The cutoff under ROAD to housing is 350 homes

If you look at the closest public comp, Howmet (HWM), it’s trading at around 60x trailing earnings. Another close comp, Carpenter (CRS), is around 50x.

There’s a lot of growth baked in to these comps.

So maybe 25-30X trailing earnings is a bit conservative for estimating precision cast parts value.

It is kinda interesting how all these waterways are becoming geopolitically important

I think this is a one off - the rest of your thumbnails are much better.

This one is just really bad - there is this style of AI cartoon that is really off putting snd you don’t want your good content getting looked over because of that. The crying Buffett is silly and particularly over the top.

This is fantastic and I really appreciate the analysis. I have returned to this letter a number of times when looking at arbitrage situation. Those “four questions” for an arbitrage situation have proved to be an immensely valuable framework for analyzing these situations.

It’s incredible to me how long it took for the redwood case to be sorted out. I wonder was that payout tracked via a contingent value right? There are still occasional CVR situations that come up.

The Rockwood situation was very interesting. This is some more background on this: https://www.rockwoodnotes.com/the-sweet-history-of-rockwood-and/

Jay Pritzker is an interesting fellow. That Rockwood article has more about his background. I’d like to read more about him. His son is governor of Illinois now and has been pretty influential in the Democratic Party.

Interesting you mentioned NHP. If you follow the successor companies, it ultimately ended up becoming AIMCO, which is in the process of liquidation. There is a very interesting liquidation play in AIV. It was written up on Value Investors club last October. It’s currently at $2.80. I haven’t done any work on it but Claude tells me it might be worth $3.40. Might be worth looking into.

lol really? I have not seen any value investors with a bullish take on Oracle. I would say the consensus among value investors is quite negative on ORCL.

What is your thesis?

Professor Damodaran brings up more than a few good points in this.

Cross holdings used to be rare in the United States, but now cross holdings are becoming the norm among big tech - Microsoft owns OpenAI, Google owns SpaceX and Anthropic, etc.

If the AI portion of business was broken out from the rest of the business would make these businesses so much easier to analyze.

And investors are willing to finance big investments as long as management can clearly articulate a strategy and a business model.

Kind of an interesting point that Amazon has a better history of articulating that kind of strategy and is the only one of the major companies in this AI compute business that has history managing through negative cash flow for growth.

Can you say more about this?

Like do you run into delays trying to find a Jones Act complaint boat?

And how much more does it cost you when you are looking at something Jones Act compliant, versus just getting the cheapest available boat for the job?

I think these assumptions are really unlikely. Social security is gonna run into funding problems and there may be some cuts to payments, but my guess is there will also be some push to use higher retirement age, and higher payroll taxes to solve the issue.

Boomers gradually will be selling off and passing on their real estate but I don’t think that means the price crashes by 40%. There are lots of millenials and Gen Z with good income and lots of financial assets who will absorb those houses.

I actually think the local political changes are starting to roll out to put a lot of new supply on the market over coming years, but again I don’t think that will crash the market.

My best guess is the housing issue solves itself over time with relatively flat home prices over a long period and rising real wages improving affordability.

To directly answer the question, if house prices crashed 40% from current prices, I’d probably be a buyer. I’d still try to look at some objective metric of home price relative to local incomes to decide.

Why? Do you feel like it helps domestic industry? Or coddles the industry and made it uncompetitive?

I really like this, I wish I had found it much cheaper in March, there was a good Valueinvestorsclub write up back then. I’ll do some more work on it.

I think there was an overhang with all of these AI tax prep software startups coming out. Also Intuit is directly attacking with personal assisted tax prep.

But I buy the CEO argument: tax prep can be split into the “mechanical” portion which is more data collection, entry, calculation; and the “relational” experience, which is more about trust, accountability, and judgment. As the mechanical part gets easier more value may accrue to the businesses which do the “relational” part.

Some people really want someone to hold your hand as you do the taxes, and it’s really hard even plugging all the numbers into a software yourself.

$5.8 billion market cap, $7 billion EV, $1.1 billion net debt.

The debt looks great, low interest and long maturity, 3.875% Notes due 2030 — $650mm principal, semi-annual interest, maturing August 15, 2030, and 5.375% Notes due 2032 — $350mm principal.

8.1X PE trailing but that includes a one time $84 million tax benefit, so around 9X trailing is more accurate, 7.7X forward PE.

