The Razor's Edge

After the Disney podcast we recorded last Friday and posted yesterday, Akram's Razor and Daniel Shvartsman continued to discuss the macro environment and the strange place we're in.

Disney is considered as blue-chip as it gets, but when you break down its famous flywheel - different business lines that all flow together to create the greatest diversions in the world - there's a lot of trouble spread around. Theme parks, box office, live sports, advertising are all under pressure - is Disney + enough to make up for that? We discuss the outlook for the entertainment company.

Topics covered:

2:30 minute mark -The Corona bear ETF

7:30 - The flywheel is stuck

12:30 - Long-term effect on consumer behavior in travel

17:00 - The significance of Bob Chapek's theme parks experience

25:00 - Cruise lines and international flags

28:00 - Whither (wither?) the box office?

36:00 - Box Office as marketing

41:00 - ESPN - the wild card

56:00 - Disney+ - the ace in the hole?

1:01:00 - The next WFH play

1:09:00 - The diversionary business model in a diversionless world

The last time J Mintzmyer and Value Investor's Edge hosted a virtual investor forum featuring industry analysts, management teams, and investors, all the way back in January 2020, it was like another world. IMO 2020 was still the buzzword, post New Year cyclicality was driving behavior, and coronavirus looked like it was a local issue in China. Meanwhile, a virtual investor forum proved to be quite ahead of the curve.

A lot has changed in two months. So, last week Mintzmyer and team hosted 15 guests ranging from industry analysts to investors to management teams, with a look at how the shipping situation has changed. The second public episode features Teekay LNG Partners' (TGP) management team, namely CEO Mark Kremin and CFO Scott Gayton. They discuss how their capital allocation looks under the current climate and whether there are any counterparty risks investors should watch out for.

Topics Covered

2:00 minute mark - Direct Coronavirus impacts to current work environment? 

5:00 - Any direct COVID-19 impacts to TGP itself? 

7:15 - Any fundamental changes for LNG shipping? Oil price war impact? 

9:00 - Any shift in longer-term growth projects yet? Qatar plans? 

10:45 - Concern for counterparties? Force majeure risk?

14:30 - Any exposure left to non-investment grade counterparties? 

18:30 - Additional ‘deep dive’ into contracts regarding force majeure? 

21:00 - How has this market shifted capital allocation priorities? 

24:00 - Reiterating full dividend stability at $0.25/qtr?

25:15 - Opportunistically repurchasing units here? Higher volumes? 

27:00 - Is the NOK bond market still open? Revolver extension? 

30:15 - Any interest in repurchasing the preferred equity? 

33:45 - Any interest in consolidation or equity plays in other firms? 

34:30 - Midsize LPG rates holding up? 

36:00 - When do forward LNG rates start to matter? 

38:00 - Asking for a ‘full pledge’ to keep the dividend regardless of price.

As the coronavirus bear market continues to roil investors, we talk about what effect its had on the tech sector in general. Is the bubble over? Will the Nasdaq be a safe haven and a future outperformer? We discuss the impact already felt in the market and where things might go.

Topics Covered

3:00 minute mark - The seismic shift

6:00 - Change in valuation approach

12:00 - Can the Nasdaq continue to outperform

19:00 - Risk assessment

25:00 - Owning market performance and the loss of margin of safety

34:00 - How ot assess going forward

39:00 - Potential sectors to invest in

48:00 - Are we at a divergence?

56:00 - Does a safe haven now sacrifice future growth?

1:03:00 - The flattening of volatility and the natural reaction

1:09:00 - The longer-term impact

1:12:00 - Close the market?

The last time J Mintzmyer and Value Investor's Edge hosted a virtual investor forum featuring industry analysts, management teams, and investors, all the way back in January 2020, it was like another world. IMO 2020 was still the buzzword, post New Year cyclicality was driving behavior, and coronavirus looked like it was a local issue in China.

A lot has changed in two months. As Mintzmyer and the VIE team gather a new round of participants for a COVID-19 and Oil Price War focused forum this week, one of the themes is how that situation has changed. And there's no better place to start than with International Seaways (INSW). CEO Lois Zabrocky and CFO Jeff Pribor took part in the first forum - it was our most recent VIE episode posted - so it offers an easy compare and contrast.

Topics Covered

2:00 minute mark: What is the immediate impact of COVID-19 to your markets? 

3:15 - How much follow-on activity is coming out of China? 

4:45 - Any non-traditional routes developing due to the oil price war? 

6:00 - How does INSW benefit from this market?

8:00 - Is the Suezmax market benefitting from this strength? 

10:45 - How is the Panamax market performing now? 

12:00 - MR product tanker market update? 

13:45 - Any indications of potential product market storage? 

14:45 - Have you adjusted your operations, shoreside and at-sea for COVID? 

17:30 - IMO 2020 transition and scrubber update? 

21:15 - Current timeline of scrubber installations in China (60 days!)

22:30 - Can you delay or back-out of scrubber installations? 

25:00 - What is your current and target balance sheet leverage? 

28:00 - Restrictive covenants in the current debt facility for repurchases? 

29:45 - Commentary on dividends and share repurchases?

Elliott Management waged a short-lived and a successful activist campaign against Twitter, at least from the perspective of getting the company to respond. While the long-term results and the fate of Jack Dorsey as CEO are still unclear, we discuss whether Twitter's future is appealing for shareholders, what could actually be done to fix Twitter, and why this might not be the lay-up it seems.

Topics Covered:

3:00 - Activist shareholders... Elliot's involvement.

4:30 - Is the goal solely to remove Dorsey?

9:30 - What's wrong with Twitter?

