Great post. Always tough to be booolishhhh when most are bearish AF. My .02c, the hard V isn't in play as we're looking at some form of recession. Personally, I think we will bounce back in more of a U shape. A 'V' recovery assumes infections peak during next 4-6 weeks, but god for bid they don't, all bets are off. Another thing that wo…
Great post. Always tough to be booolishhhh when most are bearish AF. My .02c, the hard V isn't in play as we're looking at some form of recession. Personally, I think we will bounce back in more of a U shape. A 'V' recovery assumes infections peak during next 4-6 weeks, but god for bid they don't, all bets are off. Another thing that worries me is Europe is so ugly right now, US mkt is expensive on a relative basis. With that said, I agree, the Fed is clearly saying game on. The yield action is really interesting, 10Y above 1% not-not bullish. When we do find a bottom, I also love the home builders. Check out OSB CN - - dual listed, NYSE and TSX, report in USD, FY 2019 sales of $1.7bn. 90% of their capacity is directed towards Oriented Strand Board (OSB) which is used in new home construction / repair and remodel. I am bullish the stock on account of weekly re-fi rates in the US, weeklies are spiking hard (MBAVREFI INDEX on Bloomie). With lower-for-longer rates, borrowing to buy is not out of the question in a U-bottom + any slip up in housing activity will only be a blip (if there is one). Interestingly, US housing starts have been below the LT average for some time now, not to mention fiscal spending shot in the arm.
Winston. You are probably correct that I am too bullish on the recovery. At this point, I would probably be happy with your U recovery. :)
Thanks for the heads up on the OSB. I am putting it on my list of stocks to watch. I will write up a full piece on the homebuilders, but too many forget that the biggest demographic is not Boomers, but instead millennials. Here in Canada, they have all bought houses, but in the US, they are still living in their parents' basements. Everyone tells me they won't buy houses and make families. I call BS on that one. They will do what every generation does. They will have just done it later.
And this virus induced collapse in rates has cemented the next bull market in housing. Trump and the rest of the government will hand out credit, and housing will fly.
One last thing - before this virus hit, one of the most well-connected guys I know said to me, "the smartest long-short guy I know is limit long builders." I don't think he was wrong, he was just early. :)
Nice to meet you and thanks for putting me on your email distribution list. Would love to grab a beer when we are allowed to socialize again!
The beer sounds good, looking forward my friend. PS. I looked at the STNG US calls today, vol is just crazy expensive, 200%. Probably best to just buy the equity. Only reservation is the USD exposure right now when so many +50% off sales up in the great white north.
There are a few. First off, im buying RY CN and BNS CN, because if they're fckd, we're all fckd. ATZ CN is down 45%, less than 1x levered, always packed when I've been in store, not luxury, but not fast fashion. This one is a simple as 'will your wife/daughter still shop at Aritza in 2 months'. Answer is prob YES. Set & forget. OSB CN for reasons listed before. PKI CN another. It's down 50%. They're a fuel retailer (fancy for gas stations), impacted by oil spot, but when wholesale oil prices fall, retail doesn’t fall as much and as fast so in the near term, gas station operators can take advantage of an increase in margins. I know demand is fckd for time being, but LT this is a FCF beast. Similar to ATD/b, most of their fuel is purchased at spot prices (meaning they can take advantage of what’s currently a significantly lower oil price environment). While some gas station operators may have contracts, some are branded, offset by the fact their refinery crack spreads are wider now (which they will benefit from). It's a plug your nose and buy.
Great post. Always tough to be booolishhhh when most are bearish AF. My .02c, the hard V isn't in play as we're looking at some form of recession. Personally, I think we will bounce back in more of a U shape. A 'V' recovery assumes infections peak during next 4-6 weeks, but god for bid they don't, all bets are off. Another thing that worries me is Europe is so ugly right now, US mkt is expensive on a relative basis. With that said, I agree, the Fed is clearly saying game on. The yield action is really interesting, 10Y above 1% not-not bullish. When we do find a bottom, I also love the home builders. Check out OSB CN - - dual listed, NYSE and TSX, report in USD, FY 2019 sales of $1.7bn. 90% of their capacity is directed towards Oriented Strand Board (OSB) which is used in new home construction / repair and remodel. I am bullish the stock on account of weekly re-fi rates in the US, weeklies are spiking hard (MBAVREFI INDEX on Bloomie). With lower-for-longer rates, borrowing to buy is not out of the question in a U-bottom + any slip up in housing activity will only be a blip (if there is one). Interestingly, US housing starts have been below the LT average for some time now, not to mention fiscal spending shot in the arm.
Winston. You are probably correct that I am too bullish on the recovery. At this point, I would probably be happy with your U recovery. :)
Thanks for the heads up on the OSB. I am putting it on my list of stocks to watch. I will write up a full piece on the homebuilders, but too many forget that the biggest demographic is not Boomers, but instead millennials. Here in Canada, they have all bought houses, but in the US, they are still living in their parents' basements. Everyone tells me they won't buy houses and make families. I call BS on that one. They will do what every generation does. They will have just done it later.
And this virus induced collapse in rates has cemented the next bull market in housing. Trump and the rest of the government will hand out credit, and housing will fly.
One last thing - before this virus hit, one of the most well-connected guys I know said to me, "the smartest long-short guy I know is limit long builders." I don't think he was wrong, he was just early. :)
Nice to meet you and thanks for putting me on your email distribution list. Would love to grab a beer when we are allowed to socialize again!
The beer sounds good, looking forward my friend. PS. I looked at the STNG US calls today, vol is just crazy expensive, 200%. Probably best to just buy the equity. Only reservation is the USD exposure right now when so many +50% off sales up in the great white north.
What's your favourite "quality stock that has been drubbed too far" name? And btw, I agree - Canada is on sale compared to the US.
There are a few. First off, im buying RY CN and BNS CN, because if they're fckd, we're all fckd. ATZ CN is down 45%, less than 1x levered, always packed when I've been in store, not luxury, but not fast fashion. This one is a simple as 'will your wife/daughter still shop at Aritza in 2 months'. Answer is prob YES. Set & forget. OSB CN for reasons listed before. PKI CN another. It's down 50%. They're a fuel retailer (fancy for gas stations), impacted by oil spot, but when wholesale oil prices fall, retail doesn’t fall as much and as fast so in the near term, gas station operators can take advantage of an increase in margins. I know demand is fckd for time being, but LT this is a FCF beast. Similar to ATD/b, most of their fuel is purchased at spot prices (meaning they can take advantage of what’s currently a significantly lower oil price environment). While some gas station operators may have contracts, some are branded, offset by the fact their refinery crack spreads are wider now (which they will benefit from). It's a plug your nose and buy.
Thanks Winston! Really appreciate you sharing your views!