The Natural Course Of Things is Inevitable, Not Preventable
by ValueWalk - January 17th, 2019 12:48 pm
By CapitalTrading. Originally published at ValueWalk.
Dead cat bounce or does the equity market have what it takes to reverse that negative bear market stigma? As we highlighted over the last few weekly notes, we suspected the equity markets would bounce. However now, we feel that the euphoria has hit some technical levels that should put to test the veracity of this rally. We like to take a longer-term approach in times like this as everyone is all goosed up about the rebound, because fundamentally nothing has really changed. In fact, one can argue where fundamentals are concerned, the backdrop continues to weaken, global instability continues to gain, and the US government furlough seems to be foolishly overlooked.
The French yellow vest movement continues unabated and western media continues to shun coverage. Brexit once again continues with uncertainty and we can’t figure out for the life of us what that even entails in the larger scheme of things, other than it sets a precedent for others to follow. Speaking of Europe, we can’t help but notice Draghi and his alleged balance sheet reduction as the ECB continues to take on assets. As Zhedge posted today, the balance sheets of the ECB and BOJ continue to grow. We suppose the latter couldn’t help themselves considering the Nikkei weakness to take down just a few more shares! Anyway, here is their chart, which perhaps, points to a single rationale for equity outperformance early on in 2019:
Q3 hedge fund letters, conference, scoops etc
No matter, you all know our mantra “QE4EVR” and it’s obvious here even the smallest equity pullback sends cold water shivers down the spines of these weak central bankers. DeutBank this week cut the EU growth forecast 30% down to 1%. So, the test is on for these central bankers, are they willing to let asset prices fall and balance sheets shrink, or will it be business as usual?
No matter which they choose two outcomes are certain, debt piles will continue to grow exponentially, and market signals will continue to be heavily distorted by this endless artificial central bank support. They aren’t fooling us, we know the truth, fiat and debt, they are the same things and to value an asset based on them…
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Steve Eisman: Short UK Banks On Brexit
by ValueWalk - January 17th, 2019 10:55 am
By Jacob Wolinsky. Originally published at ValueWalk.
Steve Eisman gained fame when predicting the financial crisis of 2008. Now he is shorting British banks because of the risks a hard Brexit poses to the British market.
Steve Eisman: A Hard Brexit Is The Path Of Least Resistance
Q3 hedge fund letters, conference, scoops etc
Transcript
Steve Eisman you are shorting three UK banks because of Brexit risks and the risks for a hard Brexit. Tomorrow is the big vote in parliament. What do you think will happen.
Well I think the probability of Theresa May losing is close to 100 percent. The issue is how much you lose by if she loses by a lot I think the possibility of heart it goes up even more if she loses by. Less than a lot. I think people are going as far to speculate that maybe there will be a second referendum or some other alternative that they think is palatable. I actually think that that’s not likely. That heart Brexit is the path of least resistance at this point. But we’ll see what happens in a couple of days.
Why is that the path of least resistance at the moment.
I think it’s the path of least resistance because nobody can get their act together. You know nobody can. There’s no coalition or consensus about anything. So anything that anybody proposes seems to fail and so de facto if everything anybody proposes fails therefore there’s a hard Brexit because that has a deadline.
Twenty not that much. Right. So the leader of the Opposition Jeremy Corbyn has said he’s going to call a vote of no confidence rather quickly after Theresa Theresa the next day. Yes the next day off to Theresa May as expected loses the vote Yem is this risk of a new general election something you think about only every day only every day. Yes.
You know my theory about the UK in terms of risk is a hard it and b Jeremy Corbyn becomes prime minister. The combination of the two would cause the UK stock market to go down by a lot. I don’t know whether that no confidence vote…
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PGE Short Leads Livermore To Strong 2018 Returns
by ValueWalk - January 17th, 2019 8:34 am
By Jacob Wolinsky. Originally published at ValueWalk.
