Taking stock of 2019: idea performance and thesis updates

Its close enough to year end to check in on how the ideas I've presented during the year have performed, and to update where we stand on the various theses presented. The below table summarizes the overall performance of each idea since publishing, along with benchmark performance, and alpha (outperformance vs the benchmark). Note, this … Continue reading Taking stock of 2019: idea performance and thesis updates

K+S: how hard will the potash downcycle bite?

K+S (SDF, listed in Germany), is a great mid-term structural short, because it is the highest-cost producer of scale in a global commodity market (potash) that is likely entering a multi-year downturn, all while being saddled with an incredibly levered balance sheet (4.5x net/6.2x adjusted) and burning cash. The sources of its uncompetitiveness are largely … Continue reading K+S: how hard will the potash downcycle bite?

Capital structure arbitrage, part deux – the curious case of Nio Inc

I have written about capital structure arbitrage - trading the stock and bonds of one company against each other if the prices don't make internal sense - previously with regard to Peabody Energy when it was about to file for bankruptcy (see here). I commented at the time that the equity price seemed insanely overvalued … Continue reading Capital structure arbitrage, part deux – the curious case of Nio Inc

Shinoken: this is what value looks like

You have to be prepared to look in some strange places to find cheap stocks these days, and one of them is small-cap Japan. This can be a pain for a number of reasons (language, filings/disclosures, liquidity, etc) but what's a guy to do? The S&P chart looks like this: Meanwhile the Topix 1000 (broad-based … Continue reading Shinoken: this is what value looks like

Is the market even semi-form efficient? The Aercap conundrum

Imagine I told you nothing about two different companies except their historical long-term earnings power (net income through the cycle; return on assets/equity %, etc) and capital structure (equity/total assets, debt/total capital, etc). I then told you they were both financial companies dependent upon access to capital markets for funding - making them somewhat comparable … Continue reading Is the market even semi-form efficient? The Aercap conundrum

Tesla: we’re going to miss you when you’re gone

(Tesla (TSLA) filed their 2Q earnings report last night, and while I really should wait until they file their 10-Q to make this more complete, I really just can't help myself.) In late January, TSLA reported an optically-impressive Q4'18 result (91k deliveries, 24% automotive gross margins, $140mm in net profits), and on the post-Q conference … Continue reading Tesla: we’re going to miss you when you’re gone

The never-ending story: Netflix and the ever-escalating cost of content

Regular readers will recall I have been following Netflix (NFLX) for many years (I wrote up some initial thoughts on this blog a few years ago), but as the service has grown from 'challenger' to 'near-ubiquitous', I find myself returning more often to the company, its growth philosophy, and the underlying existential question for any … Continue reading The never-ending story: Netflix and the ever-escalating cost of content