Sign up  |  Log in

2018 Ideas

Black Swan wrote:

igor555 wrote:

would buffet just get the preferreds and a bunch of warrants instead of equity

Possibly, but I think he’d go straight common equity.  The credit risk is not so bad to require the layer of protection and BRK is sitting on a record cash heap.  They could literally buy the entirety of GE out of YE cash on hand and still have $214B of untouched marketable securities left over.  So I think what they’re most interested in is a large marquee asset they can put a ton of cash into at a great valuation…

Aviation comes to mind….

Automate your Excel models with the industry's most accurate financial, market and economic data.

I’m not sure GE would part with aviation yet unless they pursue a full break up.

#FreeCVM #FreeTurd #2007-2017

i dont think he will buy the entire company. he likes well run businesses that he doesnt need to worry about. the current management is still a big questions mark and i dont think he trusts these guys yet. 

buffett likes his margin of safety and who knows what risks he sees in GE so preferreds are not a bad idea.

maybe he feels like gambling at his old age LOL

"You want a quote? Haven’t I written enough already???"

RIP

igor555 wrote:

maybe he feels like gambling at his old age LOL

Or he’s senile, which is what you would have to be to invest in GE at this point.

Hey Hamilton, have a holly jolly Christmas.

Lol, nah.  

Todd Combs (who’s running BRK’s book) made his name running a hedge fund that specializes in financials and is known for preferring to go after complex firms and “tearing apart the accounting”.  If anyone felt comfortable stepping in it would be that Combs.  The current management team has been stellar and has a track record.  Buffett has a track record of being willing to step into financials that are experiencing moments of crisis specifically for this reason.  Beyond that you have an energy and turbine business that fits in well with the massive BRK energy entity, GE aerospace that fits in fantastically with PCP and a blue chip healthcare brand.  The financial arm has huge synergies for them because they are uniquely positioned to manage it, can fire the existing financial staff if they wish for cost and the aircraft leasing portfolio could be a real asset within BRK.  People are also ignoring the fact that BRK owned GE as recently as 2017, sold at $30 (demonstrating a handle on the business, see Combs fingerprints on that one) and as recently as a few months ago Buffett said he’d be interested again at the right price.

People saying you need to be crazy to touch names honestly shouldn’t be confused with professional investors.  A great investor once said, “Be greedy when others’ are fearful.”  This is vintage Buffett for anyone who’s analyzed his past moves beyond an undergrad case study.

He wouldn’t buy the preferred over the common here because in this case I honestly think if he wasn’t confident enough to buy the common he wouldn’t bother going in.  

He’s got a lot of money to put to work and this is honestly a very attractive company.

#FreeCVM #FreeTurd #2007-2017

IsThereAny wrote:

igor555 wrote:

maybe he feels like gambling at his old age LOL

Or he’s senile, which is what you would have to be to invest in GE at this point.

he did buy teva but ppl are saying it wasnt him decision lol 

"You want a quote? Haven’t I written enough already???"

RIP

Haha I was just kidding. I know next to nothing about GE and have no opinion on if this is a good entry point.

Hey Hamilton, have a holly jolly Christmas.

IsThereAny wrote:

Haha I was just kidding. I know next to nothing about GE and have no opinion on if this is a good entry point.

Fair enough my bad.

#FreeCVM #FreeTurd #2007-2017

mortgage insurers getting crushed

"You want a quote? Haven’t I written enough already???"

RIP

Black Swan wrote:

Lol, nah.  

Todd Combs (who’s running BRK’s book) made his name running a hedge fund that specializes in financials and is known for preferring to go after complex firms and “tearing apart the accounting”.  If anyone felt comfortable stepping in it would be that Combs.  The current management team has been stellar and has a track record.  Buffett has a track record of being willing to step into financials that are experiencing moments of crisis specifically for this reason.  Beyond that you have an energy and turbine business that fits in well with the massive BRK energy entity, GE aerospace that fits in fantastically with PCP and a blue chip healthcare brand.  The financial arm has huge synergies for them because they are uniquely positioned to manage it, can fire the existing financial staff if they wish for cost and the aircraft leasing portfolio could be a real asset within BRK.  People are also ignoring the fact that BRK owned GE as recently as 2017, sold at $30 (demonstrating a handle on the business, see Combs fingerprints on that one) and as recently as a few months ago Buffett said he’d be interested again at the right price.