Livermore Partners Q4 Partners Report
January 17th, 2019 To Partners:
The quarter and YTD performance took a hit in Q4. Mainly due to a seemingly hawkish Federal Reserve and slowing global economy. Thus, driving a global selloff that hit almost every asset class into year-end. For Livermore Partners and our value-based approach, we were not spared. Even with a degree of short exposure through opportunistic situations and defined value stocks, we couldn’t continue along with our winning ways that lasted most of 2018.
That said and even with the challenging Q4, I am pleased to share that as of December 31st Livermore Strategic Opportunities LP ended the year with a gain of 14.09%. In the quarter much weakness came from core holdings in oil and gas and other sectors. Notably, our core long positions in APAC focused oil-producer Jadestone Energy, and London luxury designer, Burberry. Crude buckled and sold off over 30% from Brent’s summer high of $85bbl to $55bbl and given China’s weakness, Burberry was under the gun. On the short side, we did profit handsomely as we allocated a 20% percent plus weighting to short positions. Made up of a basket of names including Goldman Sachs, Pacific Gas and Electric (more on this later in our letter), Tesla Inc, Weight Watchers, and a handful of others. see link: 1MDB Poses Reputational Risk to Goldman, Livermore’s Neuhauser Says https://www.youtube.com/watch?v=iA2YTLH5XEg
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Our near 10% Gold exposure continued to outperform and insulate the portfolio. Mexican gold producer, Torex Gold, Russian miner Highland Gold, and our activist position in Toronto’s Detour Gold all did well in the Quarter. We continue to seek a defensive posture in the portfolio and gold serves that purpose well. Detour Gold was a compelling situation given Billionaire investor John Paulson’s drive for a complete overhaul of the company’s Board and executive team. Both Livermore and Paulson are founders in the newly launched Shareholders Gold Council (SGC). Livermore, embracing the opportunity to join forces with an astute investor, dove at the chance and pushed hard to help lever a blow to the entrenched DGC management team and Board. Through a series of letters calling…
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D.E. Shaw Investment Calls For Leadership Change At EQT
by ValueWalk - January 15th, 2019 11:00 am
By ActivistInsight. Originally published at ValueWalk.
Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 billion, also in cash.
In another sign of renewed activism in the energy patch, D.E. Shaw Investment Group has called for the Rice brothers to be installed in leadership positions at EQT or for the company to hold an annual meeting in April as a shareholder referendum on the idea. D.E. Shaw supported both the merger between EQT and Rice Energy and a spinoff of midstream assets but last month backed Toby and Derek Rice in their attempt to return to the management team. Last week, it laid out gripes with EQT’s management including wasteful acquisitions, undelivered synergies, and missed capex budgets, and said EQT should consult the Rice team before making layoffs.
Q3 hedge fund letters, conference, scoops etc
What we’ll be watching for this week
- How will Crescendo Partners and Jamarant Capital react to Stuart Olson’s rejection of a proposal to conduct a strategic review and sell the company?
- Will EQT hasten its annual meeting date to April, as per D.E. Shaw Investment Group’s request?
- How will Cruiser Capital respond to Ashland Global’s recent board refreshment promises?
Activist shorts update
Maxar Technologies announced the resignation of Howard Lance from his roles as CEO, president, and director, amid criticism from activist short seller Spruce Point Capital Management. The short seller targeted the company in August, saying its financial reports are confusing and that a deal to buy Space Systems Loral was poorly-timed. Spruce Point also said the company was worthless and its dividend unsustainable. The company denied the accusations at the time and…
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Fasanara Capital – Markets In Critical Transformation, Chaotic Behaviour Has Just Began
by ValueWalk - January 14th, 2019 8:48 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Fasanara Capital outlook for the month of January 2019, titled, “A Glimpse At 2019,” in which they discuss the structure of the market.
