This is Part 4 of a special Coronavirus Investing Series. If you have not listened to Part 1, please click here to get the overall context/market overview during this unprecedented time.
You can also listen to:

Part 2
Part 3

 
Overview
After a decade of bankruptcies, shipping investors are fed up. The shipping ETF was shuttered a month ago, and the carnage prompted Morgan Stanley and JP Morgan to drop coverage of the entire sector. Investors fear that Covid-19 will crush oil demand, and plummeting oil prices will result in tanker demand evaporating - potentially resulting in bankruptcies. However, tanker companies have used windfall profits to pay down debt, and some are now on solid footing.
 
Halts In Air Travel

As lockdowns spread and air travel grinds to a halt, oil consumption is collapsing, but Braxton says that's good for tankers because what oil isn't getting burned is going into storage on tankers, which were already in short supply.
 
Scorpio Tankers
Braxton discusses Scorpio Tankers, which trades at 35 cents on the dollar of liquidation value. Scorpio owns the youngest product tanker fleet of any public company. The product tankers built during the last boom are starting to turn 15 years and older, either trading in a second-tier market or moving into dirty trades. At the same time, new environmental regulations significantly boost the demand for product tankers to carry MGO and other compliant fuels.
 
Other Tankers
Braxton mentions several other tanker companies he owns, including Euronav, a prominent owner of crude tankers. Despite the strongest balance sheet in the industry and a policy of paying out 80% of net income as dividends, Euronav trades at two-thirds of liquidation value.
 
IMO 2030 & The Shipbuilding Industry
In the show, Braxton explains why he finds the shipbuilding industry unattractive, and how IMO 2030 may put a damper on new ordering.
 
Staying In Touch With Eric Schleien

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#85: Coronavirus Investing Series, Part 4 | Braxton Gann | Shipping Companies

Eric Schleien discusses value investing, rational investment analysis, and vital mental models.

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In today's episode, I sit down with my buddy Robbie Kramer to discuss the ultimate value investment, relationships. Last week, I had the pleasure discussing investing on his show. You can listen to the episode, here. If you prefer to watch it on YouTube, you can watch the episode, here.
The most important relationship you'll ever invest in is probably who you end up marrying. Choosing quality romantic partners is Robbie Kramer's specialty. It was an absolute joy to sit down with him and chat all things relationships, romance, and dating.
 
Watch this episode on YouTube
 
Transcript
For a transcript of today's episode, click here. 
Show Notes
[00:01:18] Marrying the right person
[00:02:35] People who are successful in their careers yet stunted in their relationships
[00:10:05] Common Mistakes Men Make
[00:13:07] Instagram and Online Dating
[00:14:53] Three Prompts for Dating Profiles
[00:19:56] Socially Awkward Men
[00:22:29] “...Some of these guys are worth a hundred million dollars, running big funds, very wealthy. Social, but either they're still single or they have a wife who they're pretty much like in an emotionally abusive relationship, like they're just not happy. If they're very honest with themselves, they're not happy with their romantic life, and that stuns me how you could be actually fairly socially incompetent.”
[00:23:35] Unhappy Relationships
[00:24:51] Social Freedom Exercises
[00:27:41] The Wealthy Executive Who Hides Behind Masks
[00:33:14] Optimizing your life
Links From The Episode
Profile Prompts
Photo Feeler
Get In Touch With Robbie Kramer
Instagram
Inner Confidence
The Leverage Podcast
 
My Other Podcast
Hey All! I’ve started a second show completely devoted to the field of Ontology which is another huge passion of mine. Please check out The Eric Scheien Podcast which is an ontological podcast where I break down distinctions of human consciousness as an access to enhancing performance.

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#173: The Ultimate Value Investment - Robbie Kramer

