating around mid $8 and lower. 

 

The lack of news for the Brickell Assemblage is a bit worrying though.

 

Any insight @BG2008?

 

The just sold The Hamilton and 20% of the adjacent assemblage, see the AIV thread for updates 

[ArminvanBuyout]

Buying some building products to add to my basket

[Saluki]

Picked up some ENPH on the dip to keep my position at 1%.  It has run up to almost 120 and back down to double digits several times, so hopefully it will do it again and I can trim on the way up and repeat as necessary. 

[Red Lion]

Bought a tracking position in CP while I do further research.

 

Not finding a lot of value in the markets currently, but I've been spoiled over the last 5 years buying alt asset managers at too cheap valuations. 

 

I really like the combination of reoccurring annuity like revenues, high ROIC, high growth, and a below market valuation. Not finding all 4 in any of the companies on my radar right now. 

[Spekulatius]

Added some Evolution / EVVTY.

[MMM20]

On 10/3/2024 at 12:43 PM, MMM20 said:

Nah, I maxed out my position a couple days ago. My average cost is ~$2.02.

 

 

I was sleeping too well so I bought some more SNDL over the past couple days.

 

My average cost is now <$2 on a ~9% position.

 

Edited October 11 by MMM20

[jouni1]

Bought some EW yesterday 

[wisowis]

Added to RTO, SCR.to, and HTL.to merger arb this week

[DooDiligence]

8 hours ago, jouni1 said:

Bought some EW yesterday 

 

LT bull here. What pushed you over the edge?

Edited Saturday at 06:16 PM by DooDiligence

[jouni1]

9 minutes ago, DooDiligence said:

 

LT bull here. What pushed you over the edge?

Been looking at it for a while and got some extra cash recently. Great returns on capital, reasonable valuation and probably a lot of growth still to be had. 

[mananainvesting]

Added to my $EFXT position. 

[mananainvesting]

Some more $EFXT

[yesman182]

AAP

[KPO]

Round 2 of RTO & starter in SEB

[Spekulatius]

On 10/8/2024 at 11:53 AM, mananainvesting said:

Buying $HTLD. Anyone following this company? CEO and his trust are buying lots of shares in the open market. Below is my thesis. Not advise.

I have looked into HTLD a while ago. I think it was Hearland value fund (or similar) who mentioned it in a podcast or investor letter (don’t remember).

 

I guess is the pitch is that the merger improves their profitability. HTLD does not have a great track record of value creation, so I am a bit sceptical. 

[mananainvesting]

3 hours ago, Spekulatius said:

I have looked into HTLD a while ago. I think it was Hearland value fund (or similar) who mentioned it in a podcast or investor letter (don’t remember).

 

I guess is the pitch is that the merger improves their profitability. HTLD does not have a great track record of value creation, so I am a bit sceptical. 

I don’t think we are talking about the same company. $HTLD - Heartland Express is a trucking company. 

[Spekulatius]

6 minutes ago, mananainvesting said:

I don’t think we are talking about the same company. $HTLD - Heartland Express is a trucking company. 

Yes, I am referring to the trucking company HTLD. I was wrong about the fund owning it - it used to be Palm Valley , but they seem to be out now:

https://finance.yahoo.com/news/why-palm-valley-capital-disposed-141831946.html
 

In any case, I sort of doubt that the acquisition is a game changer and will improve profits margins. For the time being, it seems like a worse company than before the acquisition.

[mananainvesting]

Just now, Spekulatius said:

Yes, I am referring to the trucking company HTLD. I was wrong about the fund owning it - it used to be Palm Valley , but they seem to be out now:

https://finance.yahoo.com/news/why-palm-valley-capital-disposed-141831946.html
 

In any case, I sort of doubt that the acquisition is a game changer and will improve profits margins. For the time being, it seems like a worse company than before the acquisition.

I think that is the case with every acquisition of theirs, the legacy heartland brands have one of the lowest ORs in the business, so any acquisition they do hurts in the short term. They usually take 3 years to right the acquired business to low 80s OR like the rest of the business but in this case the management has said it will likely take 4 years (from 2022). The 2 acquisitions (CFI & Smith) doubled the company’s revenue so imo it is material. 

[Spekulatius]

14 minutes ago, mananainvesting said:

I think that is the case with every acquisition of theirs, the legacy heartland brands have one of the lowest ORs in the business, so any acquisition they do hurts in the short term. They usually take 3 years to right the acquired business to low 80s OR like the rest of the business but in this case the management has said it will likely take 4 years (from 2022). The 2 acquisitions (CFI & Smith) doubled the company’s revenue so imo it is material. 

I just don’t see the attraction of a business that has been flat more than a decade. Looking up older annual reports, they made $72M in net earnings in 2005 and they only really beat this earnings number in 2022 with revenue more than double the 2005 #.

 

And now, to break out of this runt, they have done a merger that years 4 years to work out:

 

In any case, trucking cos tend to have strong earnings about a year after a recession and then the profits seem to fade. Thats not much of a runway.

 

Edited Wednesday at 01:50 AM by Spekulatius

[mananainvesting]

4 minutes ago, Spekulatius said:

I just don’t see the attraction of a business that has been flat more than a decade. Looking up older annual reports, they made $72M in net earnings in 2005 and they only really beat this earnings number in 2022 with revenue more than double the 2005 #.

 

And now, to break out of this runt, they have done a merger that years 4 years to work out:

 

In any case, trucking cos tend to have strong earnings about a year after a recession and then the profits seem to fade. Thats not much of a runway.

 

Valid points. I would point you to a couple of things a) Cash Flow (They have higher depreciation than net capex) b) buybacks c)special dividends d) valuation e)land/property on the books vs market value. They have ~27 owned terminal/properties and 40acres of land. See 2022 AR for gain on sale of one of the terminals. 

[toughcall]

$LVMH -  Sentiment is very bearish. It is doom talk in the comment sections on X and forums. If the rich get purged, we are all in bigger trouble than our LVMH stocks getting hammered. Sure, in the short run there will be trouble in China. In a couple of years, we won't even remember the tariff talks. And the growth in India and other upcoming nations will be spectacular. Great opportunity to buy a wonderful company. Can it dip 20% more? Sure, and I will gobble all the way down.

[Milu]

26 minutes ago, toughcall said:

$LVMH -  Sentiment is very bearish. It is doom talk in the comment sections on X and forums. If the rich get purged, we are all in bigger trouble than our LVMH stocks getting hammered. Sure, in the short run there will be trouble in China. In a couple of years, we won't even remember the tariff talks. And the growth in India and other upcoming nations will be spectacular. Great opportunity to buy a wonderful company. Can it dip 20% more? Sure, and I will gobble all the way down.

Yes agree with most of this, current price (even after today's drop) is still slightly over what I'm willing to pay but we are getting closer.