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General Category => General Discussion => Topic started by: BG2008 on October 29, 2018, 09:52:23 PM

Title: Best Ideas For 2019
Post by: BG2008 on October 29, 2018, 09:52:23 PM
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. 
Title: Re: Best Ideas For 2019
Post by: investor-man on October 30, 2018, 04:58:56 PM
No responses? I'll bite - FLYB:GB is now trading at about 2x operating cash. Not the prettiest picture, and some obvious clear risks, but very cheap.
Title: Re: Best Ideas For 2019
Post by: KJP on October 30, 2018, 05:06:06 PM
Can you have a large portion of your portfolio in Flybe given the Brexit risk (both risk to operations and effect of likely decline in pound on cost of USD-denominated debt and fuel)? 

I was going to nominate Parkit for this thread, but decided not to because I don't have a significant portion of my personal wealth in it and can't recommend anyone else do so.  But if you asked me what company in my portfolio is most likely to double next year, I'd say that one.
Title: Re: Best Ideas For 2019
Post by: investor-man on October 30, 2018, 05:29:36 PM
Can you have a large portion of your portfolio in Flybe given the Brexit risk (both risk to operations and effect of likely decline in pound on cost of USD-denominated debt and fuel)? 

I was going to nominate Parkit for this thread, but decided not to because I don't have a significant portion of my personal wealth in it and can't recommend anyone else do so.  But if you asked me what company in my portfolio is most likely to double next year, I'd say that one.

It was up around 10% of my portfolio earlier this year. It has dropped about 75% over the last month. I bought it back up to roughly 7.5% today. I don't think I'll buy any more until after March (supposing it looks good then). "No deal" seems an unlikely scenario to me. Either way, I've got the stomach to find out.
Title: Re: Best Ideas For 2019
Post by: Viking on October 30, 2018, 05:36:36 PM
I think raising cash on strength (stock market run ups) will be a very effective strategy moving forward (the remainder of this year and next year). Being very patient on reinvesting the cash will also be important.
Title: Re: Best Ideas For 2019
Post by: KJP on October 30, 2018, 05:42:48 PM
Like you, my longstanding Flybe holding has been a gold medal winning downhiller, but I don't have the bravery to add to it.

I'm sure 2019's biggest winner will be something like Flybe -- an existential risk that never materializes -- or something highly levered.  For the same reasons, I suspect I won't own it.
Title: Re: Best Ideas For 2019
Post by: investor-man on October 30, 2018, 06:16:38 PM
Like you, my longstanding Flybe holding has been a gold medal winning downhiller, but I don't have the bravery to add to it.

I'm sure 2019's biggest winner will be something like Flybe -- an existential risk that never materializes -- or something highly levered.  For the same reasons, I suspect I won't own it.

The difference between you and me is probably experience. Perhaps I'll learn to be more like you after this.

Anyway - anybody have any good ideas? Seems there's got to be some good deals out there and KJP and I have both given out a name.
Title: Re: Best Ideas For 2019
Post by: Gregmal on October 30, 2018, 06:34:43 PM
I can't put a finger on one specifically but MSB IMO should re-rate to $40+, with $3.50+ in distributions along the way.
Title: Re: Best Ideas For 2019
Post by: porcupine on October 30, 2018, 06:50:08 PM
Deep value play:

CCUR sold off all of their core operating assets at the end of 2017. Since then, they have been looking to deploy cash. They recently signed a letter of intent to purchase 80% of Luxemark Capital, a merchant cash advance lender. This type of business isn't viewed upon with great reverence, but the stock price of CCUR is currently pricing the acquisition at below 0. Also, the payday lending industry faces some tailwinds, as the trump administration is looking to lift Obama era regulations which restricted who payday lenders could lend to.

CCUR is currently performing due dilligence under a period of exclusivity and has until January 30th to do so. They could easily walk away from this LOI. If they do this, I believe the stock price should at least converge to their assets held at fair value (adjusted for recent market developments) less their total liabilities. They also have a significant amount of operating losses which could be applied to a profitable company. If they have reason to believe that LuxeMark isn't profitable, I do not think they will go forward with the acquisition. An activist also has been increasing his stake since 2017. He now owns around 39% of the company and his uncle is on the board of directors. CCUR also has bought back a significant amount of stock (around 725,000 shares) since announcing their repurchase plan in March.

Two catalysts for 2019 - CCUR walks away from the deal. Luxemark capital is profitable.

Worst case scenario - Luxemark Capital isn't profitable... but the valuation of the company is already pricing this acquisition at 0.

Payday lending is very risky... but the decrease in share price of this company doesn't make sense due to the relatively small amount of cash (around 11%) they are investing in this company. They also have the option of granting up to $10 million in syndication capital to Luxemark. If this were to go to 0, the company would be trading at a slight premium to fair value assets less total liabilities.

Long CCUR
Title: Re: Best Ideas For 2019
Post by: bizaro86 on October 30, 2018, 09:17:37 PM
Like you, my longstanding Flybe holding has been a gold medal winning downhiller, but I don't have the bravery to add to it.

I'm sure 2019's biggest winner will be something like Flybe -- an existential risk that never materializes -- or something highly levered.  For the same reasons, I suspect I won't own it.

My position that most resembles that description is Bri-Chem [BRY.TO]. It trades at less than 50% of NCAV, so there is certainly room for a double. They kitchen-sinked their last quarter, so just about anything will be viewed as an improvement next quarter. I think the risk-reward here is very good, but zero is on the table so it isn't a huge position.

Probably my current best idea is Labrador Iron [LIF.TO]. Premiums for high quality ore are very high, and the market has missed how much it'll help them because of the strike (resolved). Could easily end up paying $4 or more in dividends next year on a $27.50 price.
Title: Re: Best Ideas For 2019
Post by: undervalued on October 30, 2018, 09:36:48 PM
I
Like you, my longstanding Flybe holding has been a gold medal winning downhiller, but I don't have the bravery to add to it.

I'm sure 2019's biggest winner will be something like Flybe -- an existential risk that never materializes -- or something highly levered.  For the same reasons, I suspect I won't own it.