People saying you need to be crazy to touch names honestly shouldn’t be confused with professional investors.  A great investor once said, “Be greedy when others’ are fearful.”  This is vintage Buffett for anyone who’s analyzed his past moves beyond an undergrad case study.

He wouldn’t buy the preferred over the common here because in this case I honestly think if he wasn’t confident enough to buy the common he wouldn’t bother going in.  

He’s got a lot of money to put to work and this is honestly a very attractive company.

i saw that interview you referenced. i think he said something alogn the lines that during the great recession, he bought ge because the credit crunch was a temporary issue holding it back.

the issue now is that ge hasnt been growing despite the fact that everyone else is growing. this is no longer a temp issue.

also i recall that he emphasized that he would only buy certain parts of GE. so i do not think he would buy ge stock. 

here it is an article about iot:

https://www.benzinga.com/news/18/02/11258078/warren-buffett-says-he-coul...

I love my cheese. I got to have my cheddar.

Nerdyblop wrote:

Black Swan wrote:

Lol, nah.  

Todd Combs (who’s running BRK’s book) made his name running a hedge fund that specializes in financials and is known for preferring to go after complex firms and “tearing apart the accounting”.  If anyone felt comfortable stepping in it would be that Combs.  The current management team has been stellar and has a track record.  Buffett has a track record of being willing to step into financials that are experiencing moments of crisis specifically for this reason.  Beyond that you have an energy and turbine business that fits in well with the massive BRK energy entity, GE aerospace that fits in fantastically with PCP and a blue chip healthcare brand.  The financial arm has huge synergies for them because they are uniquely positioned to manage it, can fire the existing financial staff if they wish for cost and the aircraft leasing portfolio could be a real asset within BRK.  People are also ignoring the fact that BRK owned GE as recently as 2017, sold at $30 (demonstrating a handle on the business, see Combs fingerprints on that one) and as recently as a few months ago Buffett said he’d be interested again at the right price.

People saying you need to be crazy to touch names honestly shouldn’t be confused with professional investors.  A great investor once said, “Be greedy when others’ are fearful.”  This is vintage Buffett for anyone who’s analyzed his past moves beyond an undergrad case study.

He wouldn’t buy the preferred over the common here because in this case I honestly think if he wasn’t confident enough to buy the common he wouldn’t bother going in.  

He’s got a lot of money to put to work and this is honestly a very attractive company.

i saw that interview you referenced. i think he said something alogn the lines that during the great recession, he bought ge because the credit crunch was a temporary issue holding it back.

the issue now is that ge hasnt been growing despite the fact that everyone else is growing. this is no longer a temp issue.

also i recall that he emphasized that he would only buy certain parts of GE. so i do not think he would buy ge stock. 

here it is an article about iot:

https://www.benzinga.com/news/18/02/11258078/warren-buffett-says-he-coul...

How do you figure?  The reason they haven’t been growing is because their two biggest segments are power turbines and O&G, both of which are in secular decline.  Siemens (the other larger player) is seeing the same results in their power generation unit, although that unit is a smaller part of the company’s portfolio.  BHGE is also recovering with the steadying deepwater and LNG markets.  Every big name in those spaces has seen the same issues BHGE has.  So to say they haven’t been growing while everyone else is is false when you go on a sector by sector basis.  The healthcare has performed well and they’re killing it in aerospace.  Within insurance LTCA were an issue they’ve now addressed, but that was an industry wide issue in the insurance space (which Buffett acknowledged).  I would not count out any action by Buffett at this stage.  Yes, credit was an issue for GE finance during the crisis and now energy exposure is an issue during a cyclical low in power turbines and a recovering O&G cycle.   All the more reason to invest.

#FreeCVM #FreeTurd #2007-2017

igor555 wrote:

mortgage insurers getting crushed

i think floor might be in. thoughts?

"You want a quote? Haven’t I written enough already???"

RIP

(Reuters) - General Electric Co (GE.N) posted quarterly results that topped expectations on Friday, as earnings from aviation, healthcare and transportation offset weak power and oil-and-gas profits, sending shares sharply higher in premarket trading.

GE also affirmed its forecast for 2018 earnings and cash flow, and said it expects to book as much as $10 billion in proceeds from divesting industrial assets this year. Those comments eased concern that GE would post poor results.

“This news alone should fuel a relief rally,” Deane Dray, analyst at RBC Capital Markets, wrote in a research note.

