PABRAI NEW DEEP VALUE BET: AMR STOCK (3X EARNINGS?)
ฝัง
- เผยแพร่เมื่อ 15 พ.ค. 2024
- In this video I walk through the latest change in Mohnish Pabrai's U.S. investment portfolio and his large bet on Alpha Metallurgical Resources (AMR stock) which trades at ~3x FCF.
Pabrai's Dakshana Foundation: www.dakshana.org/who-we-are/
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great video as always, Daniel! but pls. stop saying 'I bought a stock with 300% upside...." :D
How else is he supposed to make money? Doyou work for free? This is all part of the youtube grift. They put in time and money into producing these videos and you all are too cheap to even buy youtube premium, let alone sign up for his group or donate.
@@jshawney3355 clicks = money smarta.....
This aged very well.
Great video, very interesting idea. I am also a great fan of Mohnish, so you already had me with the title. AMR looks very interesting, Mohnish has referenced the "Cannibal Framework" for supernormal returns several times in his talks, meaning you should look for companies that over time "eat themselves", i.e. buy back the majority of their own shares. I could probably not get myself to buy into it at this level however, given the cyclicality and the huge run it had in the last years. But probably a good name to keep in mind, and probably a no-brainer buy in case we enter a deep recession/severe economic carnage and the stock gets clobbered.
Hi there, I've subscribed to your channel. Just wondering how was the fundamentals of AMR in 2020 when the stock price was one digit for some time before it shot up to the moon, about 200 times. Imagine putting a lot of investment during that time...
I wonder if he still holds Prosus (Tencent)
Just sold micron and went in on AMR - Shameless Cloner 👬
Interesting 13f season so far. Are you planing to cover garrett motion. Klarman and Marks bought in
yes, this one should definitely get on our study list!
Good idea!
thank you
I got in AMR at $150ish. Pure play on stock buybacks. Thats the thesis
BAM is a way to go
Regional Bank KEY had market cap / operating cash flow of 2, with 7.44% dividend. Is it value or value trap?
The dividend yield does not tell you…
There has been a secular decline of regional bank stocks; pls look into the well capitalized ones only & look closely into the bank's asset portfolio before investing in regional banks; even the best like FRC have been bankrupted with the increase in rates
Is this a cyclical? It seems the price (which has exploded) is now linked to the repurchase programme, instead of the fact that the company's future is tied to coal prices/steel/global economy. So, is it still a cyclical? I don't know.
Few if any of us are even in the same league as Monish. There's no shame in sitting it out if it makes no sense. There are no called strikes in this game. And even these super investors get it wrong 2 out of 3.
My patience has been rewarded. I have been an AMR shareholder for almost 2 years. Patiently waiting for the market to catch up to me. **sigh**
If I think about it, you could have worse problems! ;)
I don't understand the "cheap" argument for these coal companies. They look cheap on a trailing basis because they're coming off a peak cycle. Forward expectations are negative growth. They already 10x'd since 2020. What's the long term outlook on coal? Charlie Munger is weeping...
Coking coal is primarily used for steel production, do you really think that steel production is going anywhere?
@@nevillekeithlow resolution vs high resolution analysis
It's literally a play on stock repurchase. From March until the end of July outstanding shares went from 18.5 million to 13.6 million shares. Coal price can drop but EPS will keep going up due to massive buybacks.
@@nevillekeith Well, AMR was trading at $3 a share only 2 years ago if my memory doesn't betray me.
Do you really wanna pay $180 a share for that shit in current market conditions?
in the bear case, if a recession hits, coal prices half and earnings drop to ~$300mil you still get a 12% earnings yield with few new entrants into the market (competition leave the market and people invest less when coal is low)
Then assuming they use that money to return capital to shareholders you can still generate great returns in a bear market especially since there’s no debt.
In the bull case investors expecting a recession may make them more hesitant to invest in coal production allowing AMR to generate supernormal profits for a few more years before prices possibly drop. This could result in a quick re-rate by the market in the next few years
Seems like a classic low downside high upside. You would just want to make sure there’s good long term tailwinds for met coal.
Am I missing something?
Future earnings are projected to decline. Forward PE will be 10x FY24 EPS. Perhaps if price declines 50% from current price, can be a buy
So in the bear case if a recession hits, coal prices half and earnings drop to ~$300mil you still get a 12% earnings yield with few new entrants into the market (competition leave the market and people invest less when coal is low)
Then assuming they use that money to return capital to shareholders you can still generate great returns in a bear market especially since there’s no debt.
In the bull case investors expecting a recession may make them more hesitant to invest in coal production allowing AMR to generate supernormal profits for a few more years before prices possibly drop. This could result in a quick re-rate by the market in the next few years
Seems like a classic low downside high upside. You would just want to make sure there’s good long term tailwinds for met coal.
If coal prices halve they likely won't be getting $300m, they would be struggling to be profitable at all
@@Ynot533Commodity companies have insane leverage on their margins. If coal prices were $400/ton, a company with costs of $100/ton absolutely coins money and has $300/ton margins, but if coal prices fall to $200/ton, the margins fall to $100/ton.
In other words, subnormal returns have happened in the past 2 years and likely wont continue in the future. The bear case you mention, once you factor in negative operating leverage makes the company less attractive than it might seem. At recession like coal prices, those companies would be selling at PEs of 30+.
