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Investment Ideas / Re: ATCO - Atlas Corp
« Last post by petec on Today at 12:00:54 AM »
Thrifty I think your framework is about right. But the key point is that if the economics of buying ships don't look good Sokol won't buy ships. So while this concern is key for the industry, it's a slightly moot point for Atlas.
“Every Republican president since Teddy Roosevelt has experienced a recession in his first two years in office,” says Sam Stovall, chief investment strategist for the research firm CFRA.

In fact, nine of the past 10 recessions in history have begun with a Republican in the White House. And several Republican commanders in chief — Dwight Eisenhower, Richard Nixon, and George W. Bush — have presided over multiple economic contractions.
Politics / Re: Trump vs Twitter
« Last post by ERICOPOLY on May 31, 2020, 11:15:54 PM »
Do you really think the law of the land is what matters?

It is what matters in the Twitter case vs Trump.
Strategies / Re: The day after tomorrow
« Last post by meiroy on May 31, 2020, 10:33:22 PM »
Doo...  "I also want to take philosophy and psychology & don’t think these subjects would be as beneficial without face to face discussions."

A good course in Abnormal Psychology is fascinating and I guarantee you will use it frequently throughout your life. It will help you read people and give you a good idea of why people do the things they do and what you can expect of some. Just my 2 cents worth.

Searched on Youtube, and came up with these two playlists:

This one looks serious:

And this one seems a bit more fun:

What do you reckon?

Politics / Re: Deck Chairs on the Titanic: Coronavirus Edition
« Last post by meiroy on May 31, 2020, 10:17:16 PM »
“A lot of people on this board seem to be from Canada, yet all they talk about is Trump!”

Here is an example of why that is:

There is a saying in Canada that if the US sneezes, Canadians catch a cold.

Canada has a 3,000 mile border with the US.
Ninety percent of Canadians live within 100 miles of that border.
No matter how well Canada has handled Covid-19 if the US screws up, Canada will suffer. So yes, Canadians are very concerned when we see the present disaster that is running the US.

Our economies are very much connected. A month or so ago Trump attempted to steal masks that had been bought and paid for by Canada. Trudeau told Trump that those US produced masks were made from Canadian materials. No more materials, no more masks. Than Trump was also told that if he kept the masks Canada would close the border to the couple of thousand Canadians who staff Detroit hospitals effectively closing those US hospitals. Trump had little choice but to back off and release the masks. Funny how Trump never mentioned this.

Canadian politicians are far from ideal - unless compared to Trump - then they look pretty good.

I would guess people all over the free world are concerned about Trump as they fear the collapse of the new world order that was built based on the lessons of WWII.

Politics / Re: Trump vs Twitter
« Last post by meiroy on May 31, 2020, 10:09:36 PM »
Morality as discussed here is a secular concept.  If you are a religious person, you follow whatever you believe your specific type of religion instructs you to do.  You are not going to enter into any discussion with the thought "hmm, maybe that absolute truth that I believe in is not really true".  So, if someone believes that his "religious laws" consider homosexuality to be "illegal", than that's it.  Trying to hide that is simply trolling.

Of course, one can note how in recent decades a lot of these religious beliefs have been adjusted in the west to fit with the modern world.  It's really encouraging to see how in many areas scientific thinking has taken over from religious thinking.

Politics / Re: Trump Has a New Press Secretary: Kayleigh McEnany
« Last post by meiroy on May 31, 2020, 10:00:13 PM »

I especially recommend the first few videos of him constructing the log cabin.  There are also a couple about fishing.


Let's say Trump is reelected.  It's 2022 and war is imminent (re. deglobalization/decoupling etc. this is a possibility to consider).  This time it would involve mainland USA and not just some faraway country.  Are you reasonably content with Trump being the commander in chief, with those around him as his advisors?  Is the system intact and ready, nothing of critical importance has been dismantled in the past few years?

Politics / Re: Trump vs Twitter
« Last post by LC on May 31, 2020, 08:10:10 PM »
I understand what differentiates the two. My point is this: if someone is homosexual, they can't help it (their brain is wired that way). If someone is prone to lying, they also can't help it (their brain is also just wired that way).

First: now you are changing the argument: From "lying" to "prone to lying".

Second, I don't think you understand what differentiates the two - I think you have cherry-picked certain aspects of each to reduce to a commonality in an attempt to justify your existing belief.

Third, your reduction you make itself is flawed: The commonality ("neither can help it") has mountains of peer review only for the former, and none for the latter.

Finally, your cherry-picking ignores other factors which differentiate the two: particularly impact.
Berkshire Hathaway / Re: Buffett/Berkshire - general news
« Last post by stahleyp on May 31, 2020, 08:03:26 PM »
I think Buffett will have the last laugh.

He is spot on that some workers won't come back to offices.  Tech companies are already making decisions for the long term which will result in at least 25% reduction in office sqft, retail and even residential real estate in expensive cities.

Folks might be under-estimating how much 25% increase in incremental real estate supply can impact prices drastically in office, retail, and maybe even residential housing in expensive cities.

