December 2017 - Short Presentation from Dec 2017: My Process + CHTR & CMCSA overview

My (short in length) presentation from this past weekend in Florida. Click here PRESENTATION LINK

Combination of:
(a) my process
(b) companies/ business models I like
(c) using a+b to go over my preference for $CHTR and $CMCSA

Markel Corp (MKL) - Brief Overview - 38 slides [6/02/2017]

Link to Slide Deck: Markel Corp (MKL) 6/2/2017 (click left)

Quick overview of MKL, how I think about the underlying drivers of the business going forward, decomposing BVPS growth.

Any feedback is welcome  findmevalue@gmail.com

Payments Industry Overview - Analysis of Visa, MasterCard, American Express - 361 Slides [5-18-2017]

Link to slide deck: Payments Industry - V / MA/ AXP - May 2017  (click left)

There are no specific recommendations in this slide deck. Most of that is due to the current valuations of the companies mentioned, which I find none of which are "cheap". There is some optionality for each company, and due to the attractiveness of some of the business models, as well as the economics, one can make the case that these businesses could each be worth more in the next 3 years +.

I am hopeful this presentation is helpful to those that read through it. Please reach out with any comments, good or bad, about this presentation, the industry, or the companies discussed.

Disclosure: Long Visa/ MasterCard currently; Was Long PayPal, but sold recently. Have never owned AXP directly.

LiLAC (LILA/B/K) - Liberty LatAm - 287 slides [09/02/2016]

Link to slide deck: LiLAC - September 2016 (Click left)

This presentation is long on purpose, as not much is written about the specific markets that LiLAC is in, but rather "broadband penetration is lower in LatAm, Malone indirectly bought more of LiLAC through the C&W purchase, LBTYA management keeps touting the fragmented market and large M&A opportunity, etc.

I did not organize this to be in a stock pitching contest, so don't expect it to be short and sweet and me to sell you on buying LiLAC immediately. Some of it may be long-winded, some repetitive, some unnecessary. Scroll through sections or areas that me be or interest, feel free to reach out with any questions or comments.

The stock is not quite dirt cheap, even despite the share decline. However, at ~$28.50/share, I think LILA represents an decently attractive opportunity, due to:

• Newbuild opportunity and progress in Chile (VTR)
• Improving mobile networks across legacy Cable & Wireless footprint to meet data growth
• Data growth will result in increased fixed broadband growth
• Fixed-mobile divergence in Cable & Wireless footprint will drive penetration, ARPU, bundling, and lower cost to carry data traffic
• Submarine cable assets will be tremendous competitive advantage as Latin America continues to experience strong mobile/fixed data traffic growth, as the Cable & Wireless sub-sea assets are the most comprehensive in the region, continue to be top ranked year-in, year-out
• Synergy targets - both on operating costs and through capital reductions - will improve FCF
• Levered Equity returns: minimal 2016 free cash flow will lead to likely zero shares being repurchases; however, 2017+ will introduce the levered-equity returns many Malone followers know of

There are some risks, but overall, I think it is difficult to lose money at current pricing over the next ~3+ years, and there are a number of levers LiLAC can pull to bring strong returns on investment

Investment Blogs to Follow/ Consider Following

Blogs to follow/ consider following for Investing-Related Material

(Note: I do *not* endorse all of these; some gathered through recommendations, some higher quality versus others. May have missed some good blogs, feel free to recommend in comment section.)

(In alphabetical order)

AboveAverageOdds.com: infrequent posting, some discussion of individual companies.

AlphaExposure (wordpress): past discussions on oil, some discussion on individual stocks such as EROS, BPT; almost predominantly a short strategy blog. Strong track record from shorting (see below)

avondaleam.com: ( @Skrisiloff) Weekly posts on company call notes.

AZValue (blogspot): ( @AZ_Value): Last post August 2015 on Valeant (VRX).

barelkarsan.com: ( @SajKarsan): Posts on investing, his fund returns, company related, such as VTU.