People that clone have a habit of believing the ideas they copy are good then backfilling it with confirmation bias. My feel is that if current circumstances persist, the stock is good, if they dont persist, the stock is okay.
Nobody was looking at the company in 2020, but all of a sudden, after it 20x and a popular investor started putting his money into it, everyone believes it to be a good idea. History shows that this type of behavior is the exact thing value investors try to avoid
They paid off all of their long-term debt ($600 million) and reduced share count by 23%, all because of the soar in coal prices in year 2022. Without debt, all future cash flows of the 20-year coal reserves belong to the shareholders. Hence, NOW was the time for value investors to get into this stock. Mohnish probably screened the quality of management for us, among all dirt cheap coal stocks. If you don't clone him on this stock, you probably shouldn't clone him on any other. Daniel, you did a great job in researching and presenting everything relevant for this stock in such a short time. Thank you and keep these videos coming!
All of the qualities he sees in AMR are also in Peabody.
Except Peabody isn’t as much met coal. Long Amr,btu, arch
@@chris-zc7rp I personally like that about Peabody. I use Arch for Met
any craic Daniel?
EEK, This play does not match my investing strategy. I liked the SOFI video a lot more. Good work though.
He’s tried this before with similar company
what was the restult
Teck Cominco 2008-2010. He had a fantastic result. 700%+ gains in a little over a year
I'd like to know why Pabrai has sold Micron, Seritage and Brookfield - all stocks he's pumped on various podcasts and youtube talks for the past couple of years. I suppose the fundamentals in all 3 must've suddenly done a 180 this quarter...
Pabrai is an excellent salesman for sure, but he has a track record of selling based mainlyon price action when there has been no material change in the fundamental outlook, abandoning his thesis in the process (see his Alibaba saga for a further example). His pronouncements just aren't credible anymore.
Yep.
Micron is getting fucking hammered tho by their elevated inventories and terrible Guidance. The write downs on the DRAM is not ideal. Bleeding FCF. Hard to project growth on that company. Solid balance sheet though and #1 in tech in their industry. I sold out at last earnings as well for 17% gain.
@@nickstearns4007 yes, Micron is a cyclical business.
In other news, the pope is a Catholic.
If Micron's cyclicality is what confounded Pabrai's thesis then that lowers him further in my estimation.
Agree, he has no credibility in my view. He started blocking people I followed on X who called him out on it. I won't follow jack he says.
So he's all in on a stock that went from $3.66 to $198 in 3 years?🤔
Change in price doesn't matter, value relative to price in the current moment does.
That stock was 2$ 2 years ago lmao
Coal 👎 Thanks for the video tho!
It seems to be a Dhandho investment…
Making a bet on coal prices lol.
Buy it at 2 next time 😂
Its funny to see it was trading @ $2 in march 2020. Is market too dumb not to price stock based on future prediction.
no that was when market was obsessed with Zoom and Teladoc. Markets are not rational because they are mostly done with computer algorithms.
They will stop the dividends starting 2024 just to focus on share repurchase. Fintwit community was scandalized by this but I think the stock could return value to shareholders immediately
may sell bn for amr
Makes sense if your strategy is cloning.
BN fair value today is in excess of $70 per share, with the real estate opportunities rivaling 2009 according to Bruce Flatt.
baba video please :)
more videos like this analyzing past quarter buys of famous/semi-famous investors; please do Guy Spiers next!
Is this legit or an influencer pump and dump?
Ha! This is the anti-pump channel!
@@unrivaled ok then I'm cashing out my granny's pension and going all in on every video you make. I'm going to sell my wife's boyfrirnds ass too. My wendys check
I think it’s a trap . From 13$ 2 year back to 185$ now . Not a buy . Good time to short this stock.
agreed. The big guys will sell while analysts keep their buy rating on it then the rug will be pulled under our legs and we can stuck.
How did that work out for you? Stock is up huge since this comment.
Very confusing approach, so Manish is a value investor focusing on cash flow and compounding, he has many followers who must have invented in BAM following his theory, and suddenly he sold 100% of it 😮 so how quickly will he sell out of AMR ? 🤷♂️
he is acting more like a momentum trader. That's why we can't copy these super investors. They human like us and make mistakes too.
not sure who Manish is..
I guess he is betting on that there will be NO recession? The demand for coal would be less during a recession.
Met coal like AMR yes, thermal coal probably not (used in energy)
I think this is a stock you´d ideally buy amidst a deep recession, and not necessarily at other times. Worked like a charm in March 2020. That´s the playbook with most commodities though..
The definition of value trap.
God damn Monish, this is getting worse than trying to clone Michael Burry. I'll stick with BN and Micron, thanks for the commentaries. Best of luck with AMR, Griffin and Simons got it at about 10 bucks, Drukenmiller recently sold the whole jingbang lot of it. I hope you don't get lost in them there coal mines.
Pabrai is not a value investor, he is a day trader, and apparently someone you shouldn't listen to.
to expensive, all the meat has been eaten
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I would really love to know how much work you did put in to get to this stage
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I will say this once again, Pabrai is OVERRATED, his actual performance is poor over the last 10 years.
Pabrai's ability to take wrong investment decisions is unrivaled.
says the anonymous youtube hater about the self-made investment billionaire..
I will get it if going under 180.👍🏻