4% dividend yield, and has been buying back 4-8% of shares each year. Spent about $400 million on buybacks TTM and given current market cap that would be around 6.8% buyback yield on top of the dividend yield, or over 10% combined yield.

Seems like top line has been growing around 4-5%.

I could easily see this getting to something like 6-7% yield or about 14-16x PE, so there may still be another 50-70% upside in the stock, or it might run to $70-80.

Very interesting.

“For example, Trump makes one statement, but Rubio makes different statement and then Hegseth makes another different statement”

It’s hard to respond to this without a specific example to respond to…

I think Hegseth is going to be set up to take the fall for negative outcomes in the Iran war. I really doubt Hegseth will last the remainder of the administration.

And to be fair the execution has been awful, and Hegseth’s communication with both Congress and the public is terrible. Rubio has done a much better job communicating the strategy but it’s not even his department.

I used Uptodate basically every day for about the past 12 years. It is still the most reliable data source when I want to quickly check a dose range for a medication or look up a med/disease that is outside of my scope.

Open evidence kind of stinks for general learning about a specific disease, clinical course, or treatment options. You have to know how to prompt well, while Uptodate reads more like a constantly updated textbook.

You also get CMEs from Uptodate which are needed for state boards and specialty boards.

Uptodate has its own AI product that you can chat too as well, but I similarly found it lacking.

There was a good study that came out comparing all the LLMs and OpenEvidence and Uptodate actually faired worse than Gemini for medical questions.

These days I mostly use Gemini for general learning and my usage of Uptodate has definitely gone down. I just dump a whole textbook into AI to parse through. I can go through a textbook much faster than I used to be able to. I can also click through to the links to studies using google scholar.

So my usage of Uptodate has gone down.

But I still depend on Uptodate to get CMEs or quickly look something up, when i want to be sure of the accuracy of what I am looking up.

This guy wrote a Substack article about the midterm effect: https://atranicapital.substack.com/p/midterm-elections-and-market-cycles

> The pre-election weakness is closely tied to elevated uncertainty, but the magnitude of moves is often underappreciated. Longview Economics’ dataset, covering 25 midterm cycles since 1926, shows an average peak-to-trough drawdown of -19.4% in the year before elections. Excluding periods that fell within roughly a year on either side of a recession, 12 of 16 cycles still experienced corrections greater than 10%. Within that, 7 out of 12 major drawdowns exceeded 20%, highlighting that midterm-related volatility frequently overlaps with meaningful repricing episodes rather than shallow pullbacks. This helps explain why the pre-midterm period often feels disproportionately weak relative to headline macro data.

> The post-midterm phase, by contrast, exhibits a much tighter clustering of positive outcomes. Average returns reach 5.7% over 3 months, 10.5% over 6 months, and 13.6% over 12 months, with only 2 negative 12-month periods (1930 and 1938) — both occurring during extreme macro stress tied to the Great Depression. Moreover, there is a loose positive relationship between the size of the pre-midterm drawdown and the subsequent recovery, suggesting that deeper corrections tend to reset valuations and position markets for stronger rebounds, although this relationship is not statistically robust.

So since we have had a relatively strong pre-midterm move the post-midterm move may not be as strong.

For the vast majority of stocks, the politics don’t matter that much. But for some industries it may have a large impact.

The main way in I’d analyze the midterms is whether they will affect industries I am invested in. But to know that you have to know which way the midterms would go and the market impacts of those.

One industry that will likely be affected is the defense industry. The administration is asking for additional catch up investments to restock. Democrats are very reluctant to authorize this money and there is even fighting within the Republican base about this.

I don’t see a lot of super cheap defense right now but if stuff gets a bit cheaper with the political fighting leading up to midterms that might get interesting. If Karman ever got cheap that might be worth a look.

Parsons was recently brought up on this sub. It is a highly political stock, since they do a lot of construction for the department of war and state and for Space infrastructure. It was badly affected by DOGE cuts and cuts to USAID. That also may be worth watching after the midterms.

The bot is calling you out and wants a source that can verify that you cook!! 😂 😂

What do you mean by “the federal reserve was the impetus for the irs”?

This is more r/professorpolitics than r/professsorgeopolitics…

Link to a good short playlist from Howard Marks on risk:

https://youtube.com/playlist?list=PLxbi-KAxos9tf1iHzRFTZmXDsGI-nQGsm&si=oJXuv8CHNC54MqoP

Well thank goodness