Other Closed Positions:
- Caesars Entertainment (CZR): Eldorado Resorts (ERI) and Caesars inked their cash and stock deal earlier this week with a headline price of $12.75 per share, with much of the cash coming from VICI Properties (VICI) via the sale leaseback of three casinos. The deal price isn't too far off of what I paid in 2017 for my initial position in CZR through CACQ, but it is a big move from the 4Q lows when the world was potentially falling apart, what a difference 6 months can make in the markets. Now seems like a good time to back away from the gaming sector, I'm interested to see how the industry does through the next recession, especially with the PropCo/OpCo model that's all but rolled out across the entire group. I suspect we'll see some opportunities and dislocations there in the future, but for now I'm going to wait on the sidelines.
- Spirit Realty Capital (SRC): When the news broke that SMTA had sold the assets in their master trust to HPT, I took the opportunity to exit SRC and roll some of that into SMTA. SRC will be a vanilla net-lease REIT by the end of the year and it'll probably trade up a bit higher from here as the multiple plays catch-up, but an acquisition by one of the larger net-lease names is likely off the table. There are enough net-lease properties in private hands that there's no reason for someone like Realty Income (O) to buy SRC, they could issue their expensive shares in a secondary and buy cheap assets directly without the headache and expense of a merger.
- Mitek Systems (MITK): Mitek Systems ended up dropping their strategic process, they have new management that presumably wants to create value independently (and not lose their jobs), the company has a strong niche, but investing in a small software growth stock wasn't my initial thesis so I sold it for a small gain.
- Hamilton Beach Brands (HBB): I was still holding onto a stub position in HBB as a result of its 2017 spinoff from NACCO Industries (NC), ended up selling it as I just didn't have conviction enough in the company meeting its long term revenue goals in the face of increasing pressure from Amazon. Amazon's advertising model to get into the top of the search results is going to pressure margins going forward.
- OncoMed Pharma (OMED): Mereo Biopharma has been a disaster since the reverse merger with OncoMed, it's notably tied up in the Woodford Patient Capital Trust mess and likely has an overhang as a result. Celgene also decided not to exercise their option on a drug that was 2 of the 3 CVRs in this transaction, chalk this one up as a loss.
- Voltari Corp (VLTC): This tiny NOL shell ended up being a home run for those small enough to get into it, the final price was $0.86/share versus the initial $0.58/share offer Icahn made to start things off.
Portfolio as of 6/30/2019:
Congratulations on the returns, put mine to shame, something for me to think about!ReplyDelete
Impressive. Keep doing your thing.ReplyDelete
Thanks - that's the plan, there will be plenty more ups and downs.Delete
How did your DFIN average cost drop from $21 6 months ago to below $15?
I tax loss harvest my losers a decent amount, did some similar things with LILA/K and CPLG last year. The average cost is my current cost, not necessarily my historical average price paid. You didn't ask directly, but given the IPO/transactional market this year if DFIN's business isn't performing well after Q1, then it really is a dog and will be time to move on.Delete
I'd love to hear some updated thoughts on MMAC and PARR... no pressure though.ReplyDelete
Still hold both, haven't changed either position:Delete
MMAC - The new debt financing on their MMA Energy business is helpful, allows them to increase ROE, but I do worry about how this trades at or above book value in the near term with the external management structure. They'll need to abandon the dream of utilizing the NOLs and instead pay out a big dividend, get some analyst coverage, a few dividend focused newsletters writing about it, etc. Another name change would probably help too, something ESG would be obvious given their focus and the increasing ESG investing trend. My other concern is just whether solar constructing lending is a good business, I don't have any particular insight, but in the back of my mind I'm a little nervous on it. But as long as it holds up, should be able to compound book value at a decent clip and produce reasonable returns despite what I think will be a persistent discount.
PARR - I think they really sandbagged the acquisition of the old Chevron refinery in Hawaii, that along with the growth projects coming online could be a real inflection point for the company. Too bad natural gas is such a disaster, I keep hoping one day I wake up and see news they've sold Laramie above their cost basis with the NOL providing a tax shield, but I don't think that's ever going to happen, would really simplify the story.
Do you own/like/dislike either - any thoughts?
I own and like both. I have no amazing insights but i am quite comfortable holding both companies. MMAC probably needs to start paying a dividend to start closing the NAV discount.ReplyDelete