Recent Posts

Pages: [1] 2 3 ... 10
1
Investment Ideas / Re: GE - General Electric
« Last post by Liberty on Today at 06:25:53 AM »
https://www.wsj.com/articles/ge-powered-the-american-centurythen-it-burned-out-11544796010

"GE Powered the American Century—Then It Burned Out: How the company that was once America’s biggest, the maker of power turbines, the seller of insurance, the broadcaster of ‘Seinfeld,’ became a shadow of its former self"
2
Investment Ideas / Re: TSLA - Tesla Motors
« Last post by Spekulatius on Today at 06:17:30 AM »
^ Firing an engineer on the spot who just happens to be around at 10pm Saturday evening. LOL. The person who’s was probably responsible for the non functioning equipment wasn‘t around I guess. People will be lining up to get employed there.
3
I don't believe its impossible for government to maximize warrant value without screwing commons over w/ dilution. It's all about sequencing. Government can easily arrange it so their 80% comes into play post the dilution/capital raise. So they retain full 80% value w/o any dilution.

He is consistent and it's crystal clear what he believes.

I agree here. I think this makes it less likely that Calabria is just going to be a yes-man for Trump, and instead that Trump actually supports Calabria's views and appointed him in order for them to be carried out.

As an aside I would just make a couple of observations: his point that housing prices would fall under his policies is correct, but his implication that housing would be more affordable is not (actually he doesn't make this point so much, more that there will be less risk, which likely IS correct); because prospective buyers would have less incentives/subsidies to buy a home..so they would be able to AFFORD less. So really this just moves prices; it doesn't necessarily make housing more affordable. And the other observation about Calabria's views (#2) is that since they will take a lot of time, they become subjected to the vagaries of political winds and changing administrations over time, which softens their impact. Thus, in my view the recap is coming, and there's no guarantee the GSEs WON'T remain dominant in housing for years to come. Commons could do quite well.

I see your point about affordable housing: Calabria argues that having lower home prices while keeping incomes unchanged makes housing more affordable, but if you can't get a loan even with a better loan value-to-income ratio, it doesn't necessarily make housing more available. Or, more accurately, home ownership.

I do agree with Calabria that increasing the housing supply is the best way to promote home ownership.

I don't share your optimism about the commons, though, for many reasons.

  • Calabria wants very, very high capital standards, arguing for at least 5% in some places and as high as 8% in others. FHFA's proposal, by contrast, calls for 3.25%. The amount of dilution needed to get to Calabria's standards while Trump is still in office is staggering.
  • Calabria and Treasury both want the GSEs to have a smaller footprint, meaning less in earnings power. Predictions based on current income levels, as Moelis includes, are likely to be overly optimistic.
  • You can get the best of both worlds if the junior preferreds are offered a conversion, because it would have to be voluntary and thus at a premium to what you could get in the market. Many see par as the ceiling for the juniors, but the plaintiffs will be starting their negotiations at par plus back dividends, interest, etc. so they might be able to get more, especially in a conversion scenario.

Every time I think about selling some of my juniors to buy commons I hesitate, and end up being glad that I did. I do think the commons have a higher upside in the best-case scenario, but there is real and substantial downside risk there if enough new shares get issued for a recap.

That has been my hesitation with owning common too but I dont seem to have a good rebuttal when someone says that a common shareholders interest is aligned with govt warrants so in turn high capital levels would dilute gov stake, unless they somehow get out first. If Sr Preferred declared paid how else does gov extract their pound of flesh besides maximizing warrant value?

Apparently as I go over this in my head Im obtuse and cant sequence this myself. Anyone mind providing a hypothetical example? that being that the common is heavily diluted first and gov retains relative value via warrants?
4
Investment Ideas / Re: BEL - Belmond
« Last post by John Hjorth on Today at 06:15:00 AM »
Primary source: LVMH : LVMH reaches an agreement with Belmond to increase its presence in the ultimate hospitality world [December 14th 2018].

Not a typical acquisition for Mr. Arnault, because this one goes into the business leg inside LVMH called "other activities" [The hotel chain called Cheval Blanc is already there.] Rest of the "other activities" is : "Groupe Les Echos, which comprises leading French business and cultural news publications; Royal Van Lent, the builder of high-end yachts marketed under the brand name Feadship"  - the common denominator for all this stuff is "art de vivre".

Yes, it's brick and mortar, but that's just a tool for selling expensive experiences!

