What are you buying today?

[Guest Schwab711]

WBS

[TwoCitiesCapital]

Back in January, the CEO said that they weren't planning on a major acquisition, but would not rule out smaller transactions like those that occurred in 2014. Santander hand increased it's ownership of BSBR from 75% to 88% in a voluntary tender during 2014. I am beginning to speculate that with the increased earnings power, high reserves, and improvement in Spain, and the price action of subsidiaries that it is becoming a possibility that Santander will do something similar again and am thinking about buying shares in the subsidiaries as opposed to increasing my holdings in the SAN directly.

 

All of the publicly traded subsidiaries are down, in euro terms, for the year:

 

Banco Santander Chile: -1.5% YTD

Banco Santander Brasil: -33% YTD

Banco Santander Mexico: -24% YTD

 

Does anyone have any thoughts on the possibility for another tender/acquisition? Also, I thought I recalled reading somewhere that the capital they have to hold against these publicly traded subsidiaries was quite high. Does anyone have any generalized banking knowledge on that subject that might help me understand the contrary argument?

 

Thanks,

 

Well, Santander didn't buy any of them, but it wasn't a bad time to be buying them. Below are the returns, not including dividends, since that post.

 

Banco Santander Chile: +23.87%

Banco Santander Brasil: +131%

Banco Santander Mexico: +30.92%

 

Despite this incredible performance from it's subsidiaries, SAN itself is down -17.53% over the same period currently sporting a market cap of $60B. This has significantly shifted the market implied values of operations in Europe (only accessible by buying a stake in the parent).

 

If we look at it's ownership in its public subsidiaries and the Americas and their market caps, (BSBR - 88.3% OF $26B, BSMX - 75% of 12.59B, and BSAC - 67% of 10.3B, SC - 58.9% of 4B), we see that it's ownership in public subsidiaries is around $42.5B against it's current market cap of $60B.

 

So what that is telling us is that the market implied value of the remainder of U.S. and European operations is only $17.5B - or roughly 4x it's earnings contribution (~4.5B - 1st half of 2016 annualized) while America's trades closer to 15x (~2.8B - 1st half annualized). I still think America's offers decent value with a long runway for growth, but methinks it's time to roll out of the subsidiaries and back into the parent to increase that European exposure.

 

Prior to today, about 1/3 of my exposure to Santander was through BSBR and the other 2/3 via SAN as I anticipated higher returns from BSBR either through an EM recovery or through Santander repurchasing the entire entity.

 

Now that it's rallied quite a bit, and the parent has languished, the repurchasing is less likely and the gains I've received are pretty favorable to roll back into an even larger position in SAN. Totally out of BSBR and back to 100% SAN.

[kab60]

GNCMA the other day

[longlake95]

EFN.TO @ 13.40- we are not far from the split - then Hudson puts the $220M from INFOR to work with an acquisition.

[John Hjorth]

Bought more BRK.B today. I have been buying this thing for about four years now, in drips, a lot during the downturn from the 150's down to 120-something in February this year, and some on the way up from there. For now, this will be enough.

[John Hjorth]

Back in January, the CEO said that they weren't planning on a major acquisition, but would not rule out smaller transactions like those that occurred in 2014. Santander hand increased it's ownership of BSBR from 75% to 88% in a voluntary tender during 2014. I am beginning to speculate that with the increased earnings power, high reserves, and improvement in Spain, and the price action of subsidiaries that it is becoming a possibility that Santander will do something similar again and am thinking about buying shares in the subsidiaries as opposed to increasing my holdings in the SAN directly.

 

All of the publicly traded subsidiaries are down, in euro terms, for the year:

 

Banco Santander Chile: -1.5% YTD

Banco Santander Brasil: -33% YTD

Banco Santander Mexico: -24% YTD

 

Does anyone have any thoughts on the possibility for another tender/acquisition? Also, I thought I recalled reading somewhere that the capital they have to hold against these publicly traded subsidiaries was quite high. Does anyone have any generalized banking knowledge on that subject that might help me understand the contrary argument?

