This is not investment advice and is general in nature. Do your own research before taking any positions in the securities listed below
Instead of a deep-dive, I thought I'd share some possible re-weights I am looking at the moment
1. $LSMXK (2.5% of Portfolio) – Why I am not selling yet
Cloned holding from Baupost,the thesis for buying this is that it is costs less than the listed holdings in Sirius/Live Nation and that Liberty will continue to buyback the remaining company to take advantage of this disconnect.
Even though they trade at 35-40% - there is an unclear path to realization given the limited tools at Liberty's disposal and the difficulty of collapsing LSXMK and SIRI at current discount levels
In terms of their results
Sirius has cycled through weak numbers as a function of its exposure to US auto sales
LiveNation has traded poorly due to the risk that its Ticketek business would be subject to anti-trust regulation
LiveNation and Sirius will grow at 6% and >25% respectively (noting LiveNation’s earnings are starting to normalise post COVID-19)
Whilst I am not optimistic about Sirius itself – the discount is too large to sell at this point for me
2. $KR – (8% of portfolio) – Pairing back this holding by c.2%
Kroger has been a great investment for me and has actually performed generally in line with Walmart over the last 5 years
As you probably know - Kroger is US’ 2nd biggest grocery retailer and they are buying Albertson the 4th biggest retailer (Cerberus backed roll-up)
Generally, my thoughts on selling down is fourfold:
It is increasingly clear that $WM and $COST are scarily good competitors
For Albertson, there is uncertainty on how many stores the regulator will let them acquire and the value of this tie-up
Long-run there is a risk of holding stranded assets in the petrol stations. Whilst I think this will take a long-time to play out, they are quite levered so an unexpected reduction in gas station valuers adversely impacts them
There are opportunities for further growth elsewhere
3. $BRG.AX (1% of portfolio)- Too uncertain to increase holding
Whilst inventory levels, and management attitudes towards inventory are less desirable, the thesis of this is very simple.
They are past peak inventory, peak net-debt and seeing margin expansion.
There is an embedded lottery ticket of their expansion into Asia, but the outlook for other regions may be mixed
Generally, the margin of safety on share price is not compelling enough
Overall I would have to see an entry point at <$17 to be compelled to invest further here
4. $LFG.AX (4% of portfolio) - Hold for now; will likely underperform
Results will be released tomorrow and will likely be received similarly to $PPM.AX
My average buy-in price was quite low so even though the price has tanked, net of dividends I am down c.5%
This one is the hardest one to value the downside because:
NIM at >3% is too high (noting they are almost all floating, secured loans)
BDD will increase (nil provisions in the previous report)
Loan run-off will increase because they are a high margin 100% floating lender
The key difference between $LFG.AX and $PPM.AX is that:
Liberty has great access to wholesale markets, with La Trobe being their only non-Bank equivalent. Interestingly some of their bonds are at an OpCo not HoldCo level so their need to lend prudently is super important albeit this favours the debt holder over the equity holder
The way they have leveraged is very different; $LFG has a lower Debt/EV at a company level but higher LVR products
I think $LFG has great optionality in SMSF loans and Loan Aggregation that $PPM
5. $BABA Sold at $100
As great as Ant/AliClould could be - sometimes you need to admit that you don't know what you are doing
6. $NKE – Sold at $120
There is plenty of long-term upside for this company as they move DTC
However, I am looking for a great margin of safety given high valuation and increased risk to the downside for their China business
7. $BBN (1% of portfolio) - Nothing for now
I posted an update on the thesis here – no real change for now
8. $FND.AX (1% of portfolio) - Nothing for now
Generally, FinTwit loves to hate on $FND because it is housing exposed & not cheap
I think the maturing of stores (i.e. new stores are under-earning) will cushion them if we have a mild recession. Obvious there is more downside if we have a greater recession - but I cannot forecast this & won't start trying
9. $GOOG (2%) - waiting for more fear about ChatGPT
AAPL is my primary tech holding but I would be interested at <$85 for GOOG given the margin for search is probably permanently lower
10. Potentially add AMP at $1.05 (Weighting TBC)
The upside here is c. $20-30m p.a. of earnings for AWM and Solutions moving to a break-even position
To the extent the Colimate deal goes ahead; $750m of buybacks & reversion to dividends would be plausible
Overall there is a suite of other holdings and possible watchlists but these have been covered in other posts. In particular the above underplays my ASX small-cap holdings (which are the majority of the other holdings).
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