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This article screams "bubble" in the VC land (people flocking to the bay area attracted by the vc gold rush with very vague job descriptions):
https://www.businessinsider.com/a-day-in-the-life-of-hsbc-executive-melania-edwards-2018-10

The article is a lightweight infoporn clickbait, but it doesn't scream "bubble". There's millions of such crap articles about pretty much anything. I could link to an article about a day of artist wannabe in Paris and scream "bubble in artists in Paris".  ::)
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Politics / Re: Fake News Liberal Media In A Nutshell
« Last post by LC on Today at 12:13:50 PM »
God forbid we have more people registered to vote!
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Investment Ideas / Re: AAPL - Apple Inc.
« Last post by johnny on Today at 12:10:51 PM »
For board members who hold multinational companies like Apple, what is your thinking on the trade skirmish between the US and China? Is it part of your investment thesis or is it something you are ignoring?

If your concern is China/Trump specifically, Apple is relatively safe. Apple would be a terrible target to direct pressure because:

1. It is understood that Apple is not, organizationally, on the Trump train, and inflicting pain on them because of Trump would not cause them to rethink their already existing Anti-Trump (tacit) posture. They are already as anti-Trump as they can plausibly be.

2. The pain inflicted on Apple would be very unlikely to be passed through or distributed to ANY US citizens, much less Trump-supporters. Apple isn't going to drop engineers in some belt-tightening response to having impaired access to the Chinese market, and even if it did, none of those people were voting T anyway. Soybeans over cellphones.

3. The pain however WILL be likely felt acutely by certain local (Chinese) constituents/partners.

This is, overall, the exact inversion of what is tactically correct (pursuing acute, politically-targeted pain for the other side, and diffusing the costs over your entire population). It makes a lot more sense to do things like target red-state agribusiness (Soy!) since slightly elevating tofu costs over 1.5 billion Chinese is politically easier than bombing out 10% of Shenzhen.

I've always considered Apple's China position a risk, but not because it will be a pawn in a grand game of strategy--more because the Chinese government would very much rather have local champions owning that market and will always be trying to maneuver and arm-twist to make it happen. That dynamic existed before Trump, and it will exist after him. Trump-risk itself is, I think, not significant.
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Events & Meeting Notes / Liberty Investor Day - 2018
« Last post by HalfMeasure on Today at 11:57:54 AM »
Anyone attending this year? I've never been, but I'm considering attending this year. Are there any events surrounding it that are worth adding to the agenda?
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Investment Ideas / Re: OZRK - Bank of the Ozarks
« Last post by atbed on Today at 11:54:29 AM »
Interesting earnings call.

1. The way they described the two credits and the circumstances surrounding them, it would seem these could be 'one-offs', especially the retail Sear/JCP mall. But also the 2007-08 resi loan. One thing is certain, next quarter is not going to give any clarity on this issue. They've written down their immediately troubled loans. If there's more trouble it's not going to be in Q1'19, simply because loans need to go bad before a write-off. The RE market may be softening, but it's not in a free fall and borrowed with 50% equity will continue to make payments this quarter. Also, management says as much when they say: "Given our expectations for excellent net charge-off ratios in the fourth quarter of 2018..." When banks are about to write off credits, its something they generally know is coming and they would not have made that statement. Not saying it's a positive, but just saying Q1 won't tell us one way or another. There simply won't be charge-offs. Longs will say that's a good thing and shorts will say "you just wait". But really, Q1 won't tell us anything on credit barring something truly bizarre happening to the economy in the next 90 days.

2. I didn't quite understand the reluctance to even consider repurchases. Not do not do it, but to say, we're not going to even consider that in the November BOD meeting at all sounds a bit weird. I understand the math Gleason is doing on ROTA of 15-17% from reinvesting v/s a P/E of 7-8 implying a 12-14% immediate "return". But I'm not sure how he can know that the price won't be $20 or $15 in November? The refusal to even entertain a repurchase and have authorization ready tells me three things (1) Management is convinced the growth opportunities are compared to their stock price (this is their line of course), (2) they think things will get worse - credit and/or liquidity - and they'll need capital (though no management will ever say that publicly), (3) Management actually wants the flexibility to do repurchases with minimal telecasting ahead of time so as to not affect price (like CABO). I'm not sure which could be true of the three.

It should be noted that Gleason is NOT stupid when it comes to knowing the value of stock at different prices... he has sold stock personally when it was at high prices in 2014. He has bought other banks by issuing stock when OZK traded above the target company stock. Then when the stock sold off, he stopped acquiring using equity and also stopped personally selling shares. So all of this makes me think that, for one of three reasons above, Gleason does not think the stock is as attractive as other opportunities available to OZK. Whether we'll see him and other management personally buy it will be something to look for.

3. The rest of it was as expected, analysts repeatedly asking the same questions over and over again... Gleason saying that he's committed to the growth strategy despite lumpy quarters (to be fair he's said this for many years, it's not just a defense strategy this quarter)... Gleason describing how borrowers put in their 50% cash into the project first, before OZK funds, etc. etc. all the things that have been said before.

What does everyone else think?

Nice analysis, AdjustedEarnings.

There's a lot of great stuff on this thread for generalists.

I got nervous about this stock last year, because I didn't know if their high NIM was sustainable; and that, to a large extent, helped them achieve their great efficiency ratio. If NIM and efficiency ratios are not sustainable, they do not deserve to trade at a premium to TBV.