Summary
In this episode, I break down the current paradigm for shareholder activism, speak to the new model that I invented which is vastly superior both in results and reliability. We discuss the myth of "if it can't be measured, it doesn't exist", the myth around "soft skills", and how people often ask the wrong questions or measure the wrong stuff due to perverted influences by HR departments.
If you're interested in more discussion of the new model for shareholder activism I developed, see the following links below:
A New Model For Shareholder Activism (Podcast)
The Proxy Activism Project
A New Model For Shareholder Activism (Blog)
A New Model For Shareholder Activism (YouTube)
A New Model For Shareholder Activism (Eric Schleien / John King)
Netflix, Sears, and Tribal Leadership (Eric Schleien / John King)
How To Keep Large Companies Innovative (Eric Schleien / Scott Forgey)
Eric Schleien discussing Tribal Leadership
Eric Schleien discussing Activist Investing
CBRE Case Study – Tribal Leadership
Comparing Transformational & Transactional Leadership (Eric Schleien)
Cultural Issues In The Hospital Industry (Eric Schleien)
New Podcast
Hey All! I’ve started a second show completely devoted to the field of Ontology which is another huge passion of mine. Please check out The Eric Scheien Podcast which is an ontological podcast where I break down distinctions of human consciousness as an access to enhancing performance.

HELP OUT THE PODCAST





If you like The Intelligent Investing Podcast, please consider leaving a rating and review on Apple Podcasts. It takes less than 30 seconds to do and makes a huge difference! You can also join the Facebook page!      
You can subscribe to the podcast on the following platforms:
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Email: IntelligentInvesting@gmail.com

#172: The New Model For Shareholder Activism; The BS Myth Around ”Soft Skills”; Measuring The Wrong Stuff

NEW PODCAST
Hey All! I’ve started a second show completely devoted to the field of Ontology which is another huge passion of mine. Please check out The Eric Scheien Podcast which is an ontological podcast where I break down distinctions of human consciousness as an access to enhancing performance.
Summary
I received this email last year about Trupanion and wanted to address some points made. The entire email is here:
Hi Eric,
 
I come in peace as a Chester County native who still very much prefers Wawa over Sheetz, despite living in Pittsburgh. You seemed very open to hearing counterpoints, as per your podcast on TRUP, so I wanted to give you some things to chew on. 
 
You made two points (I'll summarize): 1) It is justifiable to exclude development expenses from IRR and 2) there are "no accounting shenanigans" going on. 
 
I would love, then, to hear your thoughts on the following:
 
Let's first level set with the IRR methodology: the company allocates fixed expenses between Subscription and Other based on their relative revenue contributions. This includes a pro-rata allocation of G&A expenses. 
 
So let's get into G&A expenses -- what's in there? Typical back office stuff, finance, accounting, etc. But also a couple million bucks of rental income related to subleasing of the company HQ. Per their 2019 10-K: "The change was primarily due to a $3.1 million increase in compensation expenses, a $0.8 million increase in professional service fees, and a $1.5 million increase in depreciation expense mainly due to owning our home office building since August 2018, partially offset by a total of $2.6 million in savings from additional lease income and less rental expense."
 
The rental income has the effect of reducing reported G&A (i.e. it's netted against expenses). So my first question for you is as follows: if you firmly believe development expenses that aren't related to acquiring new pets are justifiably excluded from IRR calculations, how are you comfortable with several million dollars of sublease income that's clearly not related to acquiring subscription pets benefitting IRR?
 
Next up is their pet-food VIE. Also from the 10-K: The Company has also entered into a series of agreements to provide ancillary services to the variable interest entity at cost. The Company provided $1.2 million and $1.4 million of these services for the years ended December 31, 2020 and 2019, respectively, which were recorded against its operating expenses.
 
So TRUP provides back office support to the VIE and reduces its reported opex to account for the compensation for providing the services. 
 
So the next question is the same as the first: Would you bucket this in line with "development expenses" as being rightly excluded from IRR, or are you OK with the company getting the tailwind from the expense reduction?
 
Now here's where the situation becomes a bit more nefarious. The VIE has received a total of $9.5 million of funding from TRUP, including $7.0MM of preferred capital and $2.5MM from a line of credit. Think for a minute about what's going on here: the company pushed $9.5MM of cash down to another legal entity, and now reduces its reported OpEx for services provided to the VIE, with the payments being made with money TRUP used to finance the VIE. Money coming out of one pocket and right into the other. 
 
Third question: Do you think this is an accounting shenanigan?
 
Lastly, management knows PAC is getting out of hand and pulled a fast one in the first quarter to make it look like they've got things under control. Aren't you the slightest bit curious how they're going to hold PAC at $280 for the balance of this year in an increasingly competitive environment?
 