My position that most resembles that description is Bri-Chem [BRY.TO]. It trades at less than 50% of NCAV, so there is certainly room for a double. They kitchen-sinked their last quarter, so just about anything will be viewed as an improvement next quarter. I think the risk-reward here is very good, but zero is on the table so it isn't a huge position.

Probably my current best idea is Labrador Iron [LIF.TO]. Premiums for high quality ore are very high, and the market has missed how much it'll help them because of the strike (resolved). Could easily end up paying $4 or more in dividends next year on a $27.50 price.

Since we're talking about best ideas that can go down to zero or double or better, I'll add FNMAS onto the list. We're 'hoping' housing will be the priority in 2019 and Mnuchin will resolve the lawsuits.
Title: Re: Best Ideas For 2019
Post by: roughlyright on October 31, 2018, 12:42:05 AM
My pick for 2019 is Genesis Vision. Currently trading at $12. Market cap is $53 million. Today they have launched the Genesis Vision network. I wrote an article on Medium today describing why it makes sense.

https://medium.com/@samikkurty/genesis-vision-platform-launch-2226a6a7651 (https://medium.com/@samikkurty/genesis-vision-platform-launch-2226a6a7651)
Title: Re: Best Ideas For 2019
Post by: Gamecock-YT on November 01, 2018, 07:34:14 PM
I've said cash the past 3 years, so maybe a contra move to suggest something different: Product Tankers

If you want low debt, likely to survive if rates stay low: Ardmore Shipping $ASC

If you want an equity stub, with shady family insider transactions: Scorpio Tankers $STNG


Order book for product tankers has been at all time lows so whenever this thing turns it's going to go up like a rocket with demand outpacing supply. Which a catalyst is likely to be IMO 2020 where all shipping vessels will have to use low sulfur fuels so there's likely to be a demand spike as ports stock up ahead of the transition on Jan 1, 2020.

https://seekingalpha.com/article/4216449-scorpio-tankers-inc-stng-ceo-emanuele-lauro-q3-2018-results-earnings-call-transcript

STNG had a call this week where they're seeing green shoots, rates are off all time lows.

Quote
The message is that markets have moved positively in the last few weeks. In some markets, these moves are quite considerable and more substantial than we have indeed seen with these many quarters. Fundamentally, weíre seeing structural change with increased capacity utilization levels. This will benefit markets positively as we move into 2019 against the backdrop of benign new tonnage supply.

Quote
We are experiencing a very early seasonal upswing too. Normally, this product market doesn't stop to get moving until really mid to late November and it's starting up a very strong platform now in any context at all, even in years where the product market has actually been strong, right to have really been this strong at this point prior to Thanksgiving and the winter season starting.
Title: Re: Best Ideas For 2019
Post by: KJP on December 25, 2018, 09:00:48 AM
Any further thoughts given the recent declines? 

I'll reiterate my suggestion of Parkit.  See its thread for recent developments.  A sale of the Canopy lot would be a significant catalyst, assuming the bottom has fallen out of its performance or cap rates for parking lots. 

For a larger cap, I nominate NVR, but that contains an embedded macro call that new single-family house sales in the US won't decline in 2019.  I don't see any hard catalyst that would prevent NVR from staying cheap in 2019 even if the US housing market holds up, but there is the soft catalyst of large share repurchases.

EDIT:  I'll add another:  Command Center (CCNI).  See the thread for reasons why.  I believe 2019 will see continued significant buybacks and perhaps more, given the make up of the board. 

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. 
Title: Re: Best Ideas For 2019
Post by: no_free_lunch on December 25, 2018, 09:06:22 AM
I really like GUD.TO right here.  It is around 1.1x book value with a large portion of book in cash.  It seems that the selloff in pharma is beneficial as they are sitting on so much cash.  I think some of the smaller companies will start to get hungry and knight should be able to scoop up some good deals.  After BRK/BAM it is my largest position.
Title: Re: Best Ideas For 2019
Post by: writser on December 25, 2018, 10:10:20 AM
I still like Conduril, Asta Funding, Retail Holdings, a few Japan stocks, some Italian real estate funds. No class A ideas either. Maybe BDMS is my favorite idea right now but that should work out in a few weeks. Not sure if that counts.
Title: Re: Best Ideas For 2019
Post by: cameronfen on December 25, 2018, 02:41:16 PM
I like intelsat and rimini street.  intelsat owns lots of spectrum, and is trading at levels before all the positive rulings out of the FCC.  Bond markets have already reacted positively, but equity holders are a bit slow it seems...  See kerisdales thesis on SA.  rimini good too but dont have time right now to describe as I'm writing this in the restroom of fogo de Chao.  (family dinner).
Title: Re: Best Ideas For 2019
Post by: awindenberger on December 25, 2018, 06:56:47 PM
I'm still doing my DD on these companies, but given the massive losses they've taken in just the last 2 months, I think that US Natural Gas upstream producers are undervalued. I'm bullish on NatGas breaking out of its 2.50-3.00 long term range to $4+ in 2019 or 2020, which would be a significant tailwind for these companies. And right now most of them look as cheap as they've ever been.

Biglari Holdings (BH, BH/A) is currently trading at 0.7x book value, but owns close to 50% of its own shares, so its really closer to 0.35x book. Of course its trading down there because Sardar Biglari controls over 50% of the voting stock and I might be the only living person remaining that still believes he will deliver long term out-performance.

Still, the value of the shares are significantly less than the value of their CBRL stake, a stake Biglari has started monetizing over the past few weeks.

Note that Biglari has been buying BH and BH/A shares in his personal accounts recently.
Title: Re: Best Ideas For 2019
Post by: SharperDingaan on December 26, 2018, 05:47:30 AM
Heresy ... but pretty much any intermediate in the WCSB (WCP, OBE, PD, etc).
With pipeline/rail capacity coming back by 2019 year-end, it's pretty hard to see how some of these do not at least double.

