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The Sirens’ Call

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  • Valuation-sensitive investors are raising cash.
  • Defined benefit plans are net sellers of stock, but not for the reasons I posit in my article — they are doing it to move to private equity and alternatives, and bonds as a part of liability-driven investing.
  • On net, these conditions give some confirmation to what my quantitative model is saying… the market is near a top.

Some links

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  • Good “all around post” from the Brooklyn Investor on Jamie Dimon, Steven Shcarzmann, the market and more Greenwood Investors Q3 letter on the difference between “tourists and pubs” Prf.
  • Damodaran on WeWork and Softbank A good portrait of the LT3000 investment blog The PeridotCapitalist blog answers some questions from readers Ben Thompson on the “Google Squeeze” (Expedia, TripAdvisor) An interesting article on holding stocks for too long

With the End in Mind

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  • Anyways, here is some stuff I am reading and thinking about this weekend… Book I’m Reading – With the End in Mind I never saw Papa reading a book.
  • Similarly, of all mindfulness meditation, that on death is supreme.”
  • Now, the thing about meditating on your own mortality is that it doesn’t make life pointless.

The end of Temple Hotels

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  • Temple has been the target of a slow motion takeover which, in 2015, was effectively finalized by Morguard by the assumption of its asset management agreement, and repurchase of debt securities.
  • After, they proceeded to raise capital through rights offerings which resulted in Morguard accumulating a 73% stake in the company.
  • An entity associated with Clarke’s (TSX: CKI) Armoyan, owns 17% of Temple and agreed to be bought out by this price.

Easy Money and Finding Future Returns

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  • Cheapest (EV/EBIT) lagging for almost a decade!
  • Why?Perhaps, because the market is bifurcated especially between assets and financial assets.
  • Why?Declining interest rates helped by the Fed purchasing bonds (expanding their balance sheet) enables bond sellers and those receiving the Fed’s money created from thin air to putchase financial assets.

Hilton Grand Vacations: In Play, Speculating on a Deal

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  • Some point to the risk that Hilton needs to consent to a merger, this is true, but it seems contemplated that HGV would be acquired or operate non-Hilton branded timeshare properties with the caveat that it would be operated separately from Hilton branded properties and without access to the loyalty program, from the 10-K:
  • HGV's management at least acknowledges the benefits of industry consolidation, essentially confirming the rumors, from the most recent earnings call:

Franchise Group: fka Liberty Tax, Franchise Rollup

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  • Franchise Group (FRG) is the result of the odd conglomeration of: 1) Liberty Tax (old TAXA); 2) Buddy's, a franchised chain of rent-to-own electronics and furniture stores; 3) Sears Outlet business; and soon to be 4) Vitamin Shoppe (VSI); that is being orchestrated by Vintage Capital's Brian Kahn who was recently named the CEO of the newly launched platform company.

Asta Funding: Going Private Offer

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  • For a while there it was trading below cash, a clear error of omission on my part not jumping on it then as I've always kept ASFI on my watchlist.
  • But on November 1, Gary Stern, Asta's Chairman and CEO offered to purchase the remaining outstanding public float (the Stern family owns ~60% of the company) for $10.75 per share conditioned upon acceptance by a special committee of independent directors and a majority of the minority shareholders vote for its approval.

Ben Franklin Financial: Tiny Bank Merger and Liquidation

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  • Ben Franklin Financial (BFFI) is a tiny (sub $10MM market cap) two branch community bank located in the northwest Chicago suburb of Arlington Heights that completed its second step mutual-to-stock conversion in 2015.
  • Why sell to a credit union?
  • Not only is the amount uncertain, but the timing is as well, the transaction with CAFCU is expected to close in early 2020 with the distribution to shareholders occurring "within several months", thus this is more of a two step process, an asset sale and then a liquidation rather than a clean merger.

Dissent on Triple-S Management II

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  • I don’t short, but if the price drops severely if/when Propiedad (the P&C subsidiary) goes into insolvency, I will buy in again.
  • 2) If Propiedad goes insolvent there may be an effort to allege or force the parent company to stand behind all claims.
  • Propiedad has made statements like Triple-S stands behind Propiedad, but those are far short of a “full faith and credit guarantee” from the parent company.

The Softbank-WeWork End Game: Savior Economics or Sunk Cost Problem?

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  • Added Capital: Softbank would provide fresh debt financing of $5 billion ($1.1 billion in secured notes, $2.2 billion in unsecured notes and $1.75 billion as a line of credit) and an acceleration of a $1.5 billion equity investment it had been planning to make into WeWork in 2020, giving WeWork respite, at least in the short term, from its cash constraints.

All German shares part 8 (Nr. 76-100)

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  • However no growth over the years and loss making in 2018.
  • Despite book value of 100 mn EUR a clear “pass”.
  • Machinery is actually a nice business with 10% EBIT margins, however construction has been unprofitable for a long time.

This Week’s Best Investing Articles, Research, Podcasts 11/15/2019

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  • Here’s a list of this week’s best investing reads:
  • N = 1 (Of Dollars and Data)
  • This week’s best value-investing reads:

Ray Dalio: Q3 2019 Top 5 New Buys, Top 5 Sells

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  • These documents allow investors to track their favorite superinvestors, their fund’s current holdings, plus their new buys and sold out positions.
  • As a new weekly feature, we’re now providing the top 5 new buys and top 5 sells (by $ value) from some of our favorite superinvestors based on their latest 13F-HR documents.
  • This week we’ll take a look at Ray Dalio (9-30-2019).

Ken Fisher: Q3 2019 Top 10 Holdings

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  • These documents allow investors to track their favorite superinvestors, their fund’s current holdings, plus their new buys and sold out positions.
  • We spend a lot of time here at The Acquirer’s Multiple digging through these 13F-HR documents to find out which superinvestors hold positions in the stocks listed in our Stock Screeners .
  • This week we’ll take a look at Ken Fisher (9-30-2019).

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