Markets In Critical Transformation, Chaotic Behaviour Has Just Began
Our inability as market participants to properly frame market fragility and the inherent vulnerability of the financial system makes a market crash more likely, as it helps Systemic Risk go unattended and build further up. For the first time in a while, elusive economic narratives started to fail at blaming market weakness on secondary-order factors: Trade Wars, the FED, Oil prices. Attempts at dismissing market events as no more than a temporary turbulence miss the bigger picture and cast the fishing net on unaware investors looking for a dip to buy. In contrast, over the last month, conventional market and economic indicators (e.g. breaks of multi-year equity & home price trend-lines, freezing credit markets, softening global PMIs/orders) have all but confirmed what non- traditional measures of system-level fragility signalled all along: that a market crash is incubating, and the cliff is near. Nothing has happened yet.
Q3 hedge fund letters, conference, scoops etc
TABLE OF CONTENTS:
- Early Tremors, Not Market Bottoms
- Elusive Narratives Fail, Unveiling a Deeper Malaise
- Mainstream Investment Strategies Face a Tougher New Year
- Triggers For Market Chaos: A Timeline For 2019
Previously, On Fasanara Capital:
10th January 2018
Fragile Markets On The ‘Edge Of Chaos’
Financial markets are complex adaptive systems, where positive feedback loops undermine resilience and are being brought to the brink of critical transformation. link
11th May 2018
Market Fragility (Part II) Tipping Points & Crash Hallmarks
Presentation and Video Recording, on Markets as Complex Dynamic Systems and a conceptual framework for rethinking Systemic Risk as a Complexity Problem, in 3 steps: Tipping Point Analysis, Early Warning Signals Analysis, Butterflies Analysis. link
9th July 2018
Analysis Of Market Structure: Towards A Low-Diversity Trap
This is a visual story of how the market structure weakened relentlessly in the last ten years, to get more concentrated, entropic-fragile, and ready to snap. We visualize the structure of the market network during good and bad times, trying to isolate the DNA of a market crash. link
13th November 2018
How To Measure The Proximity To A…
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Colliers International (CIGI) – Leadership Transition And Near-Term Macro Worries Create An Opportunity
by ValueWalk - January 14th, 2019 1:37 pm
By Lucas Tomicki. Originally published at ValueWalk.
Colliers International is one of the “big five” global commercial real estate agencies (the others being CBRE, JLL, C&W, Savills), currently trading at a discounted valuation due to uncertainty about the near-term outlook for commercial real estate and recent CEO change. We believe that Colliers is an extraordinary business trading an ordinary valuation multiple. The company is listed on the NASDAQ and on the Toronto stock exchange. In this article we refer to the US listed shares and all amounts are in US Dollars.
Colliers earns revenue through four sources (% revenue as of TTM Q3 2018):
- Outsourcing & Advisory (38% of revenue) – outsources property management and property valuation services
- Sales Brokerage (28% of revenue) – commissions from negotiating sales / purchase of property
- Lease Brokerage (32% of revenue) – commissions from negotiating leases
- Investment Management (2%) – overseeing dedicated RE funds
Q3 hedge fund letters, conference, scoops etc
Geographically the company is concentrated in North America but growing more quickly in other markets and becoming less US-centric. Colliers has a stellar business and long secular growth opportunities, as the commercial real estate (CRE) market outside of North America is incredibly fragmented leading to many opportunities for growth via acquisition.
The commercial real estate business is durable, at minimal risk of technological obsolescence (each lease or sale is individually negotiated, and the commission amounts are trivial compared to the transaction values), and largely fragmented outside of North America, which means that the industry leading companies can continue to grow through consolidation for years to come. In the industry, we like Colliers to the most, due to the strength of its management team and excellent history of capital allocation.
Moat
Colliers has a moat – a durable competitive advantage. This is evident from the company’s sustained high return on invested capital (over 15% each year during the past decade). Colliers operates in an industry were reputation, relationships and scale matter more than price. The commissions earned by Colliers are tiny compared to the mammoth transaction sizes in most real estate projects, and the end market itself is price insensitive. What we mean by this is that cutting real estate commissions by 20% does not result in more business – in fact that matters to sellers…
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Rowan Street Capital 3Q18 Letter: Exploiting the market’s fear and greed
by ValueWalk - January 14th, 2019 1:30 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Rowan Street Capital letter for the third quarter ended September 30, 2018.
