The Future Of National Beverage Corp. (FIZZ) Stock; Cannabis Webinar
by ValueWalk - March 21st, 2019 10:50 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing the LaCroix maker National Beverage Corp. (FIZZ)’s stock; Tesla; Cannabis webinar; question 3; Jamaica.
1) I’m still sniffing around National Beverage Corp, best known for its LaCroix brand of flavored sparkling water, which I wrote up as my Stock Idea of the Day in my email eight days ago.
Q4 hedge fund letters, conference, scoops etc
The key question that will determine the future of the stock is whether we’re seeing a mere hiccup for LaCroix or the beginning of a long-term decline. To help answer this question, I’ve put together a short survey, posted here: https://www.surveymonkey.com/r/JLS9QQS.
If you drink LaCroix and/or know someone who does, I’d be grateful if you’d take a moment to fill out/forward it. Thank you!
2) A friend forwarded me a 33-slide presentation on Tesla (TSLA), Detecting “Potential” Fraud in Real-Time, that Tom Bachrach of PFH Capital gave on Tuesday to UPenn Wharton students. You can download it here.
I don’t know him or his firm, but it’s an outstanding piece of analysis, especially the forensic accounting part that begins on page 17, which captures why I think there’s at least a 50% chance of significant fraud at the company. Pay particular attention to the “VIN Gap” he discusses on slides 28-29.
3) It’s a credit to Galileo Russell, the young guy who’s made a name for himself as a Tesla uber-bull, that he’s beginning to question all of the insane, inexplicable things that the company and its CEO, Elon Musk, are doing. Most people I’ve found do the opposite once they’ve committed to something, especially if they’ve done so publicly: they dig in their heels, block out any and all disconfirming information, and attack anyone who questions them.
In contrast, Russell did a live 28-minute YouTube session yesterday with his many followers in which he outlined his concerns Tesla and Musk and practically begged the company to raise money. Why it hasn’t done so remains a great mystery…but its failure to do so may be a major cause of the craziness we’re seeing, as Russell appears to be realizing (though he says he’s still bullish and buying the stock!)…
4) I’ve been…
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Selling Into The Rally: Not Everyone Is Bullish On Equities
by ValueWalk - March 21st, 2019 5:09 pm
By Michelle Jones. Originally published at ValueWalk.
The markets have generally had a bullish view of equities for much of the year so far, but not everyone is buying stocks. In fact, Bank of America Merrill Lynch reports that this year has brought the worst start to the year for equity flows since 2008.
Selling into equity strength
Last week BofAML recorded $10.1 billion in outflows from stocks, of which $5.5 billion of those outflows were in U.S. stocks alone.
Q4 hedge fund letters, conference, scoops etc
The firm’s clients were clearly selling into strength as global stocks were up 10.6% for the week. BofAML Chief Investment Strategist Michael Hartnett and team pointed out that the equity bull market officially turns 10 on Saturday. Over the last decade, the U.S. market capitalization has increased $21.3 trillion, which is triple the U.S. GDP’s increase of $6.5 billion.
The only other asset which saw outflows last week was gold, which incidentally has performed well toward the end of this week, finally breaking above the key $1,300 per ounce level so many experts have been watching. According to BofAML, commodities were up 12.6% the same week gold recorded outflows. Precious metals saw $1.2 billion in outflows, the highest in 28 weeks.
The only other “bearish” flow, according to the firm, was the $8.8 billion in inflows to bonds.
Hartnett and team also said their Bull & Bear Indicator dropped for the first time this year, falling from 5.1 to 4.9. The drop is especially notable because of how quickly the indicator has shifted from buy territory just a few months ago deep into neutral territory now.
In fact, their Bull & Bear Indicator was in “extreme bull” territory just last year.
Credit over stocks
Harnett and team also found that flows significantly favor credit over stocks. In fact, this past week brought the fourth-largest inflows to investment-grade bonds ever recorded at $9.5 billion.