SD
Title: Re: Best Ideas For 2019
Post by: petec on December 26, 2018, 09:15:41 AM
Heresy ... but pretty much any intermediate in the WCSB (WCP, OBE, PD, etc).
With pipeline/rail capacity coming back by 2019 year-end, it's pretty hard to see how some of these do not at least double.

SD

SD sorry for my ignorance but whatís the capacity thatís coming back?
Title: Re: Best Ideas For 2019
Post by: SharperDingaan on December 26, 2018, 10:50:55 AM
Heresy ... but pretty much any intermediate in the WCSB (WCP, OBE, PD, etc).
With pipeline/rail capacity coming back by 2019 year-end, it's pretty hard to see how some of these do not at least double.

SD

SD sorry for my ignorance but whatís the capacity thatís coming back?

Enbridge Line 3 replacement comes on-line at the end of 2019 (760,000 bpd), and the first of Alta's rail-car fleet starts arriving (120,000 bpd by mid-2020). The existing aged Line 3 does roughly 380,000 bpd. With 600,000 bpd of net new capacity becoming available, the current shut-in will end, differentials should further decline, and o/g properties currently listed for sale should start to move again. Then add to it that at current valuations it's far smarter for new money to simply buy P2P reserves at cents on the dollar, versus drill for them.

Yet the oil-patch isn't talking about it?
Our own view is that it's being 'squashed' until Alta's 2019 election gets going ;)   

https://ca.reuters.com/article/domesticNews/idCAKBN1O203A-OCADN
https://www.enbridge.com/projects-and-infrastructure/projects/line-3-replacement-program-us
https://www.mprnews.org/story/2018/11/19/line-3-oil-pipeline-moves-closer-to-construction-in-northern-minnesota

SD
Title: Re: Best Ideas For 2019
Post by: petec on December 27, 2018, 08:58:43 AM
Heresy ... but pretty much any intermediate in the WCSB (WCP, OBE, PD, etc).
With pipeline/rail capacity coming back by 2019 year-end, it's pretty hard to see how some of these do not at least double.

SD

SD sorry for my ignorance but whatís the capacity thatís coming back?

Enbridge Line 3 replacement comes on-line at the end of 2019 (760,000 bpd), and the first of Alta's rail-car fleet starts arriving (120,000 bpd by mid-2020). The existing aged Line 3 does roughly 380,000 bpd. With 600,000 bpd of net new capacity becoming available, the current shut-in will end, differentials should further decline, and o/g properties currently listed for sale should start to move again. Then add to it that at current valuations it's far smarter for new money to simply buy P2P reserves at cents on the dollar, versus drill for them.

Yet the oil-patch isn't talking about it?
Our own view is that it's being 'squashed' until Alta's 2019 election gets going ;)   

https://ca.reuters.com/article/domesticNews/idCAKBN1O203A-OCADN
https://www.enbridge.com/projects-and-infrastructure/projects/line-3-replacement-program-us
https://www.mprnews.org/story/2018/11/19/line-3-oil-pipeline-moves-closer-to-construction-in-northern-minnesota

SD

Thanks. Thatís all oil not gas, correct?
Title: Re: Best Ideas For 2019
Post by: Aberhound on December 27, 2018, 11:42:50 AM
Heresy ... but pretty much any intermediate in the WCSB (WCP, OBE, PD, etc).
With pipeline/rail capacity coming back by 2019 year-end, it's pretty hard to see how some of these do not at least double.

SD

SD sorry for my ignorance but whatís the capacity thatís coming back?

Enbridge Line 3 replacement comes on-line at the end of 2019 (760,000 bpd), and the first of Alta's rail-car fleet starts arriving (120,000 bpd by mid-2020). The existing aged Line 3 does roughly 380,000 bpd. With 600,000 bpd of net new capacity becoming available, the current shut-in will end, differentials should further decline, and o/g properties currently listed for sale should start to move again. Then add to it that at current valuations it's far smarter for new money to simply buy P2P reserves at cents on the dollar, versus drill for them.

Yet the oil-patch isn't talking about it?
Our own view is that it's being 'squashed' until Alta's 2019 election gets going ;)   

https://ca.reuters.com/article/domesticNews/idCAKBN1O203A-OCADN
https://www.enbridge.com/projects-and-infrastructure/projects/line-3-replacement-program-us
https://www.mprnews.org/story/2018/11/19/line-3-oil-pipeline-moves-closer-to-construction-in-northern-minnesota

SD

Sharper, is there any prospect of a tax or Federal ban or allocation regulations ie a forced auction of "air barrels", to force majors with an interest in low oil prices to increase the profitability of their refineries? Any info on the scale of that problem and whether the new capacity might result in more air not more oil shipped? Is there any hope of the Feds being nice enough to Russia to coax the Russians to license to Canadians their better catalysts for lightening heavy oil to make it easier to ship and refine in cold climates? As I doubt the Russians are the only ones with these catalysts any chance of these being developed here and brought to market or is the technology just being shelved? My ex-NASA friend living in Alaska tells me of massive recent oil finds in the North Slope. Any chance the Feds will leverage the US need for an oil pipeline to Alaska in exchange for pre-building now the links for these future lines from Alberta and Saskatchewan to the Gulf? Will the ding-dong feds help save the killer whales by shipping the Transmountain pipeline to Anacortes so the 145,000 bpd Shell refinery start using oil sands oil again instead of shipping it in from Alaska and also start shipping out the oil from Anacortes instead of Vancouver so less killer whales are impacted and so the bigger oil tankers can be used to better reduce the tanker miles which are impacting the killer whale populations? There has been no live births for the Southern resident killer whales for some years so extinction is imminent.Will the Feds lift the gag order on the Health Canada employees imposed by the Harper government in 2011 when the milk became sufficiently radioactive to start killing children? (I learned this as I happened to be defending a client selling humic and fulvic products both which help against radiation the former by protecting cells and the latter by helping the body transmute and eliminate the radio-nucleides and the two Health Canada employees sent to seize the products told my client that their job was testing the milk and the alarm went off in spring 2011 and repeatedly thereafter and they were gagged. Now if we could somehow figure out how to get these products into the killer whales, for instance by putting all the leaves gathered in Vancouver on land beside the Fraser river so they decay and release fulvic and humic into the river like used to happen when there were more trees right up to the waterline everywhere. Notice how the BC hospital statistics for newborn deaths became hard to get after 2011.