BaseHitInvesting.com ( @baseHitInvestor): investing topics such as ROIC, incremental ROIC caluclations, compounders, and some companies such as MKL, BRK, CACC, SUNE.

BronteCapital (blogspot) ( @John_Hempton) Hedge Fund manager from Sydney, Australia. Known for his spot on calls on VRX and HLF.

BrooklynInvestor (blogspot): Posts on valuation, and some company specific posts, such as JPM, MKL, KHC, AME, OZM, SCHW, MDLZ and more.

broyhillasset.com/how-we-think: Boutique investment firm, established as a family office. Includes investor letters, presentations on wide moat investing, and occasional security analysis on TWX, KW, FUN, COH, HSP.

Calculatedriskblog.com: posts on economic and macro related topics (ISM, housing, construction spending….)

Clark Street Value (blogspot): Individual investor and CFA, posting on specific companies (mostly smaller companies) like LDOS, HE, NXRT, XRDC, HHC, PNK, LILA and more. Frequent posts, fairly solid analysis.

Creditbubblestocks.com ( @TheCreditBubble): posts on company issues, concerns, bankruptcies such as XCO, SPE, BCEI and more.

Csen.tumblr.com ( @conorsen): PM at New River Investments, posts mostly on broader investing topics

csinvesting.org: Investing related, case studies on companies, notes on books, upload of investing videos.

DislocatedValue (blogspot) (@UnderwaterCap): infrequent posts but solid reviews on companies such as LKQ, BIDU, CWC, PCRX, NPO, EXH and more.

Fortunefinancialadvisors.com/blog: posts mostly on investing topics, less so individual companies.

Fundooprofessor (wordpress): Sanjay Bakshi, posts on investing topics and behavior (less so company related)

GlennChan Random Notes on Investing ( @glennchanWordpr) Posts on specific companies, both on long and short side.

Hurricancapital.wordpress.com ( @HurriCap) Posts on investment related topics, less so on individual company-related.

intrinsicinvesting.com ( @InstrinsicInv) Ensemble Capital, posts on interesting articles, occasional stock ideas such as LSTR

kerrisdalecap.com/blog/ ( @KerrisdaleCap)  Post specifically on investing ideas implemented in their hedge fund, such as DISH,

kirkomi (wordpress): Infrequent posts, on investing topics and specific companies such as CFR, LON:RTN, AXP, Swatch, DLB, and more.

MarketFolly ( @marketfolly): Posts on interesting hedge fund news and investing articles.

Musings on Markets (aswathdamodaran blogspot): ( @AswathDamodaran) NYU Professor, discusses specific companies and valuation tools topics.

OraclefromOmaha (wordpress) ( @ValueVenture101) Posts on specific companies, very thorough and detailed, companies such as JD, CHTR, IBKR, AMZN, EBAY/PYPL, CSU.

Paincapital.wordpress ( @PainCapital): Posts on broader topics such as the Australian housing market and oil.

Punchcardresearch.com/punch-of-the-week ( @PunchCardBlog): Posts on specific companies such as CONN, WINA, TWX, CABO, LYV, LGF, SIRI and others.

Quinzedix.blogspot.de: Posts on smaller companies such as Future Bright Holdings, Keck Seng, Paradise Entertainment, TExhong, Flybe, LSB.

Rationalwalk.com ( @rationalwalk) : some topics around investing and company specific such as MKL and BRK

ShillerFeeds ( @RobertJShiller): Posts on macro topics, basic investing thoughts.

Sirf-Online.org ( @SIRF_Report) Posts by Roddy Boyd, designed to uncover issues and fraud with certain companies, such as Diamond Resorts, VRX, and others.

Stockviews.com: Posts on broad investing topics, not specific companies.

TheSkeptic21.blogspot.com ( @TheSkeptic21): Posts specifically on Valeant (VRX)

valueandopportunity.com: Posts on investing articles found interesting throughout the week, and some specific companies as well.