We would also note that other sources have indicated that pension funds, which are among the biggest investors of all, have been increasingly favoring credit over the last several months. Canaccord Genuity has been tracking record-high pension flows to credit and related…
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Public Pensions Share What They’re Doing To Boost Funding Levels
by ValueWalk - March 21st, 2019 4:37 pm
By Michelle Jones. Originally published at ValueWalk.
The pension crisis has been going on for so long that it seems like every headline about it simply adds more bad news to the pile. However, there are a few good things going on at some public pension funds. There are also some very interesting trends, according to a recent study.
The National Conference on Public Employee Retirement Systems (NCPERS) conducted a study of 167 state and local government pension funds. The NCPERS Public Retirement Systems Study analyzed the funds’ “fiscal condition” and the steps they’re taking to bolster their “fiscal and operational integrity.”
Q4 hedge fund letters, conference, scoops etc
Equity returns are higher than other asset classes
Thy found—among other things—that the three asset classes which posted the highest one-year gross returns last year are all equities. However, private equity, hedge funds and other alternatives were in fourth place. It’s interesting that PE, hedge funds and alternatives were all lumped into one group, given what we’ve seen from other studies.
For example, Canaccord Genuity has shown several times that pension funds are increasingly favoring credit and related products over other asset classes, and sometimes PE can overlap with credit. As a result, the NCPERS study makes it a bit difficult to discern exactly where pension funds are getting their returns from.
We have seen in other studies that investors in general have been boosting their allocations to PE funds, often at the expense of hedge funds.
Looking at the allocations of pension funds, the NCPERS study found “a slight decrease” in targeted allocation to equities and fixed income and a “slight increase” in targeted allocation to bonds and PE/ alternatives.
Highest returns favored equity allocations
The study also found that the pension funds with the highest one-year investment returns were those that favored equities, global fixed income, PE and alternatives, and commodities. On the other hand, these funds had lower allocations to domestic and international fixed income.
Given the strong run stocks had last year, it isn’t a big surprise that equity-focused funds did better than others, although December through a major wrench into the works for some strategies. Due…
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Detecting Potential Accounting Red Flags At Tesla Inc (TSLA)
by ValueWalk - March 21st, 2019 10:08 am
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing the Tesla bull case followed by Thomas Bachrach’s presentation on “accounting red flags” at Tesla.
1) Tesla bull and blogger Galileo Russell hosted a podcast / live YouTube yesterday, which you can watch here:
Q4 hedge fund letters, conference, scoops etc
A friend writes:
He is estimating 75,000 unit sales and 80,000 production for Q1.
Seems like he’s too high on sales, but too low on production.
They might product close to 90,000 — but sell perhaps as few as 60,000 (or even just under).
2) Anton Wahlman’s latest: https://seekingalpha.com/instablog/200447-anton-wahlman/5283935-dan-ives-wedbush-doesn-t-know-automobile-industry
Summary
- Dan Ives of Wedbush publishes Tesla report based on having visited Tesla’s two main facilities in California and Nevada.
- It appears that Ives does not cover any other automaker. Has he visited any other car factories lately? How many? Where? When?
- As for the car itself, has Ives driven the latest competitive models from Audi, Jaguar, Hyundai and Kia? If not, how does he have any sense of the competition?
- It seems to me that Ives doesn’t know what he is talking about, because he has little or no experience with the competitive climate.
- It’s like someone seeing an Android phone and being amazed, without ever having heard of Apple and the iPhone.
3) A big part of the Tesla bull case is how the company marries software and hardware, like Apple does. My analyst Kevin DeCamp writes:
The bottom line is I think OTA (over the air) updates are one of Tesla’s main advantages and one of the reasons that Tesla owners LOVE (as Whitney points out) their cars. I don’t agree that it is just the EV powertrain that they love, although that is an important part of it. Although comparisons to Apple are laughable when you consider the financials and the quality of the business, there are some parallels when it comes to the seamless integration of hardware and software.
More on this later, but for now here is a well-balanced blogpost that explains well why the auto incumbents are, and I think will continue to be for the foreseeable…
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Gator Financial Up 23% YTD As GSE Preferred Shares Yield Returns
by ValueWalk - March 21st, 2019 8:45 am
By Michelle Jones. Originally published at ValueWalk.