I took a quick glance at the Belmond website earlier today ... - it's just soo "LVMH"! I coulden't stay away from the Investor Relations section either ... looked a bit at the income statement and the balance sheet, remembering the agreed price.... *GULP*!

-Art de vivre? ... - I'm up for shepards pie for dinner today! [ : - P ]
5
Investment Ideas / Re: BERY - Berry Plastics Group
« Last post by kab60 on Today at 06:12:14 AM »
I think your points are valid, but a quick Google search seems to suggest plastics use is still growing "nicely" (and I'd expect that to continue - knowing how slow politicians are to change things). BERY is organized in three different segments and delivered 3 pct. organic growth in their most recent Q. If new technologies are needed to recycle plastics, it might increase complexity/need for investments and as usual favor the bigger players I'd think.

Either way, I think the political risk is hard to handicap and probably not necessary to have a strong view on given the valuation. I think it's more a matter of whether or not their margins are somehow gonna contract and increased appetite among PE firms pushes valuation a lot higher than they've been historically (I think that risk is real, considering Advent paid 13-14 times EBITDA for Færch Plast), but at the same time it seems like the market is extremely fragmented. Would be nice to know how many meaningful acquisition targets are out there, but I haven't read anything about that in the few investment reports I've seen on BERY.

A bit from a Plastics lobby if you're really bored: https://cdn.ihs.com/www/pdf/Plastics-Polymers-Brochure.pdf
6
Investment Ideas / Re: RADH - Radisson Hotel Group
« Last post by compounding on Today at 05:54:27 AM »
I'm thinking the long case for RADH has improved today at 40.05 vs yesterday at 36.50.

I'm not entirely sure it has improved but it's hard for me to see how risk/reward is much worse now than before the bid. Relative to fundamentals, the price difference is hardly noticeable (especially since the SEK has performed poorly lately too) and some of the worse scenarios for the minority are now off the table or have at least diminished probability.

My reasoning was that the implied put is cheaper and that we now have some evidence that Jin Jiang is interested in buying the whole company. So risk is less and reward more probable. I agree with the last part of your post.

Yet Another Value Blog, or Andrew Walker on Twitter, posted his thoughts on the situation today:

http://yetanothervalueblog.com/2018/12/christmas-idea-1-radisson-hospitality-radh.html

I found his take on reasons for bidding 40 interesting. In addition to what has been said here, he emphasised the possibility for JJ to negotiate with event-driven investors that buy now and will sell for a quick bump, sounds reasonable to me.

I would add that the company has guided to EBITDA improvements yoy in Q4. Going by the performance from the team the last couple of quarters, I'm pretty confident that they will deliver on their guidance and bump up EBITDA in Q4 (which is what I assumed in my post using the 6x multiple).

Also, speaking about comps ... Scandic is trading at 7.7x EBITDA at the moment, with 2.7x EBITDA in net leverage, worse margins, and I would argue worse growth prospects. IMO Scandic is not expensive, and the stock might even be interesting at a 12.2 P/E (I think Alluvial Capital owns it). So this comp is worse in most ways, no control premium, might itself be on the cheap side, and still priced way higher than the JJ bid.
7
Investment Ideas / Re: DVA – DaVita HealthCare Partners
« Last post by ValueMaven on Today at 05:50:41 AM »
very different business models...

I've been buying a lot of DVA here recently...expecting a nice Q1 once the deal with UNH gets done...seems to me that the market is under-pricing the upside here ...  I think this one quickly trades to the high 60s, low 70s IMHO
8
Generally, I'd prefer higher rates, but agree with the others that I think we're getting close to the end of what the economy can tolerate.

The fundamentals for higher rates are terrible - massive debt outstanding, significantly lower rates globally, and aging demographics really make it tough to raise rates.

We might have seen the "lows" for rates back in June 2016; however, that doesn't mean 10-year rates can go to 4-5% - just that 1.5% is probably the lower end of the range with 3.5% being near the upper-end of the range.

9
Should not raise and I don't think they will if they have any brains.

Housing is cooling down or a major part of the economy. Brexit is a big risk and some large countries in the EU are facing major fiscal issues. China vs U.S. trade war. U.S. dollar is already sky high. Inversion of bonds.

And where is the inflation really? Minimum wage of $15 in some places? That is what is so scary to Powell or that will cause runaway inflation??? Come on!

When I look at commodities or input they are all flat to down.

I had a post about this before and I think that the Fed and EU central bank have no clue about the end of QE and its impact.

Cardboard
Pages: [1] 2 3 ... 10