15:00 - Not growing fast enough given its exposure

23:30 - About Scott Galloway

26:30 - Should/shouldn't Twitter be more like Facebook?

29:30 - Strong user base that doesn't like change

33:45 - What do you think is going to happen with Twitter in the next weeks and months?

38:00 - What would you do in your first year as CEO of Twitter?

48:30 - Facebook excels at gaining attention, how can Twitter do this better?

53:00 - Twitter has a narrower appeal than Facebook.

1:01:30 - What can a full time CEO do? 

1:05:00 - Who would buy Twitter? How to add revenue?

1:23:00 - Buy at this price?

Four different forces combined to create a big sell-off last week, and then a jagged but strong rebound this week. There's of course the spread of the coronavirus, COVID-19. There is the Democratic primary in the US and what it foretells for the Presidential election in November. There is the, ahem, healthy valuation of the stock market, poised at all-time highs before the 7-session sell-off. And there's the role of the Federal Reserve, both in setting interest rates and in providing liquidity to the markets. We try to break down what matters and what is transient here, while conceding that uncertainty is a big part of the overall outlook.

Topics Covered

3:00 minute mark - How are you sizing the current market correction? Does this change your stance?

6:30 - Once you figure out your starting point how much does the virus matter?

11:00 - Is there a risk of market contagion?

20:00 - Was repo buying necessary?

21:30 - Has there been a fundamental change in the market such that it won't bounce back this time?

29:00 - NVDA as an example

31:45 - Have you made changes to your exposure?

40:00 - Does something like this week change people's perspectives?

47:00 - How do you evaluate a "drop" vs a recession?

1:00:00 - The election from a markets perspective... general politics.

J Mintzmyer of Value Investor's Edge Live spoke with Lois Zabrocky and Jeff Pribor, CEO and CFO of International Seaways (INSW), to discuss their views on the tanker markets and IMO 2020. This followed on INSW's investor day in January, and comes in advance of the company's Q4 earnings report.

Topics Covered

1:15 minute mark - Any surprises or different impacts in the markets?

3:00 - Impact from the lightering business? Additional EBITDA?

5:00 - Rate and fixture guidance? Old VLs doing well, Aframaxes poor?

7:45 - Difference between spot and TC fixture guidance?

8:45 - How do today’s rates compare to last year’s levels?

10:00 - Anything else impacting the market? Just seasonality?

12:45 - How are the Suezmax and Aframax spot markets doing?

13:30 - Priorities for cash flow allocation post-refinancing?

16:30 - Plans for INSW-A baby bonds? Call this summer?

19:15 - How do you balance dividends and repurchases now?

23:30 - Thoughts on current NAV range? How far underneath?

27:00 - What are some of the top risk factors in this market?

31:00 - If China imports from US, what sources are they replacing?

36:45 - Current status of the scrubber program? Any additions?

40:00 - All 2020 capex ($70M) internally financed from cash?

40:45 - More risks in the market which aren’t getting reviewed?

42:30 - Willing to look for time-charters? Where are they at now?

49:15 - Viewpoints on FSO joint-venture? Core to business?

53:00 - Closing comments- MR market, any resilience there?

PagerDuty was a screaming short last summer, an example of SaaS's over-competitive landscape and trading at a high valuation to boot. But with half the valuation and a stronger competitive advantage than expected, has the page turned for this tech company? Akram's Razor explains why he's taken the other side of the trade, and why the moat for PD has held up versus new entrants.

Topics Covered

3:00 minute mark - What does the competitive landscape look like?

5:30 - What is PD's space exactly?

9:15 - How wide a moat?

11:00 - Why are you long?

17:00 - Are they attracting new business?

20:00 - Pricing discussion

25:15 - Have competitors had any success at slowing down PD?

30:45 - Net dollar retention going in the wrong direction?

39:30 - What are you looking for in terms of the stock at this point?

42:00 - Acquisition candidate?

54:00 - Why own "value SAAS"?

On January 14th, Value Investor's Edge Live hosted Robert Hvide Macleod, CEO of Frontline (FRO), to discuss the crude tanker markets and their balance strategy to IMO 2020. Frontline is one of the largest tanker operators in the world and is backed by shipping legend John Fredriksen. FRO is set to pay large dividends in this market and they have maintained a premium valuation ahead of peers. Robert discusses the various tanker segments and his overall viewpoints and areas of focus into the new year.

Topics covered:

0:50 minute mark - Start of discussion: How is IMO 2020 impacting tankers? Any surprises? 

3:00 - What is your current scrubber uptake status? Global fleet percentage? 

4:30 - What is the current spread dynamic? Any plans to expand scrubbers? 

7:15 - Will the time charter markets follow the strength in the spot markets? 

10:00 - What is driving Suezmax strength and Aframax strength? 

13:45 - Will eco-vessels improve your TCE results? How much? 

14:45 - Confirm fleet splits of scrubber installations? 

15:45 - Any broad market concerns for tankers? Why are stocks stalling? 

17:30 - What are your capital allocation priorities besides the dividend? 

19:15 - FRO trades at a premium, why is that a potential benefit? 

22:00 - What is your target leverage? Planned split between spot and TC? 

25:45 - Why is LR2 weak compared to the strong Aframax market? 

28:00 - What are some of the key risks and uncertainties in the market? 

31:00 - If placing a newbuild order, what type of design? LNG? Scrubber? 

34:00 - How long are yards backed up with scrubber conversion work? 

35:15 - Any potential for consolidation in the tanker sector? Frontline role? 

36:00 - How many ships are laid up for COSCO sanctions? Potential impact? 

40:00 - What is the market missing right now?