25% reduction in space needed can result in over 50% drop in prices because prices are based on incremental/marginal supply/demand.  Imagine you own 100,000 sqft of office space, which was all rented pre-Covid and could cover your mortgage payments. Imagine, post-Covid only 75% is rented. What will you do with the remaining 25,000 sqft? Will you sell/rent it for whatever price you could get if you couldn’t cover mortgage payments with the remaining 75%? Does anyone know what percentage of Detroit housing had to be on sale for prices to plummet? My guess is it didn’t even need to be as high as 15%.

50% drop in real estate prices will be deadly for banks and in turn, several industries.

Hmmm...this isn't something I've thought a lot about (how values can drop dramatically even if demand doesn't fluctuate by the same amount). Interesting thought.
Strategies / Re: The day after tomorrow
« Last post by wabuffo on May 31, 2020, 07:47:29 PM »

Ahhh - glory days!

Compared to other subprime lenders, LEND had an interesting structure and that was what drew me to it after sub-prime blew up in early 2007.  As an aside I also had an investment in ECRO after it sold its origination platform to Bear Stearns.  IIRC, in 2008 - two of my top five positions at times were sub-prime mortgage lenders (ECRO, AHHAP).

OK - back to LEND/AHHAP.  LEND was originally structured as a C-Corp.  But by the mid-2000s, it was finding itself at a competitive disadvantage vs the new subprime mortgage originators on the scene that were organized as mortgage REITs (NFI, New Century, etc).  So LEND created a Mortgage Loan REIT subsidiary that housed all of its securitization trusts.  Now the rules about ownership of REITs are very specific in order to preserve its tax status.  Part of those rules are a 5/50 rule which means that the top five holders of the equity cannot hold more than 50% of the total equity.  But LEND owned all of the equity of its new Mortgage Loan REIT.  To solve this ownership problem and qualify as a REIT, LEND created a class of publicly-traded preferred shares (AHH-A later AHHAP on the pinks). The preferreds gave the Mortgage Loan REIT broad ownership and helped meet the 5/50 rule to qualify as a REIT pass-thru structure.  But here's the key to the whole investment thesis.  In order to protect the preferred shareholders, LEND had to give a guarantee to the AHHAP preferred dividends.

So to summarize, LEND (holdco) is a C-Corp holding the mortgage origination platform.  The REIT that issued AHHAP preferreds is a subsidiary of LEND.  LEND owns 100% of the common equity of this REIT sub.  The REIT sub holds onto all of the securitization trusts' residuals, which are its only source of income to pay the preferred dividends. So when the mushroom clouds start to go off in subprime in 2007, and the mortgage REIT's preferred dividends can no longer be supported by the residuals, LEND is on the hook to pay the preferred dividends because of its unconditional guarantee. 

Few people understood that - that was the key that forced the preferred dividends to continue to be paid.  It got even more interesting - in 2007 Lone Star buys 100% of LEND, but it can't touch the preferred shares without unwinding the REIT.  So basically LEND goes dark after the buyout, and the preferreds are left to trade as stranded preferreds.  Their share price craters.  This was opportunity #1 because everyone thought that Lone Star would pull the plug on the preferred dividends and I bought AHHAP in mid-2007.  But folks who had read the details in the prospectus for the preferreds, knew that Lone Star couldn't stop the preferreds without pulling the plug on its investment in LEND itself.   The preferred dividends continued throughout 2007, 2008 until the 1st quarter of 2009.  Because I had made a great return on AHHAP and more opportunities were starting to appear in late 2008, I sold out of AHHAP.  This was fortunate because I missed the...

LEND/Lone Star put the C-Corp into Chapter 11 in April, 2009.  The Mortgage Loan REIT was kept outside of the bankruptcy estate but had claims against the operating company (the origination platform and opco owed the REIT due to some large receivables related to how Lone Star extracted cash out of it) and the holdco (due to its preferred dividend guarantee).  AHHAP fell to around $1 but I stayed away.  I did follow the court docket and that's where I saw some of the discussion about large IRS refunds from past LEND tax years.  By that time the price recovered to around $6 which was where I bought back in, IIRC.  The estate filed a liquidation plan and disclosure document that outlined the recovery waterfall for AHHAP based on its claims against both the holdco and the opco.  IIRC, Lone Star basically abandoned its equity in the Mortgage Loan REIT and had to kick in some cash to the estate for basically trying to screw the preferreds as well as some of the Trust Preferreds.

But I was also watching the LEND securitization monthly reports.  And you know what, they were still providing positive cash flows to the Mortgage Loan REIT every month.  There were sixteen deals and I think the four 2004 vintage securitizations were quite solid.  In the end, between the Ch 11 recoveries and the securitization cash flows, total cash distributed to AHHAP holders was $19.21 per share (there was a final distribution in Sep 2016 after the securitizations were sold off and AHHAP was extinguished).   Not bad vs a $25 liquidation preference and very good vs where I got in at $6 in 2011.  But even better for some investors I know who got in at $1-2 right after it went Chapter 11.

I can dig through my files if you have any specific questions about the Chapter 11 case.

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