Author Topic: Best Ideas For 2019  (Read 18594 times)

Viking

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1475
Re: Best Ideas For 2019
« Reply #60 on: January 01, 2019, 11:28:01 AM »
Have cash to take advantage of market dislocations. It looks to me like the easy money has been made from the 10 year bull market in stocks and 30 year bull market in bonds. If Druckenmiller is right and liquidity matters (and is contracting) we should see continued volatility in stocks and bonds (perhaps similar to 2018). Having cash to take advantage of fire sale prices would be ideal.

To keep this strategy working it will also be important to rebuild cash reserves on strength. Rinse and repeat.

In your view, is anything at a "fire sale" price right now?  If so, which companies?

After Christmas I purchased BAM, AAPL, JPM, FDX and a smaller amount of GS
I would love to add GOOG (below $1,000), DIS (below $103) and BRK (below $195). Facebook and Fairfax are also on my watch list.


kh812000

  • Newbie
  • *
  • Posts: 38
Re: Best Ideas For 2019
« Reply #61 on: January 01, 2019, 06:17:25 PM »
MRVL is pretty interesting here.  10% holder activist Starboard driving the company's focus on adding value.  Big lift in op margins as they integrate CAVM which has higher margins and synergies add.  Mkt is missing that this is no longer a HDD and consumer semi company but enterprise.   Trading way cheap now....

KJP

  • Hero Member
  • *****
  • Posts: 794
Re: Best Ideas For 2019
« Reply #62 on: January 02, 2019, 08:12:12 AM »
Have cash to take advantage of market dislocations. It looks to me like the easy money has been made from the 10 year bull market in stocks and 30 year bull market in bonds. If Druckenmiller is right and liquidity matters (and is contracting) we should see continued volatility in stocks and bonds (perhaps similar to 2018). Having cash to take advantage of fire sale prices would be ideal.

To keep this strategy working it will also be important to rebuild cash reserves on strength. Rinse and repeat.

In your view, is anything at a "fire sale" price right now?  If so, which companies?

After Christmas I purchased BAM, AAPL, JPM, FDX and a smaller amount of GS
I would love to add GOOG (below $1,000), DIS (below $103) and BRK (below $195). Facebook and Fairfax are also on my watch list.

Thanks for the thoughts.  The examples are very helpful in understanding what you mean by "fire sale" prices, which can vary alot depending on who you ask.

LightWhale

  • Full Member
  • ***
  • Posts: 132
Re: Best Ideas For 2019
« Reply #63 on: January 02, 2019, 08:16:51 AM »
My best value ideas (risk adjusted) are preferred and selected bonds. You can buy lower grade investment quality or high grade junk with good coverage and pot. forcredit upgrades with around 9% yield. Upside potential is about 20% plus whatever you earn in interest until they recover.
Which issuers/CUSIPs fit your description?


CTL (Centurylink) might be one of them.  My parents' account needs to remain liquid and short duration, so I bought the APR2020 bond, 1.1Y duration, for 6% YTM.  The company currently pays out 2.3B dividend annually, vs 2.1B interest payments, so plenty of fat to cut before defaulting.   
« Last Edit: January 02, 2019, 08:53:14 AM by LightWhale »

LightWhale

  • Full Member
  • ***
  • Posts: 132
Re: Best Ideas For 2019
« Reply #64 on: January 02, 2019, 08:49:01 AM »
Any further thoughts given the recent declines? 

I'll also confess that when judged against the criteria of (i) underlying business quality, (ii) current valuation, and (iii) potential catalysts, these are all B-level ideas at best.  I don't have what I believe to be an A-level idea.

You might want to have a look at Westaim, which possesses the opposite traits to the names you've mentioned, in terms of business/management quality. Has been trading around ~0.8 book  (or 0.85 after adjusting the multiple on HIIG back down to x1), of which >50% is managed house money. So you pay 0.85 cent for a dollar of mid-duration credit portfolio, and 0.85 p/b of an insurance company.   

on the cashflow side, Both HIIG and Arena might reaching an inflection point. HIIG has finally improved underwriting and disposed of its legacy (money-losing) lines.  Arena's AUM has probably crossed 1B at yearend, and its operating leverage should soon shift from negative to positive.  The credit cycle is also turning in its favour.

I don't think the stock will skyrocket in 2019, but it should at least take off, and with little downside risk.
my biggest concern is that most created value will go to the employees. Holdco overhead has an annual run rate of 10m CAD, and at Arena average salary is around 350K USD


I figure I will get this thread started since the market has been volatile lately.  I have a few cheap names.  But I don't have a single one that is table pounding for 2019.  It's getting awfully close though.


