Stocks - The Best Buys 2

[bluejays]

I dunno. AC seems to be a longer hold to recover then most. Even the CEOs last statement about laying employees off was pretty cryptic along the lines of, "we'll try and get the company to hold up during this time". Guaranteed the government will have to bail them out, but when will travel be fully normalized around the world by governments? And when will people feel fully comfortable to travel on a regular basis? I'd guess that's 2.5 years away, and that's just to get going - profitability comes after. I'd put my money elsewhere personally. Seems like such a gamble with not much upside compared to other stocks.

[nik-]

Originally Posted by DoubleK

And apparently took that money and bought this:

Do you have a link to that blurb?

[Enoch Root]

Originally Posted by fleury

I dunno. AC seems to be a longer hold to recover then most. Even the CEOs last statement about laying employees off was pretty cryptic along the lines of, "we'll try and get the company to hold up during this time". Guaranteed the government will have to bail them out, but when will travel be fully normalized around the world by governments? And when will people feel fully comfortable to travel on a regular basis? I'd guess that's 2.5 years away, and that's just to get going - profitability comes after. I'd put my money elsewhere personally. Seems like such a gamble with not much upside compared to other stocks.

I agree with your position (basically said the same thing). But as far as it taking 2.5 years for flying to return to normal, I would bet that it is much less.

After 9/11, where they literally turned commercial jets into weapons and blew people up, everyone felt that flying would never fully recover. I remember having those conversations myself, and thinking it would be a very, very long time before things returned to anything close to normal.

But then I found myself flying to Costa Rica (through the US) just a few months later. Sure, there were soldiers in the airports. But people started flying again, and got on with their lives. In fairly short order.

[Enoch Root]

Still don't think AC is the way to play the rebound though.

[bizaro86]

Originally Posted by Slava

A lot of people have been waiting for Warren Buffett to do something during this market period, and it appears that he has. Berkshire Hathaway sold holdings in Delta and Southwest Airlines. Apparently they're fearful when everyone else is...well, fearful!

The other possibility is he's preparing to buy one of the airlines, either in full or in a huge preferred + warrants deal. When they bought the railway BNSF they had positions in the other railroads at the time, which they sold.

[Slava]

Originally Posted by DoubleK

And apparently took that money and bought this:

Yeah and who knows? Maybe they bought those names, maybe not. People have suggested Buffett and Berkshire could buy Boeing, Delta and a whole host of other names through the past month. Internet rumours on these things are pretty much useless in my opinion.

Originally Posted by Enoch Root

Though in fairness, it is possible to be a seller without being fearful.

Especially if he was simply rolling into another position (one that was beat down even more severely).

Yeah I was just being facetious. I love Buffett and think that what he has accomplished is incredible, even if these folksy "buy low, sell high" quotes are a little overblown.

[Slava]

Originally Posted by bizaro86

The other possibility is he's preparing to buy one of the airlines, either in full or in a huge preferred + warrants deal. When they bought the railway BNSF they had positions in the other railroads at the time, which they sold.

Hard to say. His positions are still in these airlines, just under the ten percent required for reporting. It just means they don't have to report anything until ~May 15th now, 45 days after the end of the quarter. Maybe they'll liquidate the remainder of the shares or reduce positions, but we won't find out for a month and a half.

[bluejays]

Originally Posted by Slava

Hard to say. His positions are still in these airlines, just under the ten percent required for reporting. It just means they don't have to report anything until ~May 15th now, 45 days after the end of the quarter. Maybe they'll liquidate the remainder of the shares or reduce positions, but we won't find out for a month and a half.

How does the reporting requirement work? Say he puts in another batch under 10%, before that date, does he have to now declare it before then?

[bizaro86]

Originally Posted by fleury

How does the reporting requirement work? Say he puts in another batch under 10%, before that date, does he have to now declare it before then?

Nope. Over 10% you have to file form 4, which has a short deadline. Once they are under 10% they no longer file that form.

For positions under 10% you have to wait until they file form 13G or 13D. They are still required to do that for anything over 5%, but the deadline is longer. IIRC they might not need to update their 13G until they either go below 5% or the end of the year.

They won't have to report 13f for their whole portfolio which will have these transactions until 45 days after the end of Q2, which is the middle of August.

It is possible that's why they waited until april to start selling - they could sell the whole position this quarter and not have many more reporting requirements.

[Slava]

Originally Posted by bizaro86

Nope. Over 10% you have to file form 4, which has a short deadline.

For positions under 10% you have to wait until they file form 13G or 13D. They are still required to do that for anything over 5%, but the deadline is longer.

It's 45 days after the end of the quarter. I can't see a big batch going into Delta though, because the sale takes them down to 9.9% I think. That was pretty clearly calculated.

[bizaro86]

Originally Posted by Slava

It's 45 days after the end of the quarter. I can't see a big batch going into Delta though, because the sale takes them down to 9.9% I think. That was pretty clearly calculated.

Sorry, edited. 45 days after the end of the quarter is 13F, which is their whole portfolio.

13G/13D are related to specific ownership positions. I dont think they have to update that until year end OR after they drop below 5%.

You're right that they will update at ~may 15th, but that will only be transactions until the end of March.

[MoneyGuy]

Originally Posted by Slava

A lot of people have been waiting for Warren Buffett to do something during this market period, and it appears that he has. Berkshire Hathaway sold holdings in Delta and Southwest Airlines. Apparently they're fearful when everyone else is...well, fearful!

What’s his (or your) opinion on cruise lines?

[DoubleK]

Originally Posted by nik-

Do you have a link to that blurb?

