Value Investing Bond ETFs Flash Warning Signs of Growing Mismatch |
- Bond ETFs Flash Warning Signs of Growing Mismatch
- Preferred dislocation opportunity example: $BPYPP
- Fed Unveils Major Expansion of Market Intervention
- Bloomberg Interview with Bill Ackman
- My View on Weyerhaeuser ($WY)
- Laws violated by ponzi scheme
| Bond ETFs Flash Warning Signs of Growing Mismatch Posted: 23 Mar 2020 01:42 PM PDT |
| Preferred dislocation opportunity example: $BPYPP Posted: 23 Mar 2020 11:22 AM PDT |
| Fed Unveils Major Expansion of Market Intervention Posted: 23 Mar 2020 07:23 AM PDT |
| Bloomberg Interview with Bill Ackman Posted: 23 Mar 2020 01:25 PM PDT |
| Posted: 23 Mar 2020 07:43 AM PDT There's blood in the water these days and I've been itching to get back into active investing. Deals are everywhere and I wanted to share one that I've personally acted on with y'all! DISCLAIMER: I have a long position in $WY & the stuff below is just my opinion, not actual investing or financial advice. So Weyerhaeuser is a vertically integrated timberlands REIT. Their business is acquiring, managing, and cultivating timberlands to sell directly to manufacturers of wood products or manufacture wood products themselves. In terms of scale, they're the largest by nearly 6x in acreage - $RYN is a far second. I believe this is quite valuable as wood is a commodity and keeping costs down is key to profitability and $WY's scale can be viewed a competitive advantage. Over the past five years the company has been doing roughly $1B in CFO annually and is currently trading at ~$11B market cap. Their stock price has dipped 50% from Feb 21st - Mar 20th - mostly because they do depend heavily on the health of the US economy (specifically residential real estate activity) for their business. Although the dip is expected, I believe the market might have overreacted here. My underlying macro thesis is that COVID-19 is an unforeseen shock, but one that doesn't affect the underlying factors of economic production. If you look at the three main factors (labor, capital stock, and productivity), I believe only labor will be affected. And marginally at that via young folks with underlying medical conditions. The other major risk group (seniors 65+) could effectively be considered already out of the labor force. Even if we assume that the next two years will be $0 or negative cash flows, the majority of the value will still be captured in the ongoing business which has demonstrated a pre-COVID potential of $1B in CFO. Now - will it be ongoing? Well... The big risk I see for the company is that their balance sheet leaves something to be desired. They have roughly $6.1B in debt with only $140M in cash. They also have a rough historical interest rate on debt of 6% and the first big principal repayment is coming up in 2021. If they can't refinance the debt or deal with the interest payments as a result of a prolonged recession, then they are in serious trouble. But will a prolonged recession come to pass? My bet is no. People are definitely talking about it now, but as I mentioned above - the effects of COVID on the economy should be short-run. However, if people believe a recession is coming, then they may shift from consumption / investment to saving prematurely thereby triggering an actual recession. It's a big assumption to make, but one that I'm comfortable with. Some other data points to consider:
^ All of the above is lagging admittedly, but thought I'd share. [link] [comments]  |
| Posted: 23 Mar 2020 05:24 PM PDT What securities statutes, e.g. Rule 10b5, does a Ponzi scheme typically violate? [link] [comments]  |
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