BG, would you share the cheap names you like?
« Last Edit: January 02, 2019, 08:53:57 AM by LightWhale »

Sullivcd

  • Jr. Member
  • **
  • Posts: 94
Re: Best Ideas For 2019
« Reply #65 on: January 02, 2019, 09:15:09 AM »
AHT-F, SSW-D, HT-E, AHL-D, NS-C are all interesting looking preferreds.

BG2008

  • Hero Member
  • *****
  • Posts: 923
Re: Best Ideas For 2019
« Reply #66 on: January 02, 2019, 09:23:54 AM »
I like Excelsior Capital Limited CMI.AU.  There is a thread on it.  In short it is a net net that pays a 4% dividend.  The tangible assets backing the stock is in the $1.20 to $1.30 per share range.  Tangible assets includes account receivables, inventories, and investments net of total liabilities.  The company did $6.2mm of EBITDA and earned 13.5 cents per share for FY18 ending in 2018.   They bought back some stock in November at $1.44.  Now you can buy it at prices cheaper than that at $1.41 AUD.   This is a net net because they sold a badco segment in recent years and is now focus on their coupler business.  The coupler is used in mostly underground coal mines mostly in Australia.  There is a lot to like about the business in that if you use the wrong coupler, it could lead to coal mine explosion.  I also think that we are at trough or near trough EBITDA and NI figures.  I've talked to the chairman and we talked about how hard/easy it is for new entrants to enter the space. It's tough.  The Chinese can't really introduce a product into this space.  The Australian competitors haven't been able to make headway.  There are real barriers to entry in this business.  Ultimately, it is a small ticket item relative to the large financial consequence of a coal mine catching fire.  Just ask the FELP people on what it is like to have a coal mine burning, i.e. Deer Run. 

You also get a free call option on an asset management business where it will only cost the company about $0.5 to $1.0mm.  My understanding is that the publicly traded asset management firms in Australia is worth quite a bit.  Getting listed in Australia is tough. So starting the asset management firm inside Excelsior Capital and then potentially spinning it off is an easier way.  No idea on the probability and the value of the asset management business, but it could potentially be worth quite a bit (more than market cap).  I got lucky in that I sold Teekay Offshore to buy this and my avg cost is $1.46 AUD while TOO has pretty much cratered during that time per my commentary in the TOO thread. 

On the negative, there are a couple post on the CMI thread that said that the people involved are bad people.  Objectively, I see the company selling off a badco, the company trading at net-net valuation, and they try to buy back 10% of the S/O at 10-15% above net tangible asset value.  Is it their reponsibility to take out shares at fair value?  Could they take us under?  I think when you have something trading at 85-90% of liquidation value that generates a 10% FCF yield with a decent business, it's worth taking the risk.  FYI, I bought back some TOO as well in the low $1.20s.  My gut told me that the year end price was partially due to oil prices collapsing but also largely due to tax loss harvesting.     


BG2008

  • Hero Member
  • *****
  • Posts: 923
Re: Best Ideas For 2019
« Reply #67 on: January 02, 2019, 09:33:55 AM »
I like Excelsior Capital Limited CMI.AU.  There is a thread on it.  In short it is a net net that pays a 4% dividend.  The tangible assets backing the stock is in the $1.20 to $1.30 per share range.  Tangible assets includes account receivables, inventories, and investments net of total liabilities.  The company did $6.2mm of EBITDA and earned 13.5 cents per share for FY18 ending in 2018.   They bought back some stock in November at $1.44.  Now you can buy it at prices cheaper than that at $1.41 AUD.   This is a net net because they sold a badco segment in recent years and is now focus on their coupler business.  The coupler is used in mostly underground coal mines mostly in Australia.  There is a lot to like about the business in that if you use the wrong coupler, it could lead to coal mine explosion.  I also think that we are at trough or near trough EBITDA and NI figures.  I've talked to the chairman and we talked about how hard/easy it is for new entrants to enter the space. It's tough.  The Chinese can't really introduce a product into this space.  The Australian competitors haven't been able to make headway.  There are real barriers to entry in this business.  Ultimately, it is a small ticket item relative to the large financial consequence of a coal mine catching fire.  Just ask the FELP people on what it is like to have a coal mine burning, i.e. Deer Run. 

