The Razor's Edge

Facebook entering an election year is about as hot-button a topic as there is in the market outside Tesla. Akram's Razor has called it a compelling buy on two previous podcasts this year, and after the company sold off on its earnings, it seemed good time to revisit the story in full. With comparisons to Amazon and Google, as well as news media and the inevitable diversion into the issue of political ads, we try to tease out the case for Facebook.

Topics Covered

1:30 minute mark - Is Facebook a consensus buy despite the sell off?

9:00 - Pulling in Amazon as a proxy

14:15 - Amazon, Facebook, Google and the tech conglomerate benefit or discount

18:30 - Facebook's PR challenge vs. their profit rush

26:30 - What is Facebook's "product"?

34:00 - Drilling into what's different about the modern tech companies vs. traditional media

44:00 - The actual effect of the scrutiny on Facebook's business - opportunity set and costs to overcome

52:30 - Finalizing the scrutiny arbitrage play, the e-commerce upside, and the $300 stock trading for $200

On January 17th, Value Investor's Edge Live spoke with Adrian Economakis, COO of VesselsValue, about the shipping markets and particular asset pricing cycles. Adrian reviewed some of the features of their research platform, which include trade analytics and a full database of all vessels and transactions. He also discussed some of the key observations from a review of asset cycle pricing across sectors. Tankers were on a run and not particularly cheap at the time, whereas there is some intriguing deep value opportunities in some ancillary shipping sectors such as Panamax Containerships and Offshore Support Vessels. 

Topics Covered

1:00 minute mark - Background of VesselsValue? What research features are available?

5:45 - How accurate have are the valuations compared to deals?

9:15 - Which asset classes are the most depressed? Deep value plays?

20:30 - Views on tanker asset values versus historical levels?

25:00 - Discussion on demand indications in the market.

30:00 - Vessel tracking models- storage impact?

31:30 - What are the COSCO ships doing? Laid up? Storage?

34:00 - IMO 2020 market impacts thus far? Scrubber installations?

39:30 - Specific scrubber metrics and valuations for IMO 2020?

44:10 - Any other risks or weird activity to watch out for?

46:00 - Commentary on the latest VLCC resale levels ($105-$107M)?

In a continuation of the first ever Virtual Investor Forum on Value Investor's Edge, J Mintzmyer hosted Svein Harfjeld and Trygve Munthe, co-CEOs of DHT Holdings (DHT), on January 16th, to discuss the VLCC markets and their current scrubber program and capital allocation priorities. They reiterated the strong prioritization of dividends while also ensuring the balance sheet remains very conservative- even targeting the potential for zero net debt in the future.

Topics Covered

1:30 minute mark - How is IMO 2020 impacting the markets? Any surprises? 

3:30 - What fuel spreads are you seeing? Expectations on forward moves?

5:00 - Current progress of the scrubber program? 6 ships still deferred?

8:00 - Any indications of a 2nd wave of installations? Doing more?

9:15 - How long will it take for you to install the last 6 scrubbers?

11:15 - Any pickup in HSFO storage? Are you participating in this market?

12:45 - Any indications of COSCO sanctions impact? Recent changes?

15:00 Why would the trade deal potentially be positive for DHT?

16:45 - With regards to the recent weakness, what are you seeing?

19:30 - Some of your top concerns in the market into 2020?

21:45 - Current capital allocation priorities?

24:00 - Target leverage? Down to zero net debt?

26:30 - How will the convertible notes factor into your structure?

27:45 - Are investors missing anything in these markets?

29:45 - Thoughts on the charter market? Willing to take cover?

31:45 - Standard reporting timing for Q4-19? Early February?

Pinterest has been one of the many 2019 IPOs to underwhelm in public markets to date, but there is an interesting growth story here. Filling a more specific user need, Pinterest could offer a more sustainable growth approach than other social media firms. The question is whether it can escape the example of Twitter's trajectory, and whether it can withstand the perennially looming juggernaut, Facebook.