It's behind the paywall at Globe and mail.

[Slava]

Originally Posted by MoneyGuy

What’s his (or your) opinion on cruise lines?

I don't know his, but mine is that people will cruise again for sure. If they were allowed, people would line up for a cruise today! But it's really hard. If I was Trump or the US government I have zero interest in bailing out cruiseliners that purposefully register elsewhere so they don't have to pay US taxes. I don't know what they'll do, but that's my thought on a bailout.

So then you get to the economics and financial strength of the companies. I only gave them a cursory glance a week or two ago, and there's nothing too impressive to me. So will they survive? Yeah I so. Can you make money? Yeah, if you pick the survivor(s). But this isn't a glaring deal type of situation. This isn't like one of these guys has a crazy amount of cash and they're going to ride this out and be fine. If they aren't back cruising and making money, and a bailout doesn't come, the options are limited. It's probably issue debt/equity. Issuing equity could work, as long as they don't mind selling a piece of the business for really low amounts (and that's not great if you bought ahead of that of course). Selling debt, well good luck. I'd want a lot of interest for that risk. I mean sure, Royal Caribbean was somehow rated BBB a couple weeks ago, but no one can actually believe that? It'd be junk bonds.

Long story short, it's risky and might payoff. I look at Norwegian and they're at something like $8. That's cheap, no question about it. I forget the price/tangible book, but it's something like 0.46? That's ridiculously cheap. But they're cheap for a pretty obvious reason.

So the thing about stocks is you really only "own" a claim on future earnings. Nothing else. So even that tangible book value, it's nice as a gauge, but you don't actually get that anyway. And let's say they're out of business with zero earnings for a year. That's grim. But theoretically, if they survive, you get earnings in perpetuity. So one year isn't a big deal. When a stock is down by 80% based on that, it's way oversold.

TLDR, there are good arguments either way.

[bizaro86]

I made some money selling out of the money puts on NCLH this month at the lows. I can't see any of the cruise lines getting bailout money - the political blowback for giving tax money to companies that are clearly not essential and dont pay tax would be high. They can always take a trip through chapter 11 and swap new equity for debt, the ships would still be there...

Carnival just borrowed a boat load of money with double digit rates, plus sold shares. Because they have so many assets they might be able to keep borrowing and get through without chapter 11, hard to say. Ultimately it will depend how long this lasts.

https://ca.finance.yahoo.com/news/ca...115554938.html

[TheSutterDynasty]

Any recommendations for those looking into long term investments - MFs/ETFs?

Specifically, it sounds like most people in this thread think US equities will for sure continue to fall. Is now a time to look into Canadian/International equities or hold off on everything and continue to watch?

Edit: also curious for opinions on ETFs with all holdings in the Canadian banks.

[DoubleK]

This is what I'm doing, I don't trade or change investments frequently, I rebalance twice a year. Moved everything from TD Wealth Management to Questrade in January 2020. Investment horizion is 20 years.

RRSP: 45% CDZ (MER 0.66%), 45% VEQT (MER 0.25%) and rest in cash. This is where I moved the money after moving to Questrade. Will look to add a fixed income ETF to this, probably ZAG or something similar.

TFSA: 30% VCN (0.06%), 30% XAW (MER 0.22%), 30% XDIV (MER 0.11%) and rest in cash. Tried to go low fee with my TFSA, seems to be working well so far.

[Table 5]

I'm not as smart/invested enough as many in this thread be able to pick individual stocks, so I'm just doing mostly index funds as usual (MidCap and Tech).

In my head, it does seem like the tech sector is generally a safer bet to come out relatively well, as they are most naturally set up to work with a lot of the short and long-term social/business implications. So an index fund like QQQ (or a riskier leverage like TQQQ) which has strong performers like Amazon, Microsoft, Apple, Alphabet seems like a move that is relatively safe, but also has some growth potential too it if you think these companies can further take advantage.

Midcap wise, I'm putting money into MVV. And as a risk/throwaway, 5% into UCO. Im no energy expert, but while oil may be dying a slow death long-term, right now it seem stupidly low.

[bluejays]

Originally Posted by Table 5

I'm not as smart/invested enough as many in this thread be able to pick individual stocks, so I'm just doing mostly index funds as usual (MidCap and Tech).

In my head, it does seem like the tech sector is generally a safer bet to come out relatively well, as they are most naturally set up to work with a lot of the short and long-term social/business implications. So an index fund like QQQ (or a riskier leverage like TQQQ) which has strong performers like Amazon, Microsoft, Apple, Alphabet seems like a move that is relatively safe, but also has some growth potential too it if you think these companies can further take advantage.

Midcap wise, I'm putting money into MVV. And as a risk/throwaway, 5% into UCO. Im no energy expert, but while oil may be dying a slow death long-term, right now it seem stupidly low.

Again, I’m not a financial advisor but I think you’re right. I’d only subtract a company like Apple from that group due to current conditions. They sell luxury goods and despite being such a noteworthy name, I think with current conditions unless they come out with a blowout product in September with AR capabilities as an example, their products will be what people will avoid splurging on for the time being. Amazon and Microsoft in particular seem solid right now.

[Table 5]

Originally Posted by fleury

I’d only subtract a company like Apple from that group due to current conditions.

Yes, no, maybe so. Your theory may very well be right, but personally I have no idea how Apple itself will do, so that's why I stick to buying the whole index. In the long term they'll probably be fine, but Apple makes up something like 11% of QQQ, so even if it's a relative stinker, it's not the end of the world.