http://www.fossilfuelconnections.org/anacortes-oil/ (http://www.fossilfuelconnections.org/anacortes-oil/)

My best ideas for 2019 is Lisbon real estate (focusing on buildings with fiber optic connections and lots of power) to take advantage of their being future Silk Road ports and the increased demand for data. Portugal will also get Irish corporate tax rates when Ireland joins the UK in Brexit.  I also think Central banks will cease to be independent very soon as the Leviathan State take them over to allow continued growth. Those Space forces are expensive much like the oil battleship construction expense pre-WW1. I think US will be rolling out their electro-gravitic technology so the transition will be expensive. Remember those $2B each B2 bombers? Lockheed Martin is how I am playing that bet. Any related suggestions are welcome. I am thinking Boeing but I am not sure if Boeing will finally be allowed to use their ion engines on their commercial jets. Paul Laviolette's book as available for loan on archive.org if anyone is sceptical about the technology.
Title: Re: Best Ideas For 2019
Post by: Spekulatius on December 27, 2018, 01:42:25 PM
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.
Title: Re: Best Ideas For 2019
Post by: thepupil on December 27, 2018, 01:51:03 PM
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?
Title: Re: Best Ideas For 2019
Post by: Gregmal on December 27, 2018, 01:55:05 PM
Long time favorite MSG. Whether Silver Lake gets serious w/ Dolan or not, it won't matter. With split occurring and $1B cash heading to the entertainment company, this leaves the sports teams and other assets floating at about a $4B valuation. Which won't last long. $325(~7.5B total asset value) is probably my worst case y/e target.
Title: Re: Best Ideas For 2019
Post by: shalab on December 27, 2018, 03:09:21 PM
I would also consider PDH run by Sanjeev and MPIC funds. I think if Sanjeev writes more often about the business and the investment thesis, I am certain more people will consider it.

I'm still doing my DD on these companies, but given the massive losses they've taken in just the last 2 months, I think that US Natural Gas upstream producers are undervalued. I'm bullish on NatGas breaking out of its 2.50-3.00 long term range to $4+ in 2019 or 2020, which would be a significant tailwind for these companies. And right now most of them look as cheap as they've ever been.

Biglari Holdings (BH, BH/A) is currently trading at 0.7x book value, but owns close to 50% of its own shares, so its really closer to 0.35x book. Of course its trading down there because Sardar Biglari controls over 50% of the voting stock and I might be the only living person remaining that still believes he will deliver long term out-performance.

Still, the value of the shares are significantly less than the value of their CBRL stake, a stake Biglari has started monetizing over the past few weeks.

Note that Biglari has been buying BH and BH/A shares in his personal accounts recently.
Title: Re: Best Ideas For 2019
Post by: wescobrk on December 27, 2018, 03:16:43 PM
"Note that Biglari has been buying BH and BH/A shares in his personal accounts recentl"

Are you sure they are in his "personal" accounts? I thought the filing showed it was from Lion Fund 2 which is owned by BH shareholders.
Title: Re: Best Ideas For 2019
Post by: SharperDingaan on December 27, 2018, 03:30:13 PM
The 600,000 bpd is oil, not gas.

Like any miner, oil-sand profitability is primarily driven by through-put; to drive the fixed cost/unit down as low as possible. Hence the bigger you are the lower your cost/unit, and the more 'clout' you can apply over allocated pipeline space. If you also refine (IMO), whatever you 'lose' on the upstream you make back on the downstream refining. Your growing monopoly/oligopoly can be 'controlled' a number of different ways; but ultimately there will need to be a new 'arrangement' - once pipeline constraints ease.

There's lots of o/g in NA, and no need to develop the Alaskan North-Shore any time soon. Alberta bitumen will be pelletized and shipped west in open railcars well before Alaskan oil starts to flow. Japan and China also have material reserves of near-shore methyl-hydrates (substitute for natural gas), severely limiting what the North-Shore could export.
https://www.theglobeandmail.com/business/article-cn-pushes-ahead-with-puck-sized-bitumen-for-rail-transport/
https://www.scientificamerican.com/article/should-the-world-tap-undersea-methane-hydrates-for-energy/

Politicians will do whatever neccessary to get, & stay, elected - for the least amount of ongoing effort. Sadly, until the Alberta 2019 elections are over, we aren't likely to see any significant 'change on-the-ground'. Lots of kissing babies, and stealing lolly-pops, but no new pipeline construction.

Alberta has tremendous long-term opportunities, and the forced 're-set' has been a long time coming.
But it will be to Albertans to decide. Nothing wrong in that.

SD


Title: Re: Best Ideas For 2019
Post by: rolling on December 28, 2018, 01:57:12 AM


My best ideas for 2019 is Lisbon real estate (focusing on buildings with fiber optic connections and lots of power) to take advantage of their being future Silk Road ports and the increased demand for data. Portugal will also get Irish corporate tax rates when Ireland joins the UK in Brexit. 
Could you please explain better this point? I am portuguese and never heard anything of it (as far as I know Lisbon real estate is in a quite bubbly territory). Didn't understand also the irish part: maybe there is some irony in your post I didn't catch?
Thank you
Title: Re: Best Ideas For 2019
Post by: Spekulatius on December 28, 2018, 09:34:21 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?

ETP PRC ( a floating preferred) is one that fits my bill and which I own in small quantities. Yielding close to 9% when I bought it. BB+ rated and metrics are improving. The bonds are BBB- rated, I think and also due to for an upgrade.
Title: Re: Best Ideas For 2019
Post by: LowIQinvestor on December 28, 2018, 09:41:28 AM
VIVHY

catalyst within 6 months ( sale of 50% of UMG)
UMG worth $23 billion-$35 billion
Vivendi current market cap about $30 B

Mr market is asleep on this one!
Title: Re: Best Ideas For 2019
Post by: sleepydragon on December 28, 2018, 10:00:20 AM
WFC
Title: Re: Best Ideas For 2019
Post by: NoCalledStrikes on December 28, 2018, 11:28:49 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?