GE earned an adjusted 16 cents per share, up from a restated 14 cents a share a year earlier. Analysts on average had expected 11 cents a share, according to Thomson Reuters I/B/E/S. GE recently restated 2017 results to reflect changes in accounting standards.

“It’s an apples-to-apples, 5-cent beat,” said Scott Davis, analyst and chief executive at Melius Research in New York, noting that the figure excludes restructuring costs of about 5 cents a share.

https://finance.yahoo.com/news/ges-profit-continuing-operations-surges-1...

you basically need to come from a target school pedigree/work at prestigious firm in the US/have a really good connection.

- AF hivemind

Supervalu (SVU)

Their wholesale segment outperformed. This segment is 80% of sales. The 2 acquisitions for the wholesale division are going better than expected and the synergies from one of the the acquisitions has been raised to $80MM from $60MM.

Their retail segment has been holding down their profitability but is finally beginning to show improvement. In the earnings call yesterday, management announced they will be selling off it’s unprofitable Shop ‘n Save retail businesses. They have entered in to a definitive leaseback agreement which will be bring in $450MM that will be used to deleverage. There is a strong push to turn around the retail segment.

Management is putting more focus on improving online business, and has been ramping up its delivery service. SVU recently got a contract with Instacart to provide store coupons and loyalty rewards on it’s e-commerce sites.

Reason’s the price target may not be achieved:

  • Retail has caused SVU’s shares to plunge due to stiff competition. This led to retail stores being sold
  • Declining gross margin
  • Strong competition

Adding First Quantum (FM CN) from Toronto Exchange.

#FreeCVM #FreeTurd #2007-2017

^ can’t name individual stocks but am adding base metals at this point. chinese fiscal stimulus coming if tariffs are a go. china is going to run hot before it fizzles. still somewhat bearish on commodities but can pick up certain junior miners for less than cash and huge optionality if china ramps up infrastructure capex to battle short-term decline in services exports.

Here’s my game plan in my personal account. I try to focus on value.

Keeping an eye on Southwest Airlines. BRK already has a position (and given Buffet’s recent talks, they could add more). It’s taken a beating from reduced RASM forecasts, and recent accidents.

I added GE at $14 last month. Holding.

I made some ballsy (in highsight, felt stupid at the time) picks on Macy’s at $20 in 2017 and RDS-A at $52 in 2016. Both rallied hard and have good yield. Holding both. The Iran news helped RDS-A.

I’m also holding around 20% in cash, and 10% for volatility speculation (pre-earnings straddles).​​​​​​

401-K is 100% in a TRP mutual fund. Not touching that with a 10 foot pole for the next 30 years. 

 

luv looks promising. but again this **** is cyclical. when oil prices rise, i feel they will get creamed! but who knows really. the airline industry has consistently increased their profitability this cycle and it looks like perhaps the next airline downturn wont be so bad as the 07 08. plus this company isnt really levered.

no luv for ge for me. i dont like turnarounds with a ton of debt. the old adage, fool me once, shame on you, fool me twice, cant get fooled again. verbatim:

“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”

not a fan of rds.a or energy cos in particular. i think from a cyclical standpoint they will kill it just cuz oil price will rise. but imo, their profits will have a long term secular decline, its also too capex intensive! the lowest cost producer will ipo soon. so depending on whether they want to focus on profitability , or draining their swamp that may have less value in the future will be key! rising oil prices is a terrific indicator when **** will BURNNNNN!!!

about 15% of my net worth is in liquid cash. but this cash is actually borrowed money. so im levered with cash on hand. im paying prolly 2% net for the privilege. should markets tank. im good for a year maybe 3 if i cut my expenses a lot. if i lose my job, it gets real interesting cuz i have maxed out a loan from my 401k. ill have to take money out from my roth unless i can call in some loans or borrow money from my uber rich aunt.

I love my cheese. I got to have my cheddar.

After today’s earnings, I’m a bit puzzled with Macy’s. What started with an oversold value play is turning into one of my best picks. Same store sales have done fine. They’re improving their online presence. Good dividend. Still cheap by current overall market valuation. It’s a cash cow with excellent real estate assets in prime locations. Still holding. 

I live pretty close to a Macy’s mall and it’s always packed (what kind of got me interested in researching the company in the first place). Even with Amazon and online shopping, I think people still like the tangible nature of shopping at a store.

