Value Investing Wharton Restructuring and Distressed notes |
- Wharton Restructuring and Distressed notes
- Revisiting this convo: Has anyone found a free tool to get security pricing into Excel?
- Does using EBITA can provide an investment edge?
- BERKSHIRE HATHAWAY SHAREHOLDER LETTER
- Ray Dalio & Larry Summers: Pursuing Truth in the Global Economy
- Chuck Royce on Finding Opportunities Overseas in Small Cap Stocks
- ROATCE
- Goodwill calculation for Invested Capital
- Biglari Holdings Letter (the wannabe-Warren-Buffett-letter)!
| Wharton Restructuring and Distressed notes Posted: 24 Feb 2018 10:16 AM PST Had to leave before the last couple of sessions but got most of the good stuff. Also, I didn't bother taking notes on stuff one could dig up online or some non-financial stuff that I frankly couldn't pay attention to (like high-level biographical info about when they were kids). Jamie Dinan, York Capital - basically opened with a story of his life, which he said he thought of like an "option" where the two most relevant factors are volatility and time. Did IB, then merger arb, then went to law school. Seeded York with $5MM he raised from ex-DLJ colleagues. Back then smart college grads went to Goldman and McKinsey, whereas asset management was still a backwater so it was easier to get noticed and climb the ladder if you put your mind to it. Building a reputation as a hard worker that said yes to everything as an analyst is what built his reputation and allowed him to raise money for his fund. On markets - bullish because global economy is doing extraordinarily well. Investor class (pension funds, SWFs) growing richer. There will be a correction but not like before. IG bond market is "behind the economy" and yields are going higher. Expect volatility and uncertainty in the market over the next few months. York runs 0.3-0.5 beta portfolios. Likes energy because it's inefficient, lots of technological change. Retail is challenging, brick and mortars are here to stay but valuations are richly-priced, and there is excess gross margin in the industry that will get competed away. Malls are overbuilt, but York is long real estate where demographics are growing. Very suspicious of administered care industry (hospitals, nursing homes, etc) because of high capex and reliance on government reimbursements. Orphan drugs are good. Excess supply in the telecom industry that will drive down revenue. Likes credit because "machines can't do it," you have to be active and there's too much friction and opacity for automation. Buying the Milwaukee Bucks was the most fun investment, but since buying them three years ago they've only broken even. Giannis is the nicest kid you'll ever meet. Dave Miller, Elliott Management - Volatility that we saw in 2018 is due to the market determining what will happen economically. Late in the cycle, high likelihood of downturn in next couple of years (could be preceded by some false starts like we saw in early Feb). Broker-dealer and bank balance sheets have shrunk since '08, which could help explain why credit has lagged equity this last decade. Angelo Rufino, Brookfield Asset Management - the opportunity is global; international restructurings are more inefficient and thus more profitable. Rule of law is key in this process. Brought up their participation in the restructuring of Brazilian telecom Oi and how it's challenging in that equity has disproportionate influence in a bankruptcy. Jon Zinman, Solus Alternative Asset Management - Also brought up Oi, also mention subordination issues in Brazil where debt isn't necessarily made whole before equity gets something. Regulator coming and taking over would have been the worst outcome. Bought the debt so cheap that any resolution to the bankruptcy would have been profitable. Currently there's an issue because the judge on the case gave the OI CEO a lot of sway, and that's being contested. Apparently Solus was on the losing end of the Hovnanian CDS trade. Didn't mention the the firm by name (it's BX), but basically said it's not proper that an investor can extend credit conditional upon a voluntary technical default. Solus is challenging this in court. Largely stayed away from retail but just got involved in Toys R Us. Brick and mortar is in danger as Amazon currently is prioritizing putting competitors out of business vs. making a profit. Brands are important, you can monetize the IP at Toys. Real estate is a complicated issue there because Toys stores are under a master lease. Matt Kimble, Avenue Capital - Energy is a great industry for distresed debt investing as there's lots of cycles. Invest in upstream because that's where the BKs are. Avenue likes the power sector in particular, which is facing difficulty because of oversupply and low nat gas prices. Regulations are a big deal in power. Matthew Bonanno, York Capital - focused on the BKs of Samson and Linn Energy. Linn business model was doomed to failure from the beginning, bought the distressed unsecured bonds at 9 cents, lots of dry powder for energy PE but the big buyers in Dallas are really