ETP PRC ( a floating preferred) is one that fits my bill and which I own in small quantities. Yielding close to 9% when I bought it. BB+ rated and metrics are improving. The bonds are BBB- rated, I think and also due to for an upgrade.

Does ETP PRC generate a K-1?  If so, does it have any UBTI - just checking for the IRA. Thx.
Title: Re: Best Ideas For 2019
Post by: Spekulatius on December 28, 2018, 08:54:12 PM
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?

ETP PRC ( a floating preferred) is one that fits my bill and which I own in small quantities. Yielding close to 9% when I bought it. BB+ rated and metrics are improving. The bonds are BBB- rated, I think and also due to for an upgrade.

Does ETP PRC generate a K-1?  If so, does it have any UBTI - just checking for the IRA. Thx.

I believe it does generate a K-1. It should not really create UBTI, so should be Ok to hold in an IRA on reasonable amounts.
Title: Re: Best Ideas For 2019
Post by: Hielko on December 29, 2018, 12:32:22 AM
I really don't have anything that I'm very enthusiastic about... I think I have a portfolio with decent idea's, but wouldn't want to call one of them my best idea for 2019...
Title: Re: Best Ideas For 2019
Post by: NeverLoseMoney on December 29, 2018, 09:24:05 AM
I like Legend Corporation (LGD.AX) in Australia. They are active in three segments: electrical, power and infrastructure, innovative electrical solutions and gas and plumbing.

Market cap is ~$64m AUD. Net profit guidance for H1 of fiscal 2019 is $3.6-$3.8m. The true "owner earnings" are higher, because there is ~1m a year in amortization expenses that, in my view, are purely accounting charges. If they manage to make around $7.5m for the year (fiscal year ends in June 2019), the company is trading around 8.5x reported earnings.

The CEO (Brad Dowe) owns almost 30% of the shares. He has a history of making bolt-on acquisitions. Acquisitions have been structured with earn-out targets. They have not used stock. In the last acquisition, the company disagreed with the sellers about the near term expected results of the business being acquired. They insisted on putting a $2m clawback in place. They were right and got their $2m back. The CEO is not an empire builder, but focused on buying cash flow generating businesses and buying them cheap.

I've owned shares for a while and it was obviously a lot more attractive last year when results where a bit depressed, but it still looks cheap to me. The company pays a nice dividend (I think 5%+) as well. It's certainly not a multi-bagger or anything, but I think a solid company with good capital allocation at a cheap price.
Title: Re: Best Ideas For 2019
Post by: Viking on December 29, 2018, 11:33:01 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.
Title: Re: Best Ideas For 2019
Post by: KJP on December 29, 2018, 02:58:05 PM
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?
Title: Re: Best Ideas For 2019
Post by: ajc on December 29, 2018, 04:05:59 PM

Stitch Fix (thesis below).

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sfix-stitch-fix/


Title: Re: Best Ideas For 2019
Post by: KJP on December 29, 2018, 05:52:33 PM

Stitch Fix (thesis below).

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sfix-stitch-fix/

I was intrigued by that write up when I read it, but my own personal experience with the service is that the curation is poor and the clothes overpriced.  I've asked a few other people and they've generally had the same experience.
Title: Re: Best Ideas For 2019
Post by: bbarberayr on December 29, 2018, 06:46:41 PM
Many Canadian companies are very cheap right now.  Take a look at the Power Corp companies which are pretty much at their lowest valuation in the last 20 years (see the TD report if you can).  It has been beaten down by tax-loss selling (I believe) and also the general aversion to life insurance companies with rates following, but their primary asset is Great-West Life which is probably the best run life and health insurer in Canada and doing fine.

Small industrials like Hammond Group HMM.A is at a sub-5 p/e and 40% of book value.  They just completed a major expansion, so debt if in the high side, but business is very good, so this should be worked down.

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.


I'd also take a close looked at European stocks for those have the interest.  You can look at the big banks like ING, which is well run and at 70% of Book and an 8 p/e.  But also the small caps - companies like blind manufacturer Hunter Douglas HDG, which is at a sub-8 p/e for a successful worldwide company, making things people need (at least my wife says we do!)

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.
Title: Re: Best Ideas For 2019
Post by: clutch on December 29, 2018, 08:20:07 PM
Many Canadian companies are very cheap right now.  Take a look at the Power Corp companies which are pretty much at their lowest valuation in the last 20 years (see the TD report if you can).  It has been beaten down by tax-loss selling (I believe) and also the general aversion to life insurance companies with rates following, but their primary asset is Great-West Life which is probably the best run life and health insurer in Canada and doing fine.

You fail to mention their secondary asset, which is IGM (Investor Group + Mackenzie Financials). Do you really like those businesses? They basically make money off financially illiterate people with ridiculously high fees on their funds. Not the kind of business I'd want to be in going forward...
Title: Re: Best Ideas For 2019
Post by: kab60 on December 30, 2018, 02:43:51 AM
I think Linamar is stupid cheap both short term but espescially if one expects to hold for the long term (they have a 100 year plan...). As for next year, who knows, but something like Spectrum Brands and Alliance Data might work out better as they delever, buyback and clean up their stories a bit (but Christ do I suck at making short term predictions).
Title: Re: Best Ideas For 2019
Post by: Spekulatius on December 30, 2018, 06:00:42 AM
Wells Advisors has an article for income stockideas for 2019. EPD and DWDP and PKG look interesting to me. Link is for customer only:
https://www.wellsfargo.wallst.com/EBrokerageDesktop/Report/2303-f93fdf5576c8400faf98347ebadd353e-40 (https://www.wellsfargo.wallst.com/EBrokerageDesktop/Report/2303-f93fdf5576c8400faf98347ebadd353e-40)
Title: Re: Best Ideas For 2019
Post by: bbarberayr on December 30, 2018, 07:35:57 AM
I think Linamar is stupid cheap both short term but espescially if one expects to hold for the long term (they have a 100 year plan...). As for next year, who knows, but something like Spectrum Brands and Alliance Data might work out better as they delever, buyback and clean up their stories a bit (but Christ do I suck at making short term predictions).