Topics Covered

4:00 minute mark - What's your gut take on Pinterest?

6:45 - The curse of Twitter

10:45 - How does the Twitter problem play out for Pinterest?

12:45 - Instagram as e-commerce vs social.

15:45 - PINS vs. SNAP in terms of targeted advertising

19:30 - What are investors waiting for with PINS?

25:00 - Don't the numbers show that they have room to grow?

34:00 - The threats of Instagram and Whatsapp and the cautionary tale of YELP

46:00 - Lack of engagement in Pinterest and its effect on investing

55:00 - The bear case

As part of the first ever Virtual Investor Forum on Value Investor's Edge, J Mintzmyer spoke with Anthony Gurnee and Paul Tivnan, CEO and CFO of Ardmore Shipping, about the MR product markets and IMO 2020 implementation. We discussed company specifics as well including earnings potential and capital allocation priorities.

Topics Covered

2:10 minute mark - Start of discussion: Overall market impacts, any surprises?

3:35 - Are the markets topped out or room to rise further?

4:55 - What are the economics of an MR scrubber?

8:25 - Are your ships ‘eco’ specs? Fuel savings?

9:15 - Life expectancy of product tankers and your fleet?

10:55 - What sort of discount do older ships earn in today’s market?

12:10 - Are you seeing strong rates in handysize ships?

14:10 - Have you seen new routes developing?

16:40 - Any direct signs of fuel contamination?

20:55 - What sort of storage demand have you been seeing?

21: 55 - What indexes should investors be watching to gauge rates?

24:35 - Have you hedged any of your fuel costs?

25:55 - Current earnings and dividends at $20-$25k TCE?

27:10 - Impact of Middle East tensions?

29:35 - What are your current capital allocation priorities?

30:25 - Any newbuild or secondhand interest? Upside to assets?

34:25 - Any merger & acquisition opportunities in this market?

36:10 - Are investors missing anything in the market?

The market has seemed to be on an up and to the right path, but underneath there's been a surprising amount of churn. Large-cap growth stocks especially have moved suddenly on unclear reasoning, moves that seem skittish amidst a bull market. This may just be a sign of late-cycle behavior, or it may be a source of opportunity for the nimbly patient investor. We discuss several tech stocks and provide examples of what is going on.

Topics Covered

2:00 minute mark - Setting the scene on this market

10:45 - The whiplash effect and how this affects relative valuation

13:15 - Is long term investing in trouble?

17:30 - ZOOM, WORK, DBX as long-term examples of this phenomenon

28:00 - Finding the right pair trade... harder in this market?

35:00 - The general risk climate in the market

49:00 - Apple (AAPL) and 5G

54:15 - Given the issues, how are you going to trade for the year?

1:00:00 - Streaming vs. SaaS in terms of valuation

1:09:00 - Will there be a rush back into growth stocks in 2020?

Oystein Kalleklev, CEO of Flex LNG (FLNG), joined Value Investor's Edge live to discuss the overall LNG shipping markets, US-China potential, and IMO 2020 impacts. We discussed the various types of vessel propulsion technology, reviewed their capital allocation priorities, and pressed their charter vs. spot strategy. This conversation is relevant for anyone with interests in the LNG sector including GasLog (GLOG), GasLog Partners (GLOP), Golar LNG (GLNG), Golar LNG Partners (GMLP), and Teekay LNG Partners (TGP). Some of the US-China information might also be relevant for those interested in LNG export infrastructure including Cheniere Energy (LNG), Energy Transfer (ET), and Tellurian (TELL). 

Topics Covered:

0:55 minute mark - Start of discussion- Market review: LNG sentiment now terrible?

3:25 - What market differentials exists between modern and older carriers?

7:15 - Precisely what sort of premium can investors expect to see?

8:45 - Any clear impacts or benefits from the US-China 'Phase 1 Deal'?

12:55 - Do steam propulsion LNG carriers have a future?

