Archive for the 'Market Commentary' Category

This is Part 8 of a special Coronavirus Investing Series. If you have not listened to Part 1, please click here to get the overall context/market overview during this unprecedented time.

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In this episode of The Intelligent Investing Podcast, I sit down with Jeremy Raper to chat about a potential opportunity in Japanese Mall REIT's which have been hit pretty hard during this coronavirus pandemic. 

 

Overview

If you are willing to look through whatever happens in 2020 and assume we go back to a normalized environment in 2021, then you should be looking at some of the most beaten-down sectors.

You have to ask yourself a few questions when valuing names in the most beaten-down sectors of the economy:

 

  1. Is the equity going to survive?
  2. What losses are they taking along the way?
  3. What does that post-corona-world look like?

 

Japanese REITs

Japanese Mall REITs fall within the broader subsector of Japanese REITs. REITs are real estate investment trusts. Furthermore, REITs must pay 90% of their income as dividends. 

 

Japanese Hotels

Why Japan hotels in particular? Japan has been under-hoteled for a long time. There has been a shortage of hotels and that had been rectified somewhat on the runup to the Olympics. 

However, the hotel fleet is still pretty tight. 

 

Two Cheap Japanese Hotel REITs

On this episode, we discuss two Japanese Hotel REITs

 

Both REITs trade at fractions of NAV and high normalized cap rates.

 

Staying In Touch With Eric Schleien

Staying In Touch With Jeremy Raper

 

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This is Part 6 of a special Coronavirus Investing Series. If you have not listened to Part 1, please click here to get the overall context/market overview during this unprecedented time.

You can also listen to:

 

In this episode of The Intelligent Investing Podcast, Eric Schleien & Jeremy Raper discuss opportunities in the Gold Sector.

Macro View

The macro view is that due to the massive debasement of currency during this coronavirus pandemic, that will be bullish for gold prices. In addition, gold companies such as Kinross Gold are shutting down production due to coronavirus outbreak which ends up being a net-positive for the commodity. Unlike commodities such as copper, gold demand is not impacted by economic activity due to less actual functional utility. 

 

Gold Mining Stocks

 

However, Jeremy prefers Gold Minding stocks to owning actual physical gold outright. The reason for this is that if you can buy a gold miner that has been dumped during this coronavirus crisis, and you can find one where their revenue is in US Dollars but their costs are in their local non-US currency, you can also benefit from margin expansion. The margin expansion comes from cheaper labor costs, a lower price of oil, and a debasement of non-US currencies which have been destroyed in relationship to the US Dollar.

 

Polyus Gold

Polyus PJSC (Russian: ПАО "Полюс") is a Russian gold mining company. It is the largest gold producer in Russia and one of the top 10 gold mining companies globally by output (2.84 million ounces of gold production in 2019). It is headquartered in Moscow and is listed on both the Moscow and London Stock Exchanges.Polyus’ main assets are located in Eastern Siberia and the Russian Far East - in the regions of Krasnoyarsk Krai, Irkutsk Oblast, Magadan Oblast and the Republic of Sakha.

The company is controlled by Said Kerimov, son of Russian billionaire and politician, Suleyman Kerimov.

Due to the majority share ownership of Polyus by Said Kerimov, the company is not a buyout candidate. However, the company will benefit from margin expansion and Jeremy believes the company is trading at low-mid single digits of earnings based on $1,500 gold price. That equates to a 7.5% dividend yield on a conservative basis and probably higher with margin expansion.

If you want to listen to the episode of Jeremy discussing Polyus Gold, you can listen here. You can also listen to the commentary on Polyus on YouTube.

 

DRD Gold

 

Another gold mining stock that Jeremy likes is DRD Gold based out of South Africa. Like Polyus, they will benefit from a depreciation in their local currency (Rand), and benefit from higher gold prices. Unlike, Polyus, the company is a takeout candidate as their parent company has moved up its ownership stake in DRD from 40% to over 50%. DRD has a boatload of cash and no debt. The company currently trades at a very low P/E bases off $1,500 gold and their parent may very likely buyout shareholders in order to take advantage of the low stock price. Furthermore, the parent will probably want access to a large amount of cash being that the parent is somewhat levered. It's interesting to note that DRD pays an unusually low dividend which Jeremy suspects are due to marching orders from the parent company.

 

Staying In Touch With Eric Schleien

Staying In Touch With Jeremy Raper

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This is Part 5 of a special Coronavirus Investing Series. If you have not listened to Part 1, please click here to get the overall context/market overview during this unprecedented time.

You can also listen to:

 

OVERVIEW

In this episode of The Intelligent Investing Podcast, Eric Schleien sits down with Jeremy Raper to discuss some merger arbitrage and special situation investment opportunities in this coronavirus market environment.