Agree, all the auto companies are extremely cheap  - I think this may be some bad analysis by the market.  It seems to be saying now that the US has hit the 17 million level in auto production, there is nowhere to go but down, but with employee wages going, this would be an area I would think extra spending would go to.  And if we do get the self-driving car cycle going, there is 350 million cars in the US that will need to be replaced by say 150 million new cars, so auto production would be be strong for the next decade.

If we do get a recession, then this logic won't work, but if we don't (and I don't think we do), then these auto stocks should do well.
Title: Re: Best Ideas For 2019
Post by: investmd on December 30, 2018, 07:59:54 AM
AAPL is trading at a forward P/E multiple of 12. Cash reserves in excess of debt is over $150Billion. If you subtract the cash excess from market cap, you arrive at a P/E of approx 8 for a blue chip large cap with a dividend yield of 1.8%.
Valuation metrics look a little like a bank. However, this is a company with a history of bringing ground breaking innovation to market: iPod, iPhone, iPad are 3 in the past 15 years. Reasonable chance are there will be more innovations in the next 15 years. In addition, compared to other tech or banks, the apple ecosystem is a "moat" of sorts.
Apple stores across the world are consistently full. Assuming an effective business plan, they are making a profit.
A P/E of 10 seems dirt cheap for a company like this. I saw similar metrics when AAPL was trading at around $55/share ($350-400 before the 7:1 split).
Whilst not a 3x return over 2 years, there is a lot to like with a nice safety profile.
Thoughts?
Title: Re: Best Ideas For 2019
Post by: DTEJD1997 on December 30, 2018, 09:49:25 AM
Hey all:

I am surprised that nobody has suggested Fiat/Chrysler (FCAU).

FCAU is about to have a net cash position...potentially substantial net cash if they sell their robotics division.

They are also going to pay a special dividend early in the new year, which should be a bit over 10% of current price.  After that, regular quarterly dividends will commence.

FCAU has a lot of "levers" to push/pull to improve operations/profitability.  Two big things jump to mind...

A). I am going to suggest that with another decent quarterly earnings, sale of Marelli & robotics division, that FCAU will achieve an investment grade rating on their debt.  This alone will save them a bit of $$$$$$$, but even more import it will enable them to:

B). Start a captive in house financing division

If FCAU can enable A&B, that could easily be worth $2-$4 a share.

FCAU also has a strong possibility to improve operations/quality/styling/marketing at Maserati.

Add in some general corporate efficiency/cost cutting/modest sales improvement, and you've got a company making EVEN more $$$$ than today.

I would argue that FCAU is the best managed of the large auto manufacturers today.
Title: Re: Best Ideas For 2019
Post by: no_free_lunch on December 30, 2018, 10:16:43 AM
Thoughts?

I think it's a good bet but many unknowns so I would need to size it fairly small.  Same with FCAU, which I do own. 

My concern with AAPL is there really hasn't been any dominating new tech since the IPAD.  What role did Jobs play in it all and can they innovate without him?  Didn't the IPOD/IPHONE/IPAD all happen within about 7 years?  Now it has been 8 years without anything comparable.  You can also throw in itunes I think.  The company really went to hell the last time he left, I am concerned it can happen again.  I am not really into tech so I might be missing something but this is how I understand the company.

That is the bear case and you have laid out the bull case succinctly.  I have a hard time deciding which side is correct but agree the market is not pricing much of the bull case in.  I think closer to 10x earnings and it's a 5% position for me.  That's about all I can do with this one.  What I would like to see is some new innovation that review sites are pumped about.  If that happens and the stock doesn't move I would make it a larger position.
Title: Re: Best Ideas For 2019
Post by: shalab on December 30, 2018, 12:32:36 PM
I too like Apple - right after Berkshire.

Apple has introduced Apple Watch which is a huge hit and a fantastic device.
https://www.theverge.com/2018/9/4/17820290/apple-watch-sales-idc-report-best-selling-smartwatch-wearable-market

Apple Home is a very good device and has established some market share with room to grow
https://voicebot.ai/2018/09/12/amazon-maintains-smart-speaker-market-share-lead-apple-rises-slightly-to-4-5/

The new generation ipads and iphones are excellent devices and I am upgrading my old devices with newer versions.

With 72B in earnings and EV/EBITDA in high single digit, this is definitely attractive. Apple has already retired 1 billion in stock and may retire another billion in stock in the next 4 years. I expect the dividends to go up as well. This compares to Microsoft which sports a higher valuation than Apple, 30B in adjusted net income and EV/EBITDA of about 25. Apple pays about 20% of earnings as dividends whereas Microsoft pays out about 40%.

Thoughts?

I think it's a good bet but many unknowns so I would need to size it fairly small.  Same with FCAU, which I do own. 

My concern with AAPL is there really hasn't been any dominating new tech since the IPAD.  What role did Jobs play in it all and can they innovate without him?  Didn't the IPOD/IPHONE/IPAD all happen within about 7 years?  Now it has been 8 years without anything comparable.  You can also throw in itunes I think.  The company really went to hell the last time he left, I am concerned it can happen again.  I am not really into tech so I might be missing something but this is how I understand the company.

That is the bear case and you have laid out the bull case succinctly.  I have a hard time deciding which side is correct but agree the market is not pricing much of the bull case in.  I think closer to 10x earnings and it's a 5% position for me.  That's about all I can do with this one.  What I would like to see is some new innovation that review sites are pumped about.  If that happens and the stock doesn't move I would make it a larger position.
Title: Re: Best Ideas For 2019
Post by: investmd on December 30, 2018, 02:04:37 PM
Thoughts?

I think it's a good bet but many unknowns so I would need to size it fairly small.  Same with FCAU, which I do own. 