ValueInvestingWorld: Weekly posts on interesting articles and links related to investing

Valueseekerinvestments.blogspot.com (mine) @Find_Me_Value): Posts every couple of months on investing topics and individual companies such as BRK, LILA, MCO, SPGI, DVA, HHC, CABO and others.

Valuetrap13 (wordpress) ( @valuetrap13): Hedge Fund manager posts on general investing topics, valuation.

ValueWalk.com ( @valuewalk): Posts on interesting investment articles and posts, as well as hedge fund news.

Y0ungmoney (blogspot) ( @Y0ungMoneyBlog): Posts on book reviews and investing topics.

ycginvestments.com/thoughts (Yacktman son): Posts specifically on companies such as WFC, DISCA, SCHW, VZ, ORCL, and others.

Professional Money Managers

Stock Ideas; Please suggest more in comment section.

Broyhill (See above)

GWInvestors.com/research/public ( @GWInvestors)

YCGinvestments.com (see above)

Voss Capital (Travis Cocke) – Focuses mostly on smaller/mico cap names, strong investment track record (see: hvst.com for his letters, doesn’t post as much on twitter)

Artko Capital – focuses on smaller capitalization companies (see: hvst.com for firm letters and ideas)

Cable ONE, Inc. ("CABO") - 60 page Slide Deck [5/3/2016]

I welcome any feedback/criticism.

Link to Slide Deck: Cable ONE, Inc. ("CABO") Slide Deck [5/3/2016]

Brief Summary:

• Cable ONE is the 10th largest cable company in the U.S. and is most known for their radical strategy change in 2012 whereby they de-emphasized video and telephone (the triple play bundle with broadband) and focused heavily on residential broadband and business services

• They are often well thought of in the value investing community due to their jargon around "free cash flow" and "margins" and "we are where the puck is heading", as well as attracting a solid Board of Directors with notable investing names such as Tom Gayner (Markel Corp.) and Wally Weitz (Weitz Investments)

• I would only buy the company if it got cheap enough (low $400s/high $300s) primarily due the likelihood of being an acquisition candidate in the next 1-2 years as the cable industry consolidates; otherwise, there are better investment opportunities in the industry.

Observations from 2015 The Howard Hughes Corp. (HHC) CEO Letter [3/24/2016]

Link here to 2015 Shareholder Letter (worth a read if interested in the company) LETTER or Here

Summary:

This letter is always a good read, as CEO David Weinreb goes into detail each Master Planned Community (MPC) and the primary locations of the Operating Assets. In a sense, each letter he does his best to share how to value The Howard Hughes Corp. (HHC). Even with him sharing how HHC should be valued, the stock still remains undervalued at ~$98/share and also represents a good investment over the 'long-term'.

I prefer owning companies that are run by capable management, have attractive assets, is inexpensively priced, and has a clear runway for reinvestment at above-average rates of return. Some of the best companies in the world have issues with the last quality: reinvestment runway at high rates of return. These companies often use their cash flow to pay dividends, repurchase shares, and make an occasional acquisition. For HHC, their pathway for reinvestment is fairly clear for at least the next 5 years, and they don't need to make any acquisitions to grow at above-average rates of return. 

Observations from 2015 Howard Hughes CEO Letter [released 3/23/2016]

Ownership:

• Pershing Square Capital Management
• 2014: owned 9.0% of outstanding common stock, excluding shares issued upon warrant exercise
• 2015: owned 12% of common stock and warrants and an additional 12% economic interest through total return swaps (total 24%) 

Progress:

• Increased Net Operating Income (NOI) from $43 million in 2010 to $120 million based on annualized Q4 2015
• When stabilized, commercial properties under construction or completed expected to achieve approx. $219m NOI by 2019 (excludes South Street Seaport/Pier 17 projects)
• Expect a 9.0% yield on approximately $2.0 billion costs (excludes legacy assets inherited via spin-off from General Growth Properties GGP)
• Cap rates should be lower in NYC and Hawaii, versus Las Vegas and The Woodlands
• Cash:
• 2014: $560 million unrestricted cash
• 2015: $445 million cash, add the $377 million from Seaport District Assemblage sold 3/16/2016 = $822 million cash
• $781 million additional debt needed in next 2 years for development, $541 million is for short term debt for Waiea and Anaha condos in Ward Village (repaid in full by end of 2017)