 

Staying In Touch With Eric Schleien

Staying In Touch With Jeremy Raper

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This is Part 4 of a special Coronavirus Investing Series. If you have not listened to Part 1, please click here to get the overall context/market overview during this unprecedented time.

You can also listen to:

 

Overview

After a decade of bankruptcies, shipping investors are fed up. The shipping ETF was shuttered a month ago, and the carnage prompted Morgan Stanley and JP Morgan to drop coverage of the entire sector. Investors fear that Covid-19 will crush oil demand, and plummeting oil prices will result in tanker demand evaporating - potentially resulting in bankruptcies. However, tanker companies have used windfall profits to pay down debt, and some are now on solid footing.

 

Halts In Air Travel

As lockdowns spread and air travel grinds to a halt, oil consumption is collapsing, but Braxton says that's good for tankers because what oil isn't getting burned is going into storage on tankers, which were already in short supply.

 

Scorpio Tankers

Braxton discusses Scorpio Tankers, which trades at 35 cents on the dollar of liquidation value. Scorpio owns the youngest product tanker fleet of any public company. The product tankers built during the last boom are starting to turn 15 years and older, either trading in a second-tier market or moving into dirty trades. At the same time, new environmental regulations significantly boost the demand for product tankers to carry MGO and other compliant fuels.

 

Other Tankers

Braxton mentions several other tanker companies he owns, including Euronav, a prominent owner of crude tankers. Despite the strongest balance sheet in the industry and a policy of paying out 80% of net income as dividends, Euronav trades at two-thirds of liquidation value.

 

IMO 2030 & The Shipbuilding Industry

In the show, Braxton explains why he finds the shipbuilding industry unattractive, and how IMO 2030 may put a damper on new ordering.

 

Staying In Touch With Eric Schleien

Staying In Touch With Braxon Gann

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This is Part 1 of a special Coronavirus Investing Series.

Overview

In this episode of The Intelligent Investing Podcast, Eric Schleien sits down with Jeremy Raper to discuss a general market overview during this coronavirus pandemic. We discuss 3 baskets of places to start looking and researching to find potential investment opportunities.

Staying In Touch With Eric Schleien

Staying In Touch With Jeremy Raper

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In this episode of The Intelligent Investing Podcast, Eric Schleien sits down with Braxton Gann to discuss two shipping companies, Scorpio Tankers (STNG) and Diamond S Shipping Company (DSSI). 

Overview

A lot of managers are concerned about the "trade war" because less trade = less shipping. Braxton thinks that a trade war is a positive because the trade will be less efficient, increasing ton-miles.
 
Some investors also worry that a global recession will send these shipping companies into bankruptcy, forgetting that new supply would be cut off by a recession, and that obsolete vessels would be scrapped mercilessly.
 
There has been a lot of talk about OPEC cutting production being a negative for STNG, but STNG carries products, not crude. Saudi Arabia is adding refinery capacity, and the OPEC cuts will have to be renewed in March.
 

IMO 2020

Another puzzle is that shipping companies are downplaying the obvious effects of IMO 2020, which can easily be enforced by spot checks. Braxton thinks this is because most companies can't afford scrubbers, even though they offer payback times of 10 months or less.
 
Another factor that we didn't end up getting to on the show is that many shipyards are going bankrupt, and shippers will have to rebuild their balance sheets for a couple of quarters before ordering more product tankers, which can take a year and a half to build.
 

The Tanker Thesis

 
The main reason Braxton likes product tankers is due to the disruption that will occur from IMO 2020. Many ports don't have the low-sulfur fuels required for IMO 2020, and each low-sulfur blend must be carried in a different tank. Braxton started looking at product tankers when he realized they would be the ones carrying LSFO blends. Inventories of refined products and bunker fuels are surprisingly low, so you could get a double boost from normalizing inventories and arbitrages between ports. This could boost demand by 10% or more, excluding the effect of normal GDP growth.
 

Contact Eric Schleien

If you'd like to connect with me Eric directly, he always loves connecting with listeners of the Intelligent Investing Podcast on his personal Twitter.

You can also connect with Eric on FacebookInstagram, or through his personal website.

To follow The Intelligent Investing Podcast, click here.

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In this interview, Eric Schleien sits down with Jan Svenda to discuss Mills Music Trust.

Jan is a “deep value” investor/analyst mainly focused on the US small-cap and micro-cap universe. He started out with a long-only bias (stocks trading close to NCAV etc.) which led to his interest in the OTC world.

Jan covered this space through his exclusive newsletter service where he shared his latest long ideas and a watchlist of OTC stocks which should help subscribers generate material returns and allow them to “monitor” the OTC space more efficiently.

Connect with Jan Svenda

  • To learn more about Jan and his manual of OTC stocks, you can visit his website.
  •  He can also be reached via LinkedIn.

