Cheap company, not very great management. I got the agricultural cycle wrong, not looking how fast Mosaic and Nutrien could increase production. I would have to do a significant amount of work to invest back into IPI, and I would rather own them than a lot of the tech companies I am short - however I am staying clear for now.
Excellent results, congratulations! I am very positive for 2023 and since we share many positions I am sure that we will have good results in the forthcoming year as well. Will be tough to navigate though!
Congrats to your stellar performance and analysis in 2022!
Love your portfolio going into 2023! Short book at -50% seems quite substantial and thus I would be a bit worried in case the FED flips and unprofitable companies skyrocket in a short squeeze frenzy.
But overall, a wonderful portfolio and portfolio construction that should profit mostly in a high fossil fuel price, high interest rate and moderate growth scenario. Interesting to separate the put tail hedges from the short ideas. Makes a lot of sense and something I should think more about! That is my major learning from reading your portfolio.
Would you consider adding more traditional US stocks with high FCF? Like GEO, Corecivic or FCF cannibals like Charter and DaVita?
Thanks. The short book all have stop-losses, so the potential loses are limited. Furthermore, I have the hedges from the short ideas as well in case something goes completely against me.
It is a risk, but I have already reduced the amount of short positions in the last few weeks.
Regarding interest rates, I think those will stop being the major source of news soon and we will go towards earnings worries - given the strong dollar in 2022. However it is a risk.
I have looked at GEO, Corecivic and the cannibals. While they are very attractive, they do not clear my hurdle rate. My portfolio is still very small, so I only try to invest into companies that can potentially deliver that performance. If I had a bigger capital base, I would probably have some positions in them tho.
Thanks for the explanation and with the stop-losses you seem to have a great management tool to limit downside. Really like your entries and your "mistake" section where you highlighted to really hone in on your skill to use technicals to fine-tune your shorts.
Back to the discussion on cannibals and high-FCF businesses. What is your hurdle rate and how do you apply this? Is it a discount rate in an excel model and you go to discount future cashflows in that model? Is it a technical or discretionary analysis what could be reasonable assumptions?
My hurdle rate is around 15-20% depending on the business. I apply this via a quick napkin math valuation. Whenever I tried an excel model, I lost money - as the hurdle rate then was too low. I generally not only look at future cashflows, but also at replacement costs or the value of the assets (with a big margin of safety).
I then also look at the technicals and the sentiment around the stock. Furthermore, I also look at what management said and usually read about 5 annual reports, the earnings calls of the last year. It is quite discretionary and I quickly disqualify companies if something bothers me.
Great job during 2022! You have a lot of positions to follow. I think energy continues to perform well and shipping companies that transport it. Shorting any over priced hi tech company is a good play too. I focus on FCF % to EV. Show me the money!
Good stuff. Off shore oil has had a pretty big run up the last few months. Any thoughts on entry points if someone is looking to start building a position? Wait for a pullback? Thanks.
Hi, Hope you are doing well ! Had few queries...don't want to download the substack app(so using this)...since you also have russian shares in your account ... did you get dividend ? Did you have to make a russian bank account? Any reliable brokers in decent jurisdiction which can handle the same want to shift russian shares out of Interactive brokers....P.S country neutral ...good relations with both east and west.
Thanks, that is helpful. Thank you for sharing ur experiences Happy New Year!
Happy New Year!
any comments on IPI ? thanks
Cheap company, not very great management. I got the agricultural cycle wrong, not looking how fast Mosaic and Nutrien could increase production. I would have to do a significant amount of work to invest back into IPI, and I would rather own them than a lot of the tech companies I am short - however I am staying clear for now.
Excellent results, congratulations! I am very positive for 2023 and since we share many positions I am sure that we will have good results in the forthcoming year as well. Will be tough to navigate though!
Thank you! I am looking forward to 2023 and hope that it is at least positive.
Amazing performance for 2022! Well done!
Thanks, hope you had a great 2022 as well!
Congrats to your stellar performance and analysis in 2022!
Love your portfolio going into 2023! Short book at -50% seems quite substantial and thus I would be a bit worried in case the FED flips and unprofitable companies skyrocket in a short squeeze frenzy.
But overall, a wonderful portfolio and portfolio construction that should profit mostly in a high fossil fuel price, high interest rate and moderate growth scenario. Interesting to separate the put tail hedges from the short ideas. Makes a lot of sense and something I should think more about! That is my major learning from reading your portfolio.
Would you consider adding more traditional US stocks with high FCF? Like GEO, Corecivic or FCF cannibals like Charter and DaVita?
Thanks. The short book all have stop-losses, so the potential loses are limited. Furthermore, I have the hedges from the short ideas as well in case something goes completely against me.
It is a risk, but I have already reduced the amount of short positions in the last few weeks.
Regarding interest rates, I think those will stop being the major source of news soon and we will go towards earnings worries - given the strong dollar in 2022. However it is a risk.
I have looked at GEO, Corecivic and the cannibals. While they are very attractive, they do not clear my hurdle rate. My portfolio is still very small, so I only try to invest into companies that can potentially deliver that performance. If I had a bigger capital base, I would probably have some positions in them tho.
Thanks for the explanation and with the stop-losses you seem to have a great management tool to limit downside. Really like your entries and your "mistake" section where you highlighted to really hone in on your skill to use technicals to fine-tune your shorts.
Back to the discussion on cannibals and high-FCF businesses. What is your hurdle rate and how do you apply this? Is it a discount rate in an excel model and you go to discount future cashflows in that model? Is it a technical or discretionary analysis what could be reasonable assumptions?
My hurdle rate is around 15-20% depending on the business. I apply this via a quick napkin math valuation. Whenever I tried an excel model, I lost money - as the hurdle rate then was too low. I generally not only look at future cashflows, but also at replacement costs or the value of the assets (with a big margin of safety).
I then also look at the technicals and the sentiment around the stock. Furthermore, I also look at what management said and usually read about 5 annual reports, the earnings calls of the last year. It is quite discretionary and I quickly disqualify companies if something bothers me.
Thanks! That helps me!
Great job during 2022! You have a lot of positions to follow. I think energy continues to perform well and shipping companies that transport it. Shorting any over priced hi tech company is a good play too. I focus on FCF % to EV. Show me the money!
I am currently learning about shipping, but damn what a minefield of management enrichment. We'll see how 2023 turns out. Hope you had a great year!
Hard to buy and hold. One has to keep an eagle eye on rates and fundamentals.
Amazing performance! Great job 👏
Thanks a lot!
Good stuff. Off shore oil has had a pretty big run up the last few months. Any thoughts on entry points if someone is looking to start building a position? Wait for a pullback? Thanks.
I recently exited my position - as the companies ran up to much and IMO the thesis takes longer to play out.
Hi, Hope you are doing well ! Had few queries...don't want to download the substack app(so using this)...since you also have russian shares in your account ... did you get dividend ? Did you have to make a russian bank account? Any reliable brokers in decent jurisdiction which can handle the same want to shift russian shares out of Interactive brokers....P.S country neutral ...good relations with both east and west.
Hello.
No I did not get a dividend. I still hold my Russian shares in Interactive Brokers, and I doubt I can even do it, giving it that I am in Austria.
Thanks for the prompt update. :)
Congrats. U manage many positions. Do u mind sharing an estimate of how much time u spend managing ur investments overall.
I try to spend at least two hours after work each day. Weekend 5h+
Add UAN to your portfolio .
No, the new tax rules make it impossible for me to hold without needing to pay an accountant then.