Dear Partners,
Third quarter was uneventful (flat) in terms of market price movement for our fund’s portfolio. As of September 30, Rowan Street Capital fund was up 26% in 2018 (before fees) versus 10.6% gain for the S&P 500. In terms of portfolio positions, however, our fund has seen quite a bit of activity.
Q3 hedge fund letters, conference, scoops etc
Our guiding principle #9 outlined in the Appendix of this letter, which we highly encourage all of you to read, is “Do a lot of reading and thinking and not a lot of acting.” In that we are sort of polar opposites to many investors on Wall Street that are inclined to do a lot of acting and not a whole lot of thinking. We strongly believe that activity is the enemy of returns, and we are quite comfortable doing nothing until there is something to do. Well, that “something to do” time came in September and continued well into October. Volatility has increased dramatically in October as concerns about tariffs, trade war and rising interest rates took over investors’ minds.
Over the past 12-18 months we have been doing a lot of reading and thinking on a handful of companies. We have been studying their business models, their management teams, their corporate cultures, looking at their competitors, analyzing their financials, and thinking quite extensively about their future prospects. However, all of that behind-the-scenes work has not translated to any portfolio action. Why? Because we did not think that Mr. Market had offered us an attractive price for those businesses that would ensure both a margin of safety (our principle #5) and double-digit long-term, expected returns that we demand from our investments. We have been patient and disciplined and over the past two months, Mr. Market has finally given us an opportunity to own businesses that we had dreamed of owning at prices that present us with some very attractive expected rates of return. In fact, our calculated IRRs for the next 5 years (Internal Rate of Return) for these investments are in excess of 20% per annum.
We can be very patient, but when the…
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Buffett And Munger Make Room, Tilson Adds Third Hero To His Roster
by ValueWalk - January 14th, 2019 12:56 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing the pot bubble; he met Alex Honnold; Shane Parrish; secrets in earnings reports; Jim Pattison; Deal-Master Debbane.
1) I heading to the airport to fly to Orlando for the ICR Conference tomorrow and Tuesday. They’re hosting an “inaugural dedicated cannabis track” with a panel on “Cannabis Investing: Capitalizing on a New Global Asset Class”. Oh please – sure sign of a bubble!
2) You know how you never forget the first time you meet one of your heroes? I for sure remember the handful of times I’ve met Buffett and Munger, for example. Well, I had one of those experiences yesterday when I – totally unexpectedly – had the chance to meet and briefly chat with the world’s most famous rock climber, Alex Honnold. You can read about it on my Facebook post here and here’s a picture of us:
Q3 hedge fund letters, conference, scoops etc
3) In my last email, I had a link to an excellent interview by Shane Parrish of the Farnam Street blog on How Not To Be Stupid. Following up on that, here’s a podcast interview that my friend Dan Ferris, who publishes the Extreme Value newsletter at Stansberry Research, did with Shane: click here to listen to it (it starts at 20:00; the first part is a follow-up to Dan’s discussion with Mark Spiegel on Tesla the previous week).
4) Some VERY interesting research and findings: How Companies Like Apple Sprinkle Secrets in Earnings Reports (NYTimes). Excerpt:
Three economists — Lauren Cohen and Christopher Malloy of the Harvard Business School, and Quoc Nguyen of DePaul University — downloaded every quarterly and annual corporate report of every publicly traded American company from 1995 to 2014.
They then sifted through thousands of reports, using a text analysis program. “We filtered out the reports that made a lot of wording changes over the previous year’s version,” Mr. Cohen said in an interview. “It turned out that when there are a lot of changes, there’s a good chance that something important is going on, and most of the time, it’s negative.”
5) I’d never heard…
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Tilson: I Predicted Aphria Would Fall So Pay $495 To Attend My Seminar
by ValueWalk - January 11th, 2019 2:32 pm
By Jacob Wolinsky. Originally published at ValueWalk.