Management casually slipped in the following comment during the earnings call: "We expect stock-based compensation to be around $6-$7 million per quarter for the remainder of the year." Coupled with the $8.4 million of SBC already booked in 1Q'21, TRUP is on track t

#171: Rebuttal To Some Trupanion Hate $TRUP; Discussing the Toxicity Of Twitter $TWTR

NEW PODCAST
Hey All! I’ve started a second show completely devoted to the field of Ontology which is another huge passion of mine. Please check out The Eric Scheien Podcast which is an ontological podcast where I break down distinctions of human consciousness as an access to enhancing performance.
NET NET HUNTER
This episode is sponsored by Net Net Hunter. If you’re interested in finding high-quality stocks trading at fractions of liquidation value – this research service is for you. I personally use this service at my firm to help me research tiny and obscure net-net stocks all around the world. Using Net Net Hunter comes out to way less money than hiring an analyst to do the exact same thing manually. It’s a service I love and I am proud to be able to offer this service to my listeners. If this is something you’re interested in, please click here.
Summary
Evan Bleker is a professional investor who has built his track record by buying high quality net net stocks. When not researching stocks, he focuses his time on helping small investors learn the strategy so they can earn great returns.
Evan manages two investing websites: Net Net Hunter and Broken Leg Investing.
Net Net Hunter
Complete guide to net net stocks
Broken Leg Investing
Deep Value Guide
Evan discussed Warren Buffett’s net net investing practice during his partnership. Further resources available here:
You can follow Evan’s portfolio performance here:
You can sign up for his free newsletter on the Net Net Hunter home page.
 
Show Notes
1:06 - What is Westell (WSTL)?
2:24 - Estimating liquidation value
3:07 - A simplified approach to finding high quality net-net stocks
3:55 - The 5G rollout
5:10 - Potential catalyst
5:26 - Dark Companies; The new SEC rule
8:57 - Westell quarterly update

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If you like The Intelligent Investing Podcast, please consider leaving a rating and review on Apple Podcasts. It takes less than 30 seconds to do and makes a huge difference! You can also join the Facebook page!      
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Disclosure: Eric Schleien and some SMA clients of Eric Schleien through GSCM own shares of WSTL. Nothing here is investment advice. Do your own due diligence.

#170: Westell; A Ben Graham Net-Net; Evan Bleker

NEW PODCAST
Hey All! I’ve started a second show completely devoted to the field of Ontology which is another huge passion of mine. Please check out The Eric Scheien Podcast which is an ontological podcast where I break down distinctions of human consciousness as an access to enhancing performance.
NET NET HUNTER
This episode is sponsored by Net Net Hunter. If you’re interested in finding high-quality stocks trading at fractions of liquidation value – this research service is for you. I personally use this service at my firm to help me research tiny and obscure net-net stocks all around the world. Using Net Net Hunter comes out to way less money than hiring an analyst to do the exact same thing manually. It’s a service I love and I am proud to be able to offer this service to my listeners. If this is something you’re interested in, please click here.
Summary
Today’s interview guest is Trey Henninger where discuss a recent update on Solitron Devices (SODI)
Trey Henninger runs the blog and podcast, DIY Investing. Trey is a private value investor focused on microcap and dark stocks in the United States. His focus is on high-quality companies with predictable durable earnings where management has skin-in-the-game. Trey runs a concentrated portfolio. By focusing on small companies, Trey hopes to find overlooked compounders at value prices. His favorite opportunities have a market cap below $50 million.
 
RESOURCES
My Book on Amazon
Alex Bossert's VIC writeup on Solitron
Trey Henninger's Stock Thesis on Solitron

Connect With Trey Henninger

Twitter
Blog
Spotify
Apple Podcasts
YouTube
HELP OUT THE PODCAST





If you like The Intelligent Investing Podcast, please consider leaving a rating and review on Apple Podcasts. It takes less than 30 seconds to do and makes a huge difference! You can also join the Facebook page!      
You can subscribe to the podcast on the following platforms:
Apple Podcasts
Stitcher
TuneIn
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iHeart Radio
YouTube



GET IN TOUCH WITH ERIC SCHLEIEN
Facebook  |  LinkedIn  | Twitter  | YouTube | GSCM | Instagram
Email: IntelligentInvesting@gmail.com
Disclosure: Eric Schleien and some SMA clients of Eric Schleien through GSCM own shares of SODI. Nothing here is investment advice. Do your own due diligence.

#85: Coronavirus Investing Series, Part 4 | Braxton Gann | Shipping Companies

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