Gator Financial is now two for two for 2019 after ending both January and February in the green. It’s a much-needed recovery after last year’s double-digit negative return. According to the firm’s February fact sheet, the month wasn’t as outstanding as January, but it was still a solid return, nonetheless.
Gator Financial was up 4.44% in February
The financials-focused hedge fund reported a return of 4.44% for February to follow up January’s 17.76% return. That brings Gator Financial’s year-to-date returns for 2019 to 22.98%. In all of 2018, the fund posted a return of -16.02%, with the vast majority of those losses coming in December when the fund was down 14.01%.
Q4 hedge fund letters, conference, scoops etc
Gator Financial Partners is a long/ short equity fund with a preference for small- and mid-cap financial companies with less sell-side research coverage. The firm, which is managed by analyst Derek Pilecki now manages slightly under $100 million in assets.
The fund’s top five long positions in February included Zions Bancorporation stock and warrants, which accounted for 13.04% of its net asset value. Syncora Holdings made up 9.32% of the portfolio, while 9.31% of the portfolio was in government-sponsored enterprise (GSE) preferred shares. The fund’s fourth and fifth biggest long positions were Ambac Financial Group and SunTrust Bank at 8.75% and 7.83%, respectively.
Update on GSE preferreds
Gator is one of many hedge funds banking on GSEs Fannie Mae and Freddie Mac exiting conservatorship this year. So far the bet has paid off for funds like Gator which are holding the shares. Other well-known funds which have been known to hold GSE preferred shares include Blackstone’s GSO Capital Partners, Paulson & Co., Pershing Square Capital Management and Perry Capital, The Wall Street Journal reports.
Gator has highlighted its position on the GSEs’ preferred shares several times over the years. In a recent letter, the fund’s management explained why they expect Fannie and Freddie to exit conservatorship this year. For example, they pointed out that the Trump administration was pushing to get Mark Calabria appointed as the next director of the Federal Housing Finance Agency, which oversees the GSEs. As soon as…
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Jamie Dimon On How JPMorgan Is Making The Planet A Great Place [Full CNBC Interview]
by ValueWalk - March 20th, 2019 3:59 pm
By Jacob Wolinsky. Originally published at ValueWalk.
CNBC Transcript: JPMorgan Chase CEO Jamie Dimon and American University President Sylvia Mathews Burwell Speak with CNBC’s Kayla Tausche Today
WHEN: Today, Wednesday, March 20, 2019
WHERE: CNBC’s “The Exchange”
Following is the unofficial transcript of a CNBC interview with JPMorgan Chase CEO Jamie Dimon American University President & Former Obama Health and Budget Official Sylvia Mathews Burwell and CNBC’s Kayla Tausche on CNBC’s “The Exchange” (M-F 1PM – 2PM) today, Wednesday, March 20th. Following is a link to video of the interview on CNBC.com
Q4 hedge fund letters, conference, scoops etc
Jamie Dimon: CEOs optimistic about business outlook
All references must be sourced to CNBC.
KELLY EVANS: Welcome back to “The Exchange.” The Business Roundtable has published its Quarterly CEO Economic Outlook Survey and executives are less bullish than a year ago. Kayla Tausche is in Washington and is joined by JPMorgan Chairman and CEO Jamie Dimon, along with American University President Sylvia Mathews Burwell for more. Hi, Kayla.
KAYLA TAUSCHE: Hi, Kelly. Thanks so much for having us and thanks to our esteemed guests today. In addition to that survey, they are also announcing a partnership, efforts under way between 15 companies, 13 universities to try to develop the 21st century curriculum for students and eventual workers for companies. So, our thanks to both of you for being here to discuss that and many other issues. Jamie, first the backdrop economically. We’ve heard from lots of CEOs, whether it’s FedEx, UBS, about jitters. Potentially a global slowdown. And then the Business Roundtable Survey today showed a little bit of declining optimism. Is there a slowdown afoot?