• South Street Seaport:
• Jean-Georges and David Change announced restaurants in Pier 17 building
• Renovation of Historic District completed by late 2016
• Not announced expected cash flows yet due to complexity and plans
• Still working on concept for “Project Two” (700,00 SF additional) 

New Projects (not mentioned in 2014 AR or 2015 Q3 10-Q)

• One Merriweather (199k office, 49% preleased to Medstar) in downtown Columbia, MD
• The Constellation (124 unit luxury apartments/ Joint Venture) in downtown Summerlin, Las Vegas
• Begun process of master planning remaining 184 acres in Summerlin, NV. Envision over 5 million square feet of density
• One Constellation (mentioned above) is first multifamily development in Summerlin
• Plan for Columbia, MD, approved in 2015 by Howard County, for:
• 2,300 residential units
• 1.5 million square feet office
• 314,000 million SF retail
• 250 hotel rooms
• 4.9 million SF density on 35 acres surrounding Merriweather Post Pavilion 

New Comments:

• Estimated MPC gross valuations (not yet done, that I’ve seen) = $4.749 billion undiscounted
• Weinreb shares his belief that most land is discounted at 15% - 20% for raw undiscounted law; should not be the case for HHC land, as located in established MPCs
• The Woodlands: sell-out date is certain and soon, “single digit” discount rate should be used
• HHC provided estimated pro-forma “average price per acre” for The Woodlands Hills (~$253k per residential)
• The Summit (JV with Discovery Land) is selling lots from $2 mil - $8 mil, will hold 270 residences by end 2023. “Sales well ahead of schedule”. Project has 39 lots under contract for $119 million, collected $45 million in deposits from this already. This land was contributed at book value of $13.4 million.

The Woodlands:

• Commercial land in The Woodlands – 785 acres – should be valued at undiscounted amount of $737 million due to values increasing from $10 per sq./ft. in 2010 to $22 per sq./ft. currently. (Note: I had $485.7 million undiscounted)
• The Woodlands MPC cash margin = over 90% as infrastructure built = $237m undiscounted (note: I had $193.6 million undiscounted)
• The Woodlands  = owner and developer of virtually all of the remaining commercial land in The Woodlands, do not have competitive pressures to quickly lease or monetize properties
• Slowdown in Houston helped HHC because competitors have retreated and HHC continues to strengthen their dominant position in the market
• 48% of occupied office space leased to investment grade companies
• Retail portfolio has average remaining lease term of 8.5 years
• Office portfolio has average remaining lease term of 7.8 years
• No tenants carrying significant balances more than 30 days past due

 Taxes:

• Do not expect to pay taxes over next few years due to $255 million of NOLs
• Higher NOI from commercial properties would incur taxes, but they are burdened in short-term by mortgage debt, depreciation, interest, and thus taxable income from these properties should be “near zero” in next several years
• HHC holds non-core assets that, if sold, could provide more than $340 million of additional tax deductions 

Valuation Notes:

• My MPC valuations had a $5.775 billion undiscounted value (although I used 12% - 15% discount rates), yet HHC used $4.749 billion undiscounted.
• Adjusting my MPC valuation based on:
• The Woodlands at 9.0% discounted
• Lowering the price/acre of Summerlin
• Using 13.0% discount rates for all other MPCs
• Adjusting The Woodlands Commercial Land to be somewhat closer (but still $50m + off undiscounted), using 13.0% discount rate
• All in, adjustments to MPC values lowered my MPC “NAV” by ~$2.00/share, from ~ $30/share to $28.00/share