 

Campbell (CPB)

#FreeCVM #FreeTurd #2007-2017

FTS International. Pressure pumping / fracking is a business with a TON of operating leverage. This is a really rough business due to cyclicality and lower barriers to entry, but when times are good you make a lot of money and their phones are probably ringing off the hook right now. Boom or bust industry but if you’re constructive on WTI over $60, it’s a boom period.

This is only 5x forward P/E and those aren’t off bogus EPS projections. Not many follow this b/c it was private and only IPO’d a few months ago. This type of business should naturally trade at a low multiple b/c its very cyclical but if WTI is above $60 they are making good money. This company was practically dead two years ago but they are a major beneficiary of higher oil prices. Lots of scale and leverage to U.S. oil recovery. You should consider other valuation metrics, too, but I think they are cheap on all of them.

"You want a quote? Haven’t I written enough already???"

RIP

Black Swan wrote:

Campbell (CPB)

interesting value play due to the fall in price, what happened to it?

i dont like their recent acq too with snyder. they seem to be justifying it a lot with synergies, at current  prices the snyder is like 40x multiple pre acq. snyder is growing like a beast though so thats good, but they are overpaying unless their synergies do well and also assuming that snyder growth continues.

anyways what are your thoughts. personally i dont like acquisitions.  nothing pisses me off more.

I love my cheese. I got to have my cheddar.

Nobody wants to own staples, efficacy of zero-based budgeting over, and too many new start-up in health food and snack category which is why they bought out snyder-lance. If you think market going up zero reason to own staples and low beta stuff in general. 

Yeah but FCF yield is about 10% with ~4% dividend yield and good coverage from 2019 onward (2018 has some restructuring and CAPEX).  Honestly, this is your prototypical Buffett consumer staples value play with solid metrics, stable performance, old time brand recognition and simple business model.  A common feedback I’ve heard from people about this name is along the lines of “I’m almost surprised Buffett doesn’t own this.”  I figure put this away in a long term portfolio on recent weakness and forget about it for a few years.

#FreeCVM #FreeTurd #2007-2017

It’s definitely oversold. Why this over other staples for sample GIS or KMB? You think someone could buy them out? It’s not that big. Most strategists I’ve heard are telling clients to stay away from traditionally defensive names like CPB so this category is definitely out of favor since the recession basically. Just wondering if this is a good time to buy when rates are expected to rise thus making high yield stuff even less attractive and staples performing anything but defensively during previous sell offs. 

I would buy this for my personal port tho that dividend is as safe as it can be. 

I have nothing against GIS or KMB.  This my sector is industrials / basics so I can’t get in depth on this one, just the beaten down valuation after the selloff and the fact that it is out of favor are the primary attractions for me.  I’ll buy out of favor strong cash flow, strong dividend companies all day if I can and I like Campbell’s brand appeal and iconic image.  The Snyder’s acquisition and leadership change gives it a little extra near term strain that I views as a buying opportunity.  I do think them getting bought is possible and also think that an old timey value guy like Buffett with a lot of cash could see this as very attractive.

#FreeCVM #FreeTurd #2007-2017

i dont think their cash flow is as secure as you think. consumer habits are changing. people dont like canned **** as much as before which are their legacy products and over 50% of rev. fresh foods, frozen crap, and snacks are the new desired items

also klaud you mention these new start ups. i read an article a good minute ago about how these starts up can now go toe to toe agains the juggernauts due to the rise of internet advertising. the commitments to advertise has dropped significantly plus retialers are actively trying to breed competition between products.

to add, debt is usually pretty substantial for these companies. which was good when the expectation was that these cash flows were secure, but on the off chance this is not, and their growth slows, they’ll face two things. even if stock prices were to drop the debt will still need to be paid in full, and if they cannot they will have to refi at higher rates due to secular changes as well as their ****tier cash flow.

lastly these cos have been getting better valautions due to their zbb and cost cutting measures. but you can only cut for so long, at some point you need to create top line growth hopefully organically and not through acquisitions.

I love my cheese. I got to have my cheddar.

Debt to EBITDA is 4.5x with a 10% FCF yield on negligible sustaining CAPEX…

#FreeCVM #FreeTurd #2007-2017

personally i think anything above 4x is a lot. in addition you are not talking post acq. 14b debt. ebitda of around 2b so thats 7x. when you include debt, that fcf does not look appealing. its less than 5%. of course this is pre synergies but im not really down to trust all those synergies.

I love my cheese. I got to have my cheddar.