My concern with AAPL is there really hasn't been any dominating new tech since the IPAD.  What role did Jobs play in it all and can they innovate without him?  Didn't the IPOD/IPHONE/IPAD all happen within about 7 years?  Now it has been 8 years without anything comparable.  You can also throw in itunes I think.  The company really went to hell the last time he left, I am concerned it can happen again.  I am not really into tech so I might be missing something but this is how I understand the company.

That is the bear case and you have laid out the bull case succinctly.  I have a hard time deciding which side is correct but agree the market is not pricing much of the bull case in.  I think closer to 10x earnings and it's a 5% position for me.  That's about all I can do with this one.  What I would like to see is some new innovation that review sites are pumped about.  If that happens and the stock doesn't move I would make it a larger position.

Shalab, thanks for laying out the bear case for AAPL. I agree. The idea of not coming up with a ground breaking product in the post Jobs era is a concern. However, in that case it seems that the bear case for this stock is that it does not move up and stays a blue chip paying a 2%'ish dividend.
So if bull case plays out, then win big, if bear case plays out, there is little to lose. Still a company with good revenue. Isn't that the risk ratio we want?
Title: Re: Best Ideas For 2019
Post by: Cigarbutt on December 30, 2018, 04:53:47 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.
GDL is a stock I used to follow closely. Holding period was from 2001 to 2005, during the NA building boom. The decision to sell was based on a few key variables including direct comments from the Chairman, Stephen Jarislowsky, in the 2005 annual report: "It is hard to imagine a rise in construction and home improvement spending {given the evolving macro picture}". I deeply respect Mr. Jarislowsky who was Chairman for 19 years and is still (my understanding) an "honorary" director. GDL was on a watchlist in the following years but I found better alternatives after. I stopped following closely after but was aware of management hiccups. With your post, I decided to review the company, mostly for fun, because the liquidity is low and I tend to avoid public companies that are transferred from one generation to the next (also like Power Corporation). But here are a few potentially useful comments.

The market price to book value has become incredibly low and expectations for a return-to-the-mean type of rebound are reasonable but:

-even notwithstanding the "dark chapter" attributed to the short-lived outsider CEO (2014-5), sales are about the same level they were 10 years ago and the business profitability is based on very low net margins and GDL has not recovered the above 2% net margins they used to achieve before. In other words, the moat has declined.
-IMO, a key variable here is what will happen to housing markets in Canada. In the run-up to the housing peak in 2006-7, under the leadership of the previous Goodfellow and Mr. Jarislowsky, GDL lowered debt and got ready to thrive during the following phase. In the 2009 report, Mr. Jarislowsky wrote: "It was obvious that the housing boom could not last". I understand that they then bought distressed inventory and gained market share but since 2010-1, net debt has increased ++ and their financial flexibility is low vs various potential scenarios going forward.
-Their profile has evolved in the sense that they are relatively more exposed to new housing construction versus home improvement spending which is stickier in tougher economic environments.
-In the 2007 annual report, Mr. Jarislowsky wrote: "The real test in life comes when times are tough." and IMO the 2019 GDL is not sufficiently ready for adversity.

At first sight, the large discount to book value is appealing but I find that GDL is trading pretty much where it should.

Sorry for the negativity. My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)
Title: Re: Best Ideas For 2019
Post by: deadspace on December 30, 2018, 05:02:30 PM
Thoughts?

I think it's a good bet but many unknowns so I would need to size it fairly small.  Same with FCAU, which I do own. 

My concern with AAPL is there really hasn't been any dominating new tech since the IPAD.  What role did Jobs play in it all and can they innovate without him?  Didn't the IPOD/IPHONE/IPAD all happen within about 7 years?  Now it has been 8 years without anything comparable.  You can also throw in itunes I think.  The company really went to hell the last time he left, I am concerned it can happen again.  I am not really into tech so I might be missing something but this is how I understand the company.

That is the bear case and you have laid out the bull case succinctly.  I have a hard time deciding which side is correct but agree the market is not pricing much of the bull case in.  I think closer to 10x earnings and it's a 5% position for me.  That's about all I can do with this one.  What I would like to see is some new innovation that review sites are pumped about.  If that happens and the stock doesn't move I would make it a larger position.

Shalab, thanks for laying out the bear case for AAPL. I agree. The idea of not coming up with a ground breaking product in the post Jobs era is a concern. However, in that case it seems that the bear case for this stock is that it does not move up and stays a blue chip paying a 2%'ish dividend.
So if bull case plays out, then win big, if bear case plays out, there is little to lose. Still a company with good revenue. Isn't that the risk ratio we want?


Not sure that is the only bear case for apple

1) Iphone sales have peaked
2) The strategy to raise prices to make up for peak sales is not looking like it is going to work
3) AI is weak
4) Apple is not making the best mobile app software --  Google software runs just about anything worthwhile on the iphone (maps, calendars, email).  If hardware increasingly become a commodity - and you are not making the very best software then what happens to the company in the long term
5) The narrative that they are a service company now is weak  -- they are a rent seeking company  -- Why cant i buy a kindle book on my iphone kindle app -- cause apple wants 30% FOR DOING NOTHING - will this stand up in court ??
6) The majority of their "service business"  profit comes from google - who they publicly denounce whenever they can ---- without acknowledging that they are indirectly in the business of selling data through this agreement with google
7) they are burning cash in projects like titan (waymo wannabee) and their movie business netflix wannabe  - 10 years too late

this is uninvestable -- so theres your bear thesis

Title: Re: Best Ideas For 2019
Post by: KJP on December 30, 2018, 05:09:25 PM
My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)

Hopefully not.  Pushback and coherent critiques are the most useful posts on this board.
Title: Re: Best Ideas For 2019
Post by: Gregmal on December 30, 2018, 05:26:30 PM
My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)

Hopefully not.  Pushback and coherent critiques are the most useful posts on this board.