Whitney Tilson’s email to investors discussing the ICR conference; Aphria; Green Growth Brands; Carson Block’s Muddy Waters performance; Fahmi Quadir; What the Hell Happened to Hedge Funds?; Advanced Seminar on Short Selling.
1) I just got back from CES last night and made plans to go to the ICR Conference in Orlando on Monday and Tuesday – if you’re going to be there, let me know! It’s mostly retail and restaurant companies, but this year I’m especially looking forward to the presentations by pot stocks Green Growth Brands, which made a bid for Aphria (see below), and Tilray, which the very hour it peaked on Sept. 19 at $300 in one of the largest short squeezes in history, I predicted on Yahoo Finance TV that it would fall by 90% within a year (at ~$100 today, it’s well on its way). Then, Chris Brown of Aristides Capital pitched it at our shorting conference on Dec. 3 (see video here and slides here).
Q3 hedge fund letters, conference, scoops etc
2) The story of Aphria keeps getting more and more absurd. After Gabriel Grego showed conclusively at our shorting conference that insiders have looted the company of hundreds of millions of dollars (see video here and slides here; further evidence that his report is correct is today’s news that Chief Executive Vic Neufeld and Co-Founder Cole Cacciavillani will leave the company), the stock got cut in half, but has since rallied strongly, driven in part by Andrew Left’s bullish report and a supposed takeover offer by an equally ridiculous and dicey party, Green Growth Brands.
I actually have to give Aphria credit for this devious scheme: if you’re running a company and somebody reveals that you’ve stolen huge sums and the board has called for an investigation, what should you do? Quickly sell the company! And how do you make that happen? Have a related-party entity (as Hindenburg Research shows: The Latest Act in The Aphria Circus: A Very Obviously Related-Party ‘Hostile’ Takeover Offer) make a bogus bid to put the company into play and hopefully smoke out a real buyer!
It’ll be interesting to see if Aphria…
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General Motors CEO Mary Barra On Layoffs ” I don’t see additional changes needed to be made”
by ValueWalk - January 11th, 2019 1:28 pm
By Jacob Wolinsky. Originally published at ValueWalk.
CNBC Transcript: General Motors CEO Mary Barra Speaks with CNBC’s Phil Lebeau Today
WHEN: Today, Friday, January 11, 2019
WHERE: CNBC’s “Squawk on the Street”
The following is the unofficial transcript of a CNBC interview with General Motors CEO Mary Barra and CNBC’s Phil Lebeau on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Friday, January 11th. The following is a link to video of the interview on CNBC.com:
Watch CNBC’s full interview with General Motors CEO Mary Barra
Q3 hedge fund letters, conference, scoops etc
PHIL LEBEAU: Mary, let’s begin first off. Your guidance – I think some people are going to be surprised that your — in terms of your raising it, in terms of what you expected to exceed for 2018. That goes counter to what some people are expecting. Why? Why is that, that you guys exceeded what you originally gave as guidance?
MARY BARRA: Well, I think I’m really proud of the team. Because we really – and it’s across the board, the team executed, we really worked. And this is a team that really strives to meet their commitments. And I also think that the foundation that we relayed in 2015, of continuing to strengthen the business, sometimes making the very tough decisions to make changes to make sure the core business is strong, as well as making those investments, from an EV, AV and connectivity perspective. I think we’re seeing that strength. And I think to a certain extent, General Motors is uniquely position.
PHIL LEBEAU: You’ve strengthened the company overall, but in terms of the market out there, what are you seeing? Is it the strong demand for trucks, SUVs? What’s driving that better than expected performance certainly in the second half of this year and as you head into ’19?
MARY BARRA: Well, from an ’18 perspective, again, it was not only a focus on really, you know, capitalizing on the new trucks that we have out there, the light duty trucks but also on cost reduction. So it was it was across the board. Every element of the company — you know one of our philosophies is everything can be made better. And…
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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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