only experienced in dealing with clean assets where they can just buy and start drilling. Upstream has a G&A problem, need to reduce administrative overhang through consolidation. Marc Lasry, Avenue Capital - (moderator asked him the same questions as for Dinan) bullish on market because economy doing well globally. Trump is getting all the credit for reforms put in motion by Obama. Real risk is exogenous events, with the example that you'd want 500bps over treasuries for South Korean sovereign debt for geopolitical risk and etc, but you'd only get 10. Bullish on energy, seeing large restructurings in services and power sectors. Retail is tough, if investing has to be in senior debt. Long healthcare. No opinion on telecom, not enough companies in trouble. Active investing has underperformed over the last few years because hedging is expensive. Then Lasry spends half an hour talking about shenanigans he got into with Bill Clinton and Bush. Says Clinton is the smartest person he ever met. Bruce Richards, Marathon Asset Management - never been as much duration related to interest rates as there is today. The three main drivers of rates (Fed, inflation, supply/demand) are all point to higher rates. Low likelihood of global recessions, expect sub 25% downturn in earnings for a future recession. Recessions are hard to predict, and economists have been predicting them happening every year since 2015. One will probably happen in next couple years but nothing says it has to, Australia hasn't had one in 30 years. American economy accelerating because of deregulations, tax cuts, lots of capex, prediciting 3% GDP growth. $54B in distressed bonds currently vs. $100B in dry powder for distressed assets. Managers who raised funds in the last few years anticipating a recession are running out of time to deploy capital. Institutional investors are shifting towards private credit, 2011-2013 fund vintages have had ~13% returns whereas last three year vintages have had ~8% returns. Banks starting to lend to the upper middle market so there will be more competition for the direct lenders and BDCs. Smaller companies are still too cumbersome for banks - and borrowers don't have to put up with stricter covenants if they can turn to alternative lenders. BBB debt issues are exploding, currently half the IG market. PR is going to be a key issue going forward (referenced the heat on Klarman for buying COFINA bonds). Both his fund and Avenue Capital are raising seperate aircraft leasing funds. For the first time in a long time, Marathon is favoring southern Europe over northen Europe (Italy, Spain, Portugal but staying away from Greece). Mostly corporate loans and CRE loans where they could take over the real estate. Beginning to buy Venezuelan debt. [link] [comments]  |
| Revisiting this convo: Has anyone found a free tool to get security pricing into Excel? Posted: 25 Feb 2018 01:22 AM PST Wanted to throw this to the community since Yahoo Finance patched the API that a lot of people were using for this. There's a free tool called "Stock Connector", but I don't find it very useful. You have to work out of their big sidebar and you're not able to make dynamic links to cells containing tickers. Thanks [link] [comments]  |
| Does using EBITA can provide an investment edge? Posted: 25 Feb 2018 03:26 AM PST Be aware that it's not EBITDA but EBITA. McKinsey once introduced this figure. and i think even Buffett said same thing in his letters. because amortization isn't a recursive cost unlike depreciation. adding back it to EBIT sounds logical in terms of estimating earnings power figure. and i feel this figure is so unknown among investors. thus theoretically, in case of a firm that has large amount of amortization that reduces normal earnings. we can get more reasonable valuation than others by using this figure. but does it really effective in practice? i never benefited from it because the firms that i'm interesting are usually don't have large amount of amortization. what about you? [link] [comments]  |
| BERKSHIRE HATHAWAY SHAREHOLDER LETTER Posted: 24 Feb 2018 04:56 AM PST |
| Ray Dalio & Larry Summers: Pursuing Truth in the Global Economy Posted: 24 Feb 2018 06:29 PM PST |
| Chuck Royce on Finding Opportunities Overseas in Small Cap Stocks Posted: 24 Feb 2018 03:36 PM PST |
| Posted: 24 Feb 2018 01:00 PM PST What does ROATCE tell us? Is it better than using ROA or ROE for banks or other companies in the financial sector? [link] [comments]  |
| Goodwill calculation for Invested Capital Posted: 24 Feb 2018 06:52 AM PST Reading the McKinsey Valuation book it says that to calculate invested capital with goodwill you have to adjust goodwill and intangibles by adding back amortization and impairment. The reasoning behind this wasn't clearly explained other than "unlike other fixed assets goodwill and intangible assets to do wear out". Is there a more intuitive reason behind this? [link] [comments]  |
| Biglari Holdings Letter (the wannabe-Warren-Buffett-letter)! Posted: 24 Feb 2018 05:12 AM PST |
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