16:25 - Any major new technologies on the horizon? 2030 carbon reduction? 

21:25 - What about TFDE propulsion? Is there a clear future for these? 

25:10 - Are there any direct impacts coming from IMO 2020 regulations?

29:50 - Are you planning to increase your charter coverage into 2020?

34:45 - What are your capital allocation priorities with extra free cash?

39:15 - Will dividends be closely tied to earnings going forward?

Craig Stevenson, CEO of Diamond S Shipping (DSSI), and Kevin Kilcullen, CFO, joined Value Investor's Edge last Thursday, December 12th, to discuss the product tanker and Suezmax crude shipping markets ahead of pending IMO 2020 regulations. We reviewed capital allocation priorities and why they believe their stock price has been underperforming, and what they plan to do going forward. This conversation is relevant for anyone long the product tanker or the crude tanker sector, including Ardmore Shipping (ASC), DHT Holdings (DHT), Euronav (EURN), Frontline (FRO), Navios Maritime Acquisition (NNA), Nordic American Tankers (NAT), Scorpio Tankers (STNG), Teekay Tankers (TNK), Torm plc (TRMD) or Tsakos Energy Navigation (TNP).

Topics Covered

0:45 minute mark - Start of discussion- Market review: any IMO 2020 impacts

2:25 - Product rates are lagging crude, what is driving this separation? 

5:25 - Should we expect a significant spike in rates? Any disruptions yet? 

7:55 - DSSI trades at a significant discount? How to address PE overhang? 

11:20 - How is the market shaping up for product/crude versus Q3 guidance? 

16:10 - Any new charters? Looking for cover here? Current 1-2y charter rates? 

18:35 - Any desire to add additional scrubbers to the Suezmax fleet?

22:25 - What trade flows are we seeing with MGO and VLSFO? Sources? 

27:15 - What efforts can DSSI take to reach to peer valuation levels? 

29:45 - How do you view capital allocation priorities? 

32:25 - Tackling 2021 maturities yet? Timing on those? 

35:35 - How is management compensation structured? Fleet growth? 

37:35 - Is DSSI available for sale at the right price?

Greg Zikos, CFO of Costamare (CMRE) joined Value Investor's Edge to discuss the containership markets and specific company prospects and capital allocation priorities. This interview and discussion is relevant for anyone with containership investments or interests, including Capital Product Partners (CPLP), Danaos Corp (DAC), Global Ship Lease (GSL), Navios Maritime Containers (NMCI), and Seaspan Corp (SSW). 

Topics covered

1:25 minute mark - Market review: Strong rates vs. Trade War Concern

5:45 - What is your scrubber plan for IMO 2020? Approach for capital spending?

9:45 - What are the biggest risks/concerns for this market?

12:15 - How does the supply-side look? Concerned about newbuilds? 

14:15 - Have you seen any interest in LNG-fueled ship transactions?

16:10 - What is the most attractive area to invest in for containerships?

18:35 - What are your current leverage levels and long-term targets?

23:15 - What are your priorities for capital allocation? Dividends? 

26:35 - Ready to raise the dividend yet, or need more growth? 

28:55 - How are the longer-term charter markets shaping up?

Akram's Razor was a notable bear on Nvidia in 2018 before closing a short position. Recently, he switched from the sidelines to becoming an owner of shares and a bull. We discuss what changed with the company over the past year, how it's proven itself, and what may be ahead.

Topics Covered

2:00 minute mark - revisiting the short case

12:30 - NVDA's competitive position in artificial intelligence

23:00 - Expanded advantage in artificial intelligence, with the USPS deal as an example

33:00 - How Nvidia's moat plays out for new potential entrants

38:00 - The change in the valuation picture

47:00 - How crypto wreaked havoc on understanding Nvidia's gaming segment

56:00 - The structural questions in the gaming segment

1:11:00 - Mellanox and its import/fit with Nvidia

1:19:00 - Has management regained its credibility?

1:34:00 - Applying a lens to management's views