JAMIE DIMON: What I would call a ‘slowdown’ – there are always jitters. I’ve never been in business where there weren’t jitters. And it’s a little bit of a slowdown. But, you know, the Business Roundtable is very optimistic about the future. America, in particular, had less of a slowdown than the rest of the world. But one of the things we try to focus on is: how do you make things better? So, this initiative today is a great example how business, government and this town can get together, create jobs for kids, you know, earning $50,000,…
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David Mark Rubenstein’s Full Interview With CNBC [Transcript]
by ValueWalk - March 20th, 2019 12:56 pm
By Jacob Wolinsky. Originally published at ValueWalk.
CNBC Exclusive: CNBC Transcript: The Carlyle Group Co-Founder and Co-Executive Chairman David Mark Rubenstein on CNBC’s “Squawk on the Street” Today
WHEN: Today, Wednesday, March 20, 2019
WHERE: CNBC’s “Squawk on the Street” – Live from the Yale CEO Caucus in Washington D.C.
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with The Carlyle Group Co-Founder and Co-Executive Chairman David Mark Rubenstein on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Wednesday, March 20th. Following is a link to video of the interview on CNBC.com:
Q4 hedge fund letters, conference, scoops etc
Watch CNBC’s exclusive interview with Carlyle Group’s David Mark Rubenstein
All references must be sourced to CNBC.
SARA EISEN: Stocks are a bit lower this morning, ahead of today’s Federal Reserve decision on interest rates and the policy statement. The major indices though are up double digits since Chairman Powell said, back in January, that the Fed will take a patient approach to monetary policy. Joining us now for a CNBC exclusive is Carlyle Group Co-Founder and Co-Executive Chairman David Mark Rubenstein, live today from the Yale CEO Caucus down in D.C. David, welcome. Nice to see you again.
DAVID MARK RUBENSTEIN: My pleasure to be here.
SARA EISEN: So, since you know Jay Powell, the Chairman, better than most: you hired him at Carlyle, you spoke to him recently at The Economic Club — what do you expect to hear from him today?
DAVID MARK RUBENSTEIN: Well, he’s obviously a person that’s got a lot of people focusing on him. He worked at Carlyle for about eight years – he was an outstanding buyout professional. I thought that was the highest calling of mankind, he would stay there forever, but he decided that public service was more important, so he’s now doing a great job, I think, as Chairman of the Fed. Now that’s a difficult position because nobody ever likes anybody who is increasing interest rates, so when he’s had to increase interest rates, that’s been a problem for some people. But I think it’s been the right decision.
SARA EISEN: Do you expect that he’s…
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Feds Last Weapon … “Empty Words”
by ValueWalk - March 20th, 2019 12:33 pm
By CapitalTrading. Originally published at ValueWalk.
The all-powerful FOMC meets and will provide us with mostly conjecture as to their continued waffle of a monetary policy. It was just a few months ago the FOMC was calling for 4 rate hikes in 2019, my how things have changed, we will be lucky to get one. The combination of balance sheet reduction and lack of global real sustainable growth has led the FOMC to produce nothing short of one’s tail between the legs. Defeated and dejected and spit out of the mouth of the even more powerful global bond markets, who have most certainly called the Fed’s bluff on their rate hikes. What do we mean? Well the yield curves have steepened and 10yr yields have consistently tested the 2.52% area. For all our long-time readers, you know how important this level is for us, being that the Fed Funds upper limit rests at 2.50% a clear inversion of the Fed Funds / 10yr would (we mean will) usher in certain pain for the overall equity market tone. Why is this level important? Because the free investment rate will be below the cost of funds and thus this inversion has a negative future cash flow effect and when we discount future cash flows, we must at times discount our expected returns. Now think of the massive amounts of leverage in the system and think gee how much real capital underpins these assets??? Not much, that’s for darn sure.
