TheDailyCompounder

Truly value add account in a sea of wild information and accounts gaining followers from fear and misinformation this is an account ran by someone with real expertise - check him out.

Anecdote on where we are in market psychology. At a value fund hosted by @BobRobotti he was asked 2 questions about AI and The Blockchain. Yeesh.

@WarrenPies Believe we are near record draws

Always skeptical of API, but this would be massive.

Good lord

Is the new DCA into $IWM? 😂

Stopped by Mona Cigar lounge while in Richmond for $MKL and to see @BobRobotti and gang speak tomorrow. Good spot with a decent selection.

$OIH is really interesting- the truth is anything that services a commodity product that floats on the water today trades for ridiculous valuations to asset values - the question on our mind is who has the ability to deploy the excess cash in interesting ways to extract extra value above even the peer group on the other side of a recovery. We think $TDW is best positioned

As an autist, I take offense. We are much too detail oriented to get fooled by 13F options filings.

$FND $HD $LOW Expert commentary on Floor and Decor vs HD and Lowes. I avoided this business like the plague when everyone and their cousin was talking about it being the next Costco because of Munger. Today, if the business can continue to take share in the current environment, consolidate the industry and maintain its cost structure it seems unreasonably cheap. Still undecided on this one but doing some work as of late sub $50. "Client: Okay. Switching to Floor & Decor. Your perspective on them. Did you have conversations internally at Home Depot about that competitor specifically? A lot of the Home Depot merchants go to Floor & Decor. I think it's because they're based in the Southeast. [Former HD Director]: Yeah, they're based in Atlanta. They have a Southeast footprint, but that's it. Client: What internally in Home Depot would you talk about the most about Floor & Decor? Expert: Specialty products. We are losing to [FND] all day, every day. They have so much margin and capacity. Have you been in a Floor & Decor? Client: I actually haven't. I don't live near one. Expert: If you go into Floor & Decor, it's about the size of a Home Depot, except all they have is flooring and tile up to the ceiling. They have anything and everything you could possibly want. Obviously, that wasn't our intent as a business. It was to focus on that solely, but they do. They have a good installation program. They are the one-stop shop if a tile breaks and you have to replace one or two. You can go in there and find one. It's going to be hard to find on Home Depot, probably. We would talk about assortment. We talk about pricing. I would say that we moved more plain tile, like the white subway tile. We moved a lot more than them, just if you think about it from a per store basis. They had us cornered on everything else. They don't do carpet, I don't think. They may do carpet, but I'm sure we outdid them in carpet." ...... [Former Lowe's Director]: I think Floor & Decor has just unlimited runway. I think they can just keep throwing stores everywhere because they're a category killer and they could just keep bleeding Home Depot for years and years. But I've also gotten the impression that FND doesn't necessarily have a cost advantage. [Former LOW Director]: The flooring has been a category that's been growing so well. think what Home Depot has is somewhat of a competitive advantage in its delivery capacity is that we built these FDCs, forward distribution centers that allow us next-day delivery. For a lot of contractors, having the product delivered on time for their 6:00 A.M. job is critical. Part of it is the rising tide lifts all boats. Flooring has been a hot category and while Floor & Decor has been expanding, we haven't felt too much pressure from them. I'm sure that they are selling more and they're selling more. They also play in many more categories than we inherently play in the store, much more assortment to stone and tile and higher-end components versus a lot of what we sell is a contractor or remodeler-grade luxury vinyl plank. That's like where 80% or 90% of your sales are. It hasn't been as painful, I would say, as Amazon and Wayfair, because Floor & Decor doesn't fundamentally have an advantage in cost. They might have a broader assortment play, absolutely, but they don't have fundamental lower costs and they don't have as good of a delivery network. We can outcompete them with our pro customers. Our pro customers who need next-day delivery by 6:00 A.M. and they need the delivery truck at their job site, they're probably are not going to go to Floor & Decor. It's different for us. Wayfair, Amazon, who fundamentally have a better mousetrap in their categories. That's my perspective on them.

Strait of Hormuz traffic is nonexistent #MacroEdge

My.lord.

@RazorOil detailed this in April that draws are becoming 2022 adjacent. All of this to hold up a market where spot is over $100. Insane times we live in. The question is after this conflict resolved what does the market price in vs what becomes the new floor? Seems to me the curve is totally mispriced and that conservatively $80 is probably the “new floor” until adequate supply is brought online which in the past takes about 6mo to get to 88% of pre conflict/disruption output.

Didn’t China say it had never paid any of the tariffs anyways?

Investing success relies on positioning within the economic environment which is what markets reward. The question isn’t where is capital now but where is it going. I would suggest to you physical assets operating in cyclical industries are fish in a barrel even after their recent price trends over say, 8-10 months. Your edge in this type of economic environment in my view is totally dependent on temperament. Everyone can see businesses with net cash or near net cash balance sheets that trade for fractions of high quality assets with little/no substitution risk. The valuation provides the margin of safety/ permanent capital loss risk. The balance sheet allows underlying commodity or widget pricing to remain distressed for a period of time greater than you anticipate thus avoiding the danger of timing based predictions. Finally the lack of substitution makes it to eventually those assets have to take an acceptable cost of capital and it’s simply a matter of time before they do. In other words cheap assets as an entry point + balance sheet strength + low/no substitution will outperform the dollar neutral podshop that has 0 duration and can’t stand a 2-3% decline.

@KarstResearch Have you heard of $MKL?

Inb4 “have you heard of $FFH.TO?”

Create a generational hard market in insurance. Good, now make it last long enough that investors start to take notice. Excellent, now drop property rates 15% globally and cause a soft market right when they start buying p&c names.

In a market full of large cap mania $CB Chubb is increasingly interesting. I think paying anything sub 2x book for this quality of a firm is probably reasonable. The underwriting is first rate and the business is well positioned. More on this as we do more work.

This will be bullish tech somehow guys better load up on $SOXX (satire)