Friday File: We’re All Speculators Now
by Travis Johnson, Stock Gumshoe | December 11, 2020 4:48 pm
Reducing some leverage in some names, and buying a little more equity in others in our latest Real Money Portfolioupdate -- with updates on CHWY, SFIX, YSAC, ROKU, VSBLTY and dozens more...
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Source URL: https://www.stockgumshoe.com/2020/12/friday-file-were-all-speculators-now/
With great amusement I note the misspelled caption this weekend, “Weakened Update” as appropriate for our times.
Hi Travis,
regarding your hip – you might consider trying acupuncture and/or prolotherapy . Both are low risk and might bridge the gap between now and your eventual hip replacement. Please also consider glucosamine sulfate / chondroitin sulfate. Not fast acting (takes 4- 6 months for maximun effect ) but eventually has the equivalent pain relieving efficacy of NSAIDS with no serious side effects . Also multiple peer reviewed publications now confirm that glucosamine/chondroitin reduce all cause mortallity by about 16% possibly because they reduce inflammation. More specifically they reduce the incidence of cardiovascular disease, lung and colon cancer. http://dx.doi.org/10.1136/annrheumdis-2020-217176
Hi Travis
I was wondering if you have done any research and had any opinions on the spac BFT. Thanks
Nope, what makes it catch your eye?
Have been hearing a lot talk about it. Plans to merge with pay safe. I haven’t really dug into the business or financials yet. I was just curious if you had researched it at all because I know your research is very thorough
I am pretty well into this one. Investor deck for PaySafe here – https://www.paysafe.com/fileadmin/user_upload/Foley-Trasimene-Acquisition-Corp-II-and-Paysafe-investor-presentation.pdf
Thanks for the info tg.
thank you as always for the thoughtful insights and well researched reports. During the holiday season which isn’t very cheerful or bright, your last few paragraphs are particularly astute. We need to stop whining if we are still healthy and blessed with savings or a job. We will get through this and another Christmas will come next year. But suck it up; do your part. the world is much nastier than it needs to be and don’t contribute to that ugliness. Best wishes and Happy New Year!
Yellowstone
Ist time dealing with warrants. When they sent me a notice to choose to split or not I took the Warrants.
Should I have waited?
No reason to wait that I’m aware of, the split won’t be any different in the future… and no rush to split your units, necessarily, unless you’re interested in selling either the shares or the equity sometime soon.
who sent you the notice?
ALSO… I’m a Member (Irregular) . Why doesn’t it show on my posts?
Travis – What is your take on SBVCF the Canadian Cannabis SPAC that Jay-Z recently teamed up with?
Any particular reason you’re buying Brown&Brown and AJG but not AON? Seems like AON/Towers Watson has a lot of synergies and going to be pretty powerful as it competes for multi-national business –
I prefer the somewhat smaller family-run players, and particularly think BRO is appealing for their long-term focus on compounding value, but if my thesis on rising rates and commissions works out that will likely benefit all of them — and yes, it’s certainly possible that the larger combined AON/WLTW will squeeze out some real synergies and do very well, though that’s going to be a huge and complicated merger if it goes through (and there may end up being some regulatory or antitrust pushback). I’ve not generally been very impressed by WLTW, but AON has been a strong and steady performer, and all four of these are objectively high-quality businesses trading at rational valuations, so to some degree we’re splitting hairs. So far my preference for BRO over AJG has also been different than the market’s preference, since AJG has led that group so far in 2020 and had a nice surge recently.
Trade Note: Watchlist stock added to Real Money Portfolio today
Just a quick note for you on this today, since it’s a stock I mentioned a couple weeks ago when I added it to the watchlist… today a limit order I had in for a small entry position in Deterra Royalties (DRR on the Australian Exchange) was triggered as those shares finally dropped a bit, so you’ll see that in the Real Money Portfolio when the next update hits on Friday, and I’ll share some more details of my thinking at that time as well. There is no OTC US trading in this one, so if you’re interested you’d have to be willing and able to trade in Australia (I use Interactive Brokers for international trading, but many brokers now offer similar access). If you’re looking for other iron ore-exposed royalty names, Labrador Iron Ore in Canada (LIF.TO, LIFZF) is the obvious one and I also continue to hold a large and stubborn position in Altius Minerals (ALS.TO, ATUSF), which owns a chunk of Labrador Iron Ore and some other iron exposure in the Labrador Trough, which competes with Australian iron ore.
This results in roughly a 0.25% position, at AU$4.79. They closed below that at about A$4.61, so hopefully the price will continue to drop and I’ll be able to build a larger position over time… we’ll see. Assuming that iron ore prices don’t go completely kerplunk and that there aren’t big operational issues with BHP’s plans to nearly triple production on Deterra’s royalty lands over the next few years, the value seems quite reasonable here — not especially cheap, but justifiable.
The biggest risk beyond that concentration (they’re entirely dependent on one mine, really), is that they could make foolish acquisitions as they try to diversify their royalty portfolio and build a larger royalty company, the first real player of that kind in the Australian market. Plenty of uncertainty, but given my current assumptions it’s a pretty nice value here. My assumption is that it will track the iron ore price and offer a decent dividend, probably hitting 5% from my cost within a couple years.
G’Day Travis,
A good point about Iron Ore Royalties linked to Area C & BHP’s activities, but perhaps you have overlooked one recent point. Chinese-Australian relations are at a low point. China is now refusing to accept Australian thermal coal and there are 70 loaded boat s now just hanging around off Chinese ports looking for a new destination and selling point. Included is at least one loaded with oz coking coal. There is now a Chinese investigation into iron ore prices. This has made many Australians nervous because, to put it bluntly, our economy is dependent on iron ore exports. Our trade has been overall 40% sent to China, before they banned barley, much meat, wine and most recently coal exports. Any partial ban or slowdown in iron ore will be disastrous for our overall economy. Moreover it will interfere with BHP’s expansion into Area C and strongly affect Deterra’s royalty stream.
Good points.
We live in a nasty world. Unfortunately all the political fights will make the trade wars worse and everyone will pay a higher price. Not a win-win.
True enough, but I expect investors will probably look past that with the assumption that this will pass… at least for now, I guess the news changes every day. Iron ore is not quite fungible, but pretty close, and the Pilbara is one of a few major production areas around the world, and China is obviously the biggest buyer, so everyone should be incentivized to make nice. I expect the rough China/Aussie relations to be resolved, though certainly don’t know when or have 100% certainty.
But yes, important to note that risk… thanks. If this becomes a large position for me, it will happen slowly, both because of
Commodity and concentration risk and, as you note,
The geopolitical risk that is part of so many commodity bets.