Q4 hedge fund letters, conference, scoops etc
The absolute about face from the FED flies in the face of any economic fundamental financial principal. Basically, the FED has decided to target asset prices, which from a sound Austrian Economic level…should be illegal. Let’s just call it what it really is, counterfeiting. When you have the authority to print money and buy private assets, well just exactly pray tell how Joe Blow public can compete? They can’t and thus the weak-kneed FED has decided enough of the rate hikes, the market can’t take it, nor can they take the massive and we mean massive (#joke) central bank balance sheet reductions! Please stop, Mr. Market can’t take this whopping 10% balance sheet reduction:
We tend to think that public has been sold…
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If Elon Decides Its Time To Raise Capital, It Might Delay Tesla’s Collapse
by ValueWalk - March 20th, 2019 12:04 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing the fear for Tesla short-sellers which is if Musk decides to raise capital.
Whitney – IMHO, the only real fear for a Tesla short is that one day Elon wakes up and decides its finally time to raise capital which delays the inevitable collapse of Tesla for at least a year. Sure it dilutes the stock, but If you are selling at 4x overvalued on the strength of your narrative, why not sell 20%, raise a ton of cash and then sell for 5x with an even better narrative of a more secure future.
Q4 hedge fund letters, conference, scoops etc
It seems like such a no-brainer, so why doesn’t he raise? (In increasing order of likelihood)
- SEC forbids it per an existing agreement.
- Really hard to believe such an agreement, if it existed, could stay secret for this long
- If true, wouldn’t Elon be tweeting foul about government regulations in this space.
- Yet, the SEC let him issue a handful of shares for diesel trucks last month.
- No one will run his secondary.
- It’s hard to believe that an investment bank couldn’t walk up to some hedge funds and offer a private placement to cover their shorts at a nice discount for an instant profit. Maybe something this blatant is illegal? Surely hedge funds could figure out a creative solution.
- Surely some investment banks do want his secondary business – that’s why they tout silly target prices, but Elon is waiting for Google, Softbank, Saudi’s, etc. to give him better terms.
- Musk doesn’t want to show the numbers behind the numbers to anybody. The numbers are either fraudulent or would expose violations of other financial agreements if revealed.
- Elon is worried about short-term price drop initiating margin calls.
- Allegedly, he still has stock to post as collateral down to 120 which would easily cover a temporary 30% drop. I say temporary because, I’d predict a quick short cover rally once everyone realizes the company is safe for another year. Seriously his followers don’t seem to care about the share count, all that matters on Robinhood is the quoted
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Is Buffett Wrong About Gold?
by ValueWalk - March 20th, 2019 11:41 am
By Independent Trader. Originally published at ValueWalk.
If you would ask today 100 random people who in their opinion is the most known investor, probably 70 would mention Warren Buffet, the icon of investing in stocks. The legend that has been built around the “Omaha oracle” over the last 40 years is indeed impressive.
While I very often agree with his views regarding, for example, the level of cash in portfolio or migration from growth to value stocks, I absolutely can not agree with what he wrote in the letter to shareholders about gold, once again showing how badly it perfroms in comparison to the US shares.
Q4 hedge fund letters, conference, scoops etc
I do not want to question Buffet’s knowledge at any point, but after reading his views, one conclusion comes to mind: “sell gold and buy American stocks.” Buffet is an icon, legend and nothing will change that. The fact is, however, that the past decade has greatly improved his results. Over the past 10 years, global speculative capital has been flowing strongly to the US, as a result of which shares on the NYSE are the most overvalued in relation to other markets since the research has began.
Source: BofA Merill Lynch
What is the probability that such a level will last for a long time? Close to zero. In order to show you how owning such overvalued one asset class in portfolio ends, I will show you the results of Buffett’s strategy during several periods that the management of Berkshire Hathaway would probably like to forget.
For this purpose, I used the data from the analysis of Meb Faber (not to be confused with Marc), called Global Asset Alocation. For the sake of clarity, Buffett’s strategy is based on investing roughly 90% of capital in US equities. It is not surprising that it works well when the prices of NYSE stocks growing strongly. What if stock prices are not changing or falling?
Source: Meb Faber, Global Asset Allocation
Let’s see:
In 1973 (beginning of research) – 1980 Buffett’s strategy have suffered real losses (after taking inflation into account) in the amount of 4.78% per annum for 7 consecutive years, reaching a cumulative loss of 38.6%. A lot.…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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