The current origination/paydown trends are a positive and a negative. They are (1) pulling back as new projects don't meet their standards and (2) seeing good projects get permanent financing which are both good signs. But now they are experiencing a slowdown in asset growth, guiding to a possible drop in their non-purchased loan book, and facing headwinds to their NIM & efficiency ratio.

They will make fewer RESG loans as demand worsens around the country. My sense is that competition has heated up as CRE lenders have stopped tightening standards. So it's kind of hard seeing RESG unfunded balances grow, and therefore enough originations to offset large pay downs. I had thought OZK would leverage their relationships, replacing relatively smaller development loans with much larger stabilized real estate loans. That was part of my original thesis, but apparently that is not the case.

Maybe that will change. Otherwise, I am not sure how they will combat falling NIM. It may be hard to build the same deposit franchise, that investors in the space like so much. It's also now nearly impossible to see them make an accretive acquisition.
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Politics / Re: Fake News Liberal Media In A Nutshell
« Last post by MarkS on Today at 11:51:10 AM »
That's just silly Parsad.  Elle started out as a left leaning feminist magazine in France and has remained so through today.  Their primary target audience is 16 to 34 year old women with disposal income.  Odds are very likely that any reader clicking that link is left of center.   So they don't have to link them to a democratic site to be effective.
http://www.thefashionlaw.com/home/elle-the-making-of-a-modern-magazine
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Investment Ideas / Re: OZM - Och-Ziff
« Last post by walkie518 on Today at 11:49:51 AM »
Who is puking this thing out? It seems unlikely that this is trading down because of fundamentals, as AUM seems to be stabilizing and performance is  better than what certain other high-profile funds have posted.
It's unclear and you're correct...it doesn't seem there has been a material decline in AUM.  On the other hand, I don't have a table for who's window to redeem opens and when.  It's feasible that someone knows when such and such institutional client is exiting that might make a mark on AUM.

At the same time, the pref shs are an overhang and management is a little bit of a mess. 

That said, I think they're trying to fix this issues without giving the firm's internal problems too much media attention.  Maybe investors are catching a whiff?
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Politics / Re: Fake News Liberal Media In A Nutshell
« Last post by Parsad on Today at 11:22:58 AM »
As long as they are simply guiding voters to registration, there is nothing wrong with this.  They are not putting out fake posts on Facebook talking about how Hillary should go to jail, etc.  So to call it "fake news liberal media in a nutshell" is the same ignorant, rhetoric the President is guilty of when debasing journalists across the board.  Cheers!

Sanjeev! They straight up fabricated a headline! There is a difference between a slant, or hyperbole, and literally just creating something out of thin air.

You're going to tell me that advertisers cannot use misdirection to get clicks to other sites?  The only difference is that this was click bait for voter registration.  They are not influencing the election, simply getting voters registered. 

Now if it went to a site that was pro/anti-Democrat or pro/anti-Republican, then yeah that's a problem.  Cheers!
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General Discussion / Re: The Fed and interest rates
« Last post by Schwab711 on Today at 11:10:55 AM »

No, it's important thought experiments! If they bought $100T the USD would tank and vice versa. You can't view rates in isolation.

Agree that the Dollar would tank. But its my contention that LT nominal rates would clearly go through the roof if they printed that much money. 

The bigger point is that a central bank can (almost) always get any sort of nominal interest rate and nominal GDP growth rate that it chooses. 

Its a bit worrying that the Fed, etc don't realize its own power and instead blame the low nominal growth and low nominal interest rates since 2009 on other factors like demographics, etc. These have some affect, but the Fed can always overwhelm these factors.

It's a fair point on the first. I should also note (which I think you assumed), that I can't know the truth any better than you (or the Fed). There's a ton of factors that set FX/rates which can't be studied with any precision. I should correct my prior post that the Fed not having any effect on LT rates is almost certainly wrong. Surely there is some effect. I suppose my argument is on the idea that it's not very meaningful after liquidity and such. I don't have any great math to back this up. I'm just not convinced a single participant can alter a market in the long-run. Maybe it can, but knock-on effects will render the effort worthless. Small quibble if this is our big disagreement.

As to inflation, I never had much of a thought back in the day so this is 20:20 hindsight, but I think the money never ended up in the hands of consumers was the predominate factor for low CPI (which may be a big 'duh' since RE and some other assets are valued generously right now). Agreed that somehow the bond market in aggregate figured out the effects of the program. Kind of fascinating to think through the ways it all could have gone.

Quote
As a final thought experiment, if the Fed truly cannot do anything about low long term rates, why do we bother to collect taxes at all?  why not just finance all government expenditures through money printing?  Of course, in reality, at some point, printing money will cause inflation and raise long term rates.

Yes. At some point in these experiments there has to be an assumption there's a state/revenue generation ability behind the rates/FX, which is probably very important to note in the context of this thread. No matter how many or few schwab711 dollars I print and no matter how strong my guarantee of 'full faith and credit of schwab711' is, I'm guessing you won't hand over a single USD for them :) Taxes is patient zero in the value of the USD since you must pay them with USD.
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General Discussion / Bad Earnings Call
« Last post by alpha on Today at 11:02:36 AM »

CEO of Cleveland-Cliffs had a melt down on recent earnings call, he suggests one analyst should commit suicide. One of the worst calls I've heard in a while :D


https://www.cnbc.com/video/2018/10/19/ceo-berates-analysts-on-conference-call-you-are-a-disaster--they-will-have-to-commit-suicide.html?__source=cnbcembedplayer
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