You also get a free call option on an asset management business where it will only cost the company about $0.5 to $1.0mm.  My understanding is that the publicly traded asset management firms in Australia is worth quite a bit.  Getting listed in Australia is tough. So starting the asset management firm inside Excelsior Capital and then potentially spinning it off is an easier way.  No idea on the probability and the value of the asset management business, but it could potentially be worth quite a bit (more than market cap).  I got lucky in that I sold Teekay Offshore to buy this and my avg cost is $1.46 AUD while TOO has pretty much cratered during that time per my commentary in the TOO thread. 

On the negative, there are a couple post on the CMI thread that said that the people involved are bad people.  Objectively, I see the company selling off a badco, the company trading at net-net valuation, and they try to buy back 10% of the S/O at 10-15% above net tangible asset value.  Is it their reponsibility to take out shares at fair value?  Could they take us under?  I think when you have something trading at 85-90% of liquidation value that generates a 10% FCF yield with a decent business, it's worth taking the risk.  FYI, I bought back some TOO as well in the low $1.20s.  My gut told me that the year end price was partially due to oil prices collapsing but also largely due to tax loss harvesting.   

Cigarbutt

  • Hero Member
  • *****
  • Posts: 1594
Re: Best Ideas For 2019
« Reply #68 on: April 12, 2019, 08:12:09 PM »
...
Another idea is wood distributor Goodfellow - GDL.  It had a bad year a couple of years ago when it put in a new IT system and it gave wrong prices (too low!), but that has been fixed and profitability is being restored.  Has never traded at a cheaper valuation in at least 25 years.
...
You have to buy stuff when its on sale.  And unless we do get a ful-blown recession, a lot of stocks are looking pretty good.
I do agree that there are some risks with the Canadian housing market, but I see that more as a Toronto thing and a slowdown in Toronto and region would hurt, but 60% of their sales are Quebec, Atlantic and the US, which haven't had the same bubble as Toronto.  but I am watching that.

The other thing which makes me optimistic is GDL has never made less than $0.85 per share from 1996 to 2015 and had average EPS of $1.41.  They then got into trouble with their new ERP System and took some losses, but seem to be turning things around and had had positive EPS of $0.24 and $0.21 the last 2 quarters.  Unless their earnings capability has somehow been impaired or competed away, if they can move back even to the lower end of that previous period (say $1.00, but I expect higher), hard to see the stock doesn't move from $5.00 to at least $8 or $9.
This is unlikely to become a long discussion so won't start a thread for this idea which I'll follow for a while.
The stock is up 15% since your last post.
Q1 results out and one quarter does not mean much.
Results show a typical rise in inventories for the season but sales are down which means that the bottom line is likely to be hurt going forward unless housing activity picks up significantly later this year.
https://www.globenewswire.com/news-release/2019/04/12/1803442/0/en/Goodfellow-Reports-Its-Results-for-the-First-Quarter-Ended-February-28-2019.html
https://www150.statcan.gc.ca/n1/daily-quotidien/190408/t002a-eng.htm
https://eppdscrmssa01.blob.core.windows.net/cmhcprodcontainer/sf/project/cmhc/pubsandreports/preliminary-housing-start-data/2019/preliminary-housing-starts-data-64695-2019-m04.pdf?sv=2017-07-29&ss=b&srt=sco&sp=r&se=2019-05-09T06:10:51Z&st=2018-03-11T22:10:51Z&spr=https,http&sig=0Ketq0sPGtnokWOe66BpqguDljVgBRH9wLOCg8HfE3w%3D

Aberhound

  • Sr. Member
  • ****
  • Posts: 334
Re: Best Ideas For 2019
« Reply #69 on: April 16, 2019, 04:13:40 PM »
With US facing challenges from Russia and China (plus mysterious others?) and with the new secret funding system discussed on Solari report I suggest the top recipients of US government contracts:

https://en.wikipedia.org/wiki/Top_100_Contractors_of_the_U.S._federal_government

I wonder if Lockheed Martin #1 and Boeing #2 will finally be allowed to deploy their Ion engines used on the B2. Why not? It is hardly a secret anymore and it would be embarrassing if the Chinese or Russian deploy it first and take market share from Boeing and Airbus. I wonder if the Max 8 was designed for a better engine and Boeing was forced to use an obsolete turbofan creating a pig that flies.

The period of lack of real competition is ending so hopefully we will find out what goodies the US military industrial complex has been hiding in the closet for the last 80 years after the $28 Trillion+ unaccounted for spending well described and documented on Solari.com.