I know there seems to be some kind of quasi-feud with some here vs other forums, but the main reason I find VIC much more productive is because people are dicks and cut your throat analysis/logic wise. Which for me at least, is the greatest gift because it challenges my thesis. Here, let's face it, a lot of people don't contribute shit, some basically just add meaningless tidbits of already out there analysis, and some indeed give pushback. I like the later. Look at the MDXG or FB threads...People take offense to pushback or differing opinions. They even get mad at disagreement. LOL ok, enjoy your thesis drift while I make money. Cheers...
Title: Re: Best Ideas For 2019
Post by: bbarberayr on December 30, 2018, 06:12:32 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.
GDL is a stock I used to follow closely. Holding period was from 2001 to 2005, during the NA building boom. The decision to sell was based on a few key variables including direct comments from the Chairman, Stephen Jarislowsky, in the 2005 annual report: "It is hard to imagine a rise in construction and home improvement spending {given the evolving macro picture}". I deeply respect Mr. Jarislowsky who was Chairman for 19 years and is still (my understanding) an "honorary" director. GDL was on a watchlist in the following years but I found better alternatives after. I stopped following closely after but was aware of management hiccups. With your post, I decided to review the company, mostly for fun, because the liquidity is low and I tend to avoid public companies that are transferred from one generation to the next (also like Power Corporation). But here are a few potentially useful comments.

The market price to book value has become incredibly low and expectations for a return-to-the-mean type of rebound are reasonable but:

-even notwithstanding the "dark chapter" attributed to the short-lived outsider CEO (2014-5), sales are about the same level they were 10 years ago and the business profitability is based on very low net margins and GDL has not recovered the above 2% net margins they used to achieve before. In other words, the moat has declined.
-IMO, a key variable here is what will happen to housing markets in Canada. In the run-up to the housing peak in 2006-7, under the leadership of the previous Goodfellow and Mr. Jarislowsky, GDL lowered debt and got ready to thrive during the following phase. In the 2009 report, Mr. Jarislowsky wrote: "It was obvious that the housing boom could not last". I understand that they then bought distressed inventory and gained market share but since 2010-1, net debt has increased ++ and their financial flexibility is low vs various potential scenarios going forward.
-Their profile has evolved in the sense that they are relatively more exposed to new housing construction versus home improvement spending which is stickier in tougher economic environments.
-In the 2007 annual report, Mr. Jarislowsky wrote: "The real test in life comes when times are tough." and IMO the 2019 GDL is not sufficiently ready for adversity.

At first sight, the large discount to book value is appealing but I find that GDL is trading pretty much where it should.

Sorry for the negativity. My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)

Thanks for the review - certainly don't mind negative opinions, especially when expressed thoughtfully and respectfully.  Differing views only help with understanding the stock.

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.

Title: Re: Best Ideas For 2019
Post by: KJP on December 30, 2018, 06:34:04 PM
My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)

Hopefully not.  Pushback and coherent critiques are the most useful posts on this board.

I know there seems to be some kind of quasi-feud with some here vs other forums, but the main reason I find VIC much more productive is because people are dicks and cut your throat analysis/logic wise. Which for me at least, is the greatest gift because it challenges my thesis. Here, let's face it, a lot of people don't contribute shit, some basically just add meaningless tidbits of already out there analysis, and some indeed give pushback. I like the later. Look at the MDXG or FB threads...People take offense to pushback or differing opinions. They even get mad at disagreement. LOL ok, enjoy your thesis drift while I make money. Cheers...

I agree there's a lot of useless posts here, but there is a fair amount of useful stuff and some real gems.  I don't think you can expect more from an anonymous, free and open-to-all internet forum. 
Title: Re: Best Ideas For 2019
Post by: cherzeca on December 30, 2018, 09:15:46 PM
re apple. "Why cant i buy a kindle book on my iphone kindle app -- cause apple wants 30% FOR DOING NOTHING - will this stand up in court ??"

scotus heard argument on P's class action antitrust case this past month; decision this coming spring.  if that case moves forward, apple will have a large money damages exposure (3X) as well as breaking up its apple store.  too hard to make book on it from a legal point of view
Title: Re: Best Ideas For 2019
Post by: Spekulatius on January 01, 2019, 07:56:13 AM
FB May be one of the best ďobviousĒ or plain sight opportunities out there for 2019. I bought a bit more on the last trading day. It will be interesting how they navigate the choppy waters this year. I feel like the reputational damage is fixable. I also think they could surprise on the cost side, relative to their projections in Q3.

GOOG is essentially flat in 2018, while the business has grown 20%+, so its significantly cheaper than early last year.
Title: Re: Best Ideas For 2019
Post by: John Hjorth on January 01, 2019, 08:29:04 AM
... My 2019 resolution for involvement here is to spread less negative posts which means more absence unless the environment changes. :)

Cigarbutt,

Your posts here on CoBF to me do not contain negativism, but healthy skepticism, based on facts, observations & documentation. And always polite posts & to the point. Personally, I hold a list, where I'm in overdue with qualified replies to your posts. The replies from me will eventually come up, after I have done my own home work, to get better. [NVO comes to mind here.]

Please keep them coming, Cigarbutt!
Title: Re: Best Ideas For 2019
Post by: Viking 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.
Title: Re: Best Ideas For 2019
Post by: kh812000 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....
Title: Re: Best Ideas For 2019
Post by: KJP 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.
Title: Re: Best Ideas For 2019
Post by: LightWhale 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.   
Title: Re: Best Ideas For 2019
Post by: LightWhale 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?
Title: Re: Best Ideas For 2019
Post by: Sullivcd on January 02, 2019, 09:15:09 AM
AHT-F, SSW-D, HT-E, AHL-D, NS-C are all interesting looking preferreds.
Title: Re: Best Ideas For 2019
Post by: BG2008 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.     

Title: Re: Best Ideas For 2019
Post by: BG2008 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.   
Title: Re: Best Ideas For 2019
Post by: Cigarbutt 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
Title: Re: Best Ideas For 2019
Post by: Aberhound 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 (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.
Title: Re: Best Ideas For 2019
Post by: DooDiligence on April 17, 2019, 03:27:22 AM
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 (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.

Go Berkshire!