Connect With Eric Schleien

  • Visit Eric Schleien’s Podcast
  • Visit Eric Schleien’s Twitter
  • Visit The Intelligent Investing Podcast’s Twitter
  • Like The Intelligent Investing Podcast on Facebook
  • Follow Eric Schleien on Facebook
  • Visit Granite State Capital Management’s Website
  • Follow Eric Schleien on Instagram

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Episode #53 of the Intelligent Investing Podcast brings back Brian Langis to discuss the recent transaction between Brookfield Asset Management (BAM) and Oaktree Capital, LLC (OAK). 

Full Link:

https://ericschleien.com/podcast/brian-langis-the-oaktree-capital-brookfield-asset-management-transaction/

 

Connect with Brian Langis: 

Visit Brian Langis' BLOG: https://brianlangis.wordpress.com/author/brianlangis/

Visit Brian Langis' SEEKING ALPHA: https://seekingalpha.com/author/brian-langis

Visit Brian Langis' LINKEDIN: https://www.linkedin.com/in/brianlangis/

Visit Brian Langis's FACEBOOK: https://www.facebook.com/brian.langis

Visit Brian Langis' TWITTER: https://twitter.com/absolut_brian

 

Connect with Eric Schleien: 

Visit Eric Schleien's PODCAST: https://www.EricSchleien.com/Podcast

Visit Eric Schleien's TWITTER: https://twitter.com/ericschleien

Visit The Intelligent Investing Podcast's TWITTER: https://twitter.com/investingcast

Like The Intelligent Investing Podcast on FACEBOOK: https://www.facebook.com/theintelligentinvestingpodcast/

Follow Eric Schleien on FACEBOOK: https://www.facebook.com/eric.schleien

Visit Granite State Capital Management's WEBSITE: https://www.GSCM.co

Follow Eric Schleien on INSTAGRAM: https://www.instagram.com/ericschleien/

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In this episode, Eric Schleien and Brian Langis discuss Warren Buffett's CNBC interview from Monday, February 25, 2019. We also discuss Warren Buffett's letter that was recently released on Saturday. You can find a podcast on the letter, here: https://intelligentinvesting.podbean.com/e/2018-berkshire-hathaway-letter-to-shareholders-intelligent-investing-podcast-eric-schleien/

 

Show Links: 

1) CNBC Full Interview with Warren Buffett: https://www.cnbc.com/video/2019/02/25/warren-buffett-cnbc-full-interview-berkshire-hathaway.html

 

Connect with Brian Langis: 

Visit Brian Langis' BLOG: https://brianlangis.wordpress.com/author/brianlangis/

Visit Brian Langis' SEEKING ALPHA: https://seekingalpha.com/author/brian-langis

Visit Brian Langis' LINKEDIN: https://www.linkedin.com/in/brianlangis/

Visit Brian Langis's FACEBOOK: https://www.facebook.com/brian.langis

Visit Brian Langis' TWITTER: https://twitter.com/absolut_brian

 

Connect with Eric Schleien: 

Visit Eric Schleien's PODCAST: http://intelligentinvesting.podbean.com

Visit Eric Schleien's WEBSITE: https://www.EricSchleien.com

Visit Eric Schleien's TWITTER: https://twitter.com/ericschleien

Visit The Intelligent Investing Podcast's TWITTER: https://twitter.com/investingcast

Like The Intelligent Investing Podcast on FACEBOOK: https://www.facebook.com/theintelligentinvestingpodcast/

Follow Eric Schleien on FACEBOOK: https://www.facebook.com/eric.schleien

Visit Granite State Capital Management's WEBSITE: https://www.GSCM.co

Follow Eric Schleien on INSTAGRAM: https://www.instagram.com/ericschleien/

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Warren Buffett released his letter to shareholders this morning. I break it down with my thoughts and go over some of the key highlights.

 

The full letter can be found here: http://www.berkshirehathaway.com/2018ar/linksannual18.html

 

If you'd like to connect with me regarding the letter to discuss more, feel free to reach out!

 

Connect with Eric Schleien:

Visit Eric Schleien's PODCAST: http://intelligentinvesting.podbean.com

Visit Eric Schleien's WEBSITE: https://www.EricSchleien.com

Visit Eric Schleien's TWITTER: https://twitter.com/ericschleien

Visit The Intelligent Investing Podcast's TWITTER: https://twitter.com/investingcast

Like The Intelligent Investing Podcast on FACEBOOK: https://www.facebook.com/theintelligentinvestingpodcast/

Follow Eric Schleien on FACEBOOK: https://www.facebook.com/eric.schleien

Visit Granite State Capital Management's WEBSITE: https://www.GSCM.co

Follow Eric Schleien on INSTAGRAM: https://www.instagram.com/ericschleien/

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