 

Thanks,

 

Well, Santander didn't buy any of them, but it wasn't a bad time to be buying them. Below are the returns, not including dividends, since that post.

 

Banco Santander Chile: +23.87%

Banco Santander Brasil: +131%

Banco Santander Mexico: +30.92%

 

Despite this incredible performance from it's subsidiaries, SAN itself is down -17.53% over the same period currently sporting a market cap of $60B. This has significantly shifted the market implied values of operations in Europe (only accessible by buying a stake in the parent).

 

If we look at it's ownership in its public subsidiaries and the Americas and their market caps, (BSBR - 88.3% OF $26B, BSMX - 75% of 12.59B, and BSAC - 67% of 10.3B, SC - 58.9% of 4B), we see that it's ownership in public subsidiaries is around $42.5B against it's current market cap of $60B.

 

So what that is telling us is that the market implied value of the remainder of U.S. and European operations is only $17.5B - or roughly 4x it's earnings contribution (~4.5B - 1st half of 2016 annualized) while America's trades closer to 15x (~2.8B - 1st half annualized). I still think America's offers decent value with a long runway for growth, but methinks it's time to roll out of the subsidiaries and back into the parent to increase that European exposure.

 

Prior to today, about 1/3 of my exposure to Santander was through BSBR and the other 2/3 via SAN as I anticipated higher returns from BSBR either through an EM recovery or through Santander repurchasing the entire entity.

 

Now that it's rallied quite a bit, and the parent has languished, the repurchasing is less likely and the gains I've received are pretty favorable to roll back into an even larger position in SAN. Totally out of BSBR and back to 100% SAN.

Very nice moves, TwoCitiesCapital.

[John Hjorth]

Bought more NVO today. [Danish share at Nasdaq OMX CPH]. It's now my third largest position, next to BRK and cash.

[CRHawk]

Bought some more DIS on Thursday. 

[PatientCheetah]

VXX the board is very quiet considering what have transpired today :o

[scorpioncapital]

Stocks always go up, like real estate , you can't lose :)

 

 

[benjamin1978]

ummmm, why should we tell you jokers what we're buying TODAY?? Just kidding

[John Hjorth]

Bought a bit more NVO today.

[EricSchleien]

crossroads capital

[Spekulatius]

I have bought more cash recently and had to sell shares to do so.

[John Hjorth]

Added to MKL today. Still at about 15% cash.

[TwoCitiesCapital]

Stocks always go up, like real estate , you can't lose :)

 

+1

 

all and leveraged to the hilt.

 

Don't disappoint me Janet!

[PatientCheetah]

FIZZ SAM can't fight the Fed ;D

[sarganaga]

Pardee Resources PDER

[TwoCitiesCapital]

Pardee Resources PDER

 

Noice!

 

Hoping it stays where it's at for another 3 weeks. Anticipating selling CMG into any post-earnings rally (fingers crossed) and rolling the proceeds into more Pardee shares before since it hasn't participated in the rally like other commodity names.

[meiroy]

DB. j/k.

[TwoCitiesCapital]

DB. j/k.

 

Glad I'm not the only one. Haven't purchased the shares outright, but did sell puts @ $10 two days ago which seemed like an easy way to pocket a 5% premium to insure against a 20+% loss in a 1.5 month period.

 

Now that we're basically there, there's a good chance I may be assigned before expiry.

[sarganaga]

Sabine Royalty Trust      SBR

[John Hjorth]

Added to FFH.TO today.

[longlake95]

GM.WS.B

[Cardboard]

Prairie Provident Resources (PPR-TO).

 

Near debt free, light/medium oil producer (71% liquids), relatively low decline rate of 24% (similar to PWT), good hedge book and with solid room for growth in production with low risk drilling and waterflood.

 

Trades for just under $23,000 per boe/d, 83% of PDP NAV and 37% of 2P NAV. Flowing metric does not include the benefit of at least 500 boe/d that was behind pipes.

 

Most brokerages have a target of around $2 and it trades for $0.86.

 

Cardboard