Author Topic: Ask Packer - No Seriously, Ask Him Anything (AHA)!  (Read 228700 times)

motownsf

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #20 on: April 07, 2013, 08:02:12 AM »
largest % gains - FFH LEAPS (550 to 875%), Telephonica del Peru (415%), Petrobank (367 to 672%), Uranium One (396%) and  Saga Communications (297% to 614%)  - I also have some 100% losses

Lessors - Fist lessor was Seaspan introduced by JEast which has nice recurring revenue that was being levered by lower cost debt

I focus on where the bargains are and then expand from there.  I probably should include container lessors.  Do you which ones are publicly traded?
Packer,

       You are too humble. I bought some VRTS around $16-18 which you mentioned about three years ago.  I sold around $60-$80 last March. Now it is trading around $170-$180.  A ten bagger from you!


Did the same thing with VRTS. Sold too early!


zippy1

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #21 on: April 07, 2013, 02:11:06 PM »
VRTS was a great pick in several ways.  First, it was a spinoff. The company that spun it off, I think, went over bankruptcy. The price vs. AUM is really cheap as Packer noted. It probably will be difficult for investment managers to explain to customers how great this investment is.

My thought at the time Packer brought it up was "If I were to be an investor manager, I would not touch it with a ten-foot pole."   It really was a great pick. Thanks to Packer. It paid for my son's four-year college expenses!  ;)

fenris

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #22 on: April 07, 2013, 02:47:57 PM »
I focus on where the bargains are and then expand from there.  I probably should include container lessors.  Do you which ones are publicly traded?
Container lessors: TGH, TAL, CAP
Recent transactions: Triton Container by Warburg Pincus, GE SeaCo by Chinese conglomerate and BOX (Seacube) by Ontario Teachers' Retirement Plan

Compared to other leased equipment, containers have very long useful life and high residual value (scrap value of metal). Also shippers are cash strapped (have been since crisis) and global mix continues to shift from shipper to lessor ownership. Having that said, pretty much all production capacity is located in China and if there is a rush of capital lease rates could get hammered as the production cycle is short and the product a commodity. Nice thing about these firms is that the assets are global and the players are incorporated offshore to minimize tax burden. In combination with depreciation of container fleet this eliminates cash taxes for the time being.

Sector has had a great run since the crisis...

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #23 on: April 07, 2013, 03:25:54 PM »
Thanks I have added them to my leasing spreadsheet but they do appear a bit pricey in comparison to some of the other sectors at this time (8 to 15x EBITDA and 6% to 10% FCF yields).

Packer

fenris

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #24 on: April 07, 2013, 03:55:35 PM »
Yes. Check out how much they were able to grow earnings since the crisis as a result of shippers' lack of capital to invest in containers. Combined with good lease rates (vs. ie. lease rates on ships which collapsed) made for a very favorable environment. I think these are great businesses but I'm not sure that this is a great time in the cycle to invest in them (not invested in any of them right now).

JBird

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #25 on: June 30, 2013, 02:02:26 PM »
When you create valuations do you estimate a probably-weighted range of values?
Woman and wine, games and deceit, make the wealth small and the wants great. - Ben Franklin

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #26 on: June 30, 2013, 04:53:43 PM »
No I do not as I would not know what the probabilities are today or in the future.  I try to make it simple as I don't have time to do extensive DCF modeling on my investments.  I do however get a feel for what a normalized valuation would be. 

Let me give you an example.  About 2 to 2.5 years ago I invested in 2 radio companies.  If you looked at the values at which I bought one Saga Communications it was 4.7x EBITDA.  Good recurring revenue media properties typically were sold for 8 to 10x EBITDA if not higher prior to 2008.  This is due to real synergies that can be obtained by aggregating media stations.  So in looking at both Salem and Saga I found the 2 radios who had the best performance of the radios in terms of EBITDA before and after the crisis.  They both also happened to be amongst the cheapest of the radios on an EBITDA and FCF basis also.  The debt coverage ratios for both were also the best amongst the radios.  After the radios has appreciated I noticed the TVs had not so I purchased some of them at 5 to 6x EBITDA and now they are bring purchased for 8 to 10x + EBITDA multiples. 

Packer 

JBird

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #27 on: June 30, 2013, 07:21:25 PM »
Thanks
Woman and wine, games and deceit, make the wealth small and the wants great. - Ben Franklin

muscleman

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #28 on: July 03, 2013, 10:28:41 PM »
Mr. Packer, could you tell me how you analyze telecom companies? I am very interested in PT, but not sure how to start.
Could you share your perspectives on that?
The basic things that I know:
1. large fixed cost, so they had better have a large customer base, and bundle plan offering is usually cost effective.
2. Capex. They need to upgrade the network from time to time. 2G to 3G and then to 4G. I am not sure what is the cost of each upgrades, and usually how many years would it take before another upgrade is needed?
3. What is their moat? Existing network?

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #29 on: July 04, 2013, 08:21:45 AM »
Telecom can be thought of as 2 businesses (a legacy business (think landline and wireless phone service) and broadband services business (think cable, broadband internet and 4G wireless)).  Right now we are in transition from legacy to broadband services.  The legacy business throws off alot of free cash flow which is being re-invested in broadband services.  I think going forward you are going to see a convergence of these 2 businesses and consolidation.  If you look at the presentation, PlanMeastro has posted about telecom you can see the increasing profitability of scale and the 2 less consolidated markets are the US an Brazil.  So as we see consolidation in those markets we should be able to see more profitability.  Bundling these services together is key and right now PT has done that successfully in Portugal and is beginning in Brazil (through Oi).  PT has done a great job if increasing EDITDA in a terrible macro situation and having to spin-off its cable business.  So PT has re-built its broadband services business from scratch and is a good competitor in broadband services.  The CEO of OI and formerly PT get the triple-play future.  BTW this is trend that John Malone is investing in when he is buying cable cos such as Virgin Media and Charter Communications.

The one risk for both OI and PT is the relatively high leverage of over 3x EBITDA.  But as long as the focus is on broadband, I think this fine due to low interest rates and the cable cos typically have in excess of this amount of debt.

The moat is the existing network and the cost advantage of bundling.  There is also the media distribution channel.

Packer