This is interesting, Below is a chart of insider buying in WMB for the last 4 years. Now, there hasn’t been a ton of it but, the last time the folks who just recently bought more on the open market did so, was in 2020 during the COVID scare. Now they are back it again, buying in the open market at a price 2X what they paid in 2020. Think these directors have a feeling toward something? [Read More...]
Subs: Expansion
High cost cultivations are coming off the market in droves in CA. Just because you can grow cannabis in your backyard does not mean you can do it at a 100,000sft scale. You have to be able to run a business and people are finding that out now. Fortunately, Glass House grows fantastic cannabis and are first class operators. They are going to be THE major player in CA soon. The Release: LONG BEACH, CA and TORONTO, March 1, 2023 // — Glass House Brands Inc. (“Glass House” or the “Company (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), one of the fastest-growing, vertically-integrated cannabis companies in the U.S., today announced plans to retrofit an additional greenhouse to expand production at its SoCal… [Read More...]
Subs: Saturday’s Links
1- I concur with this article 2- People are noticing 3- Great article on Ackman and COVID [Read More...]
Subs: Record Year
Not too much to complain about here. The only thing I’d prefer since the business is cyclical is to bank the excess cash now and go hog wild on the buybacks when prices fall and the stock is cheaper. Given the price volatility, we could get a significant number of extra shares repurchased timing the buybacks better. The Release: TEXAS PACIFIC LAND CORPORATION ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS DALLAS, TX (February 22, 2023) – Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or “TPL”) today announced its financial and operating results for the fourth quarter and full year of 2022. Fourth Quarter 2022 Highlights •Net income of $99.7 million, or $12.95 per share (basic) and $12.94 per share (diluted) •Revenues of $152.7 million •Adjusted EBITDA(… [Read More...]
Retail Sales Suprise
“Davidson” submits: Real Retail Sales post a major positive surprise leaving many confused. Larger surprises were in vehicle and restaurant sales as economic activity continues to exit the COVID era. The analyst miss comes from taking a single month’s dip as if it is the next 12mos trend. The overall context remains economic expansion post-COVID with rising Real Personal Income supporting a shift in retail sales from goods and services that supported needs during lockdown over to those areas reflecting reopening and normalization post-COVID. At some point, investors should expect the high level of retail activity to normalize to the trend pre-COVID. Support for the expansion continues from rising Real Personal Income that remains below the trend pre-COVID. Real Personal Income remains… [Read More...]
Still Rising
“Davidson” submits: Good news is difficult for some investors betting on recession and lower rates. With this morning’s employment reports revealing stronger economic trends than expected, Household Employment Survey rises 1,016,000, Establishment Survey rises 517,000, and Wards Automotive est Jan vehicle sales of 15.74mil SAAR(Seasonally Adjusted Annual Rate) vs Dec 13.31mil SAAR, a big jump, the overall picture is far more positive than anticipated. This month the Bureau of Labor announced significant revisions and is why tracking the trend is more valuable for economic insight than any single report. Excerpts from today’s US Employment Situation report: “Total nonfarm payroll employment rose by 517,000 in January, and the unemployment rate changed little at 3.4 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains… [Read More...]
More Positive News
“Davidson” submits: Durable Goods Orders released today already in an uptrend have spiked higher. It is well known and the media has frequently headlined that vehicles and aircraft have significantly greater demand than manufacturing has been able to supply due to supply chain issues related to COVID. Today’s report underscores that perception. Transportation as a percentage of GDP at 8.4% in 2021, was below the historic 10% level-see chart. There has been heavy demand on transportation infrastructure during COVID which has held up post-COVID. Equipment needs replacing and upgrading with the lull in production during COVID. Orders for aircraft announced last year are now showing up in the data and recently there has been a surge in Class 8 truck orders. Both, industries have capacity limitations… [Read More...]
Does Data Back Recession Fears?
“Davidson” submits: It is a given that pessimism is high. It is at historic levels for some measures. The media covers the many issues daily. Retail Sales are reported as “tumbling”. Job Openings are collapsing. Layoffs are soaring. PMI collapsing The yield curve, the T-Bill/10y Treasury rate spread, has inverted to a historical level. Money funds are at record levels. Etc, etc, etc It is given that certain assumptions are believed to be true. In fact, these assumptions do not hold up to closer scrutiny. Consumer spending causes inflation Oil demand causes inflation Oil prices are a measure of economic activity as is “Dr. Copper” The Fed controls interest rates A rising US$ is negative for the US economy The Fed/the government can… [Read More...]
Subs: Overreaction
The market freaks out each time a tenant in cannabis is a bit late on rent. This is normal in any REIT in any industry and part of doing business. The reaction is just outsized in cannabis because so very few people actually understand the business. This company is exceedingly well capitalized, is 100% leased, and will rectify these issues. What is lost in the hysteria is they collect 97% of their rents. Think of it this way, Simon Properties, the largest mall operator in the US at any given time has only about 94% of its portfolio leased. IIPR collects a higher percentage of that in lease payments I’m not stressed about this at all The News: SAN DIEGO, CA – January 18, 2023 – Innovative Industrial… [Read More...]
Subs: A Sale and Insider Buying
There has been a slew of insider buying in CODI since last summer. This remains a nice income generator for us and I think as the market turns, there is also a considerable upside. I’ve toyed several times over the years with selling this but the yield is rock solid on it and they tend to emerge from times like we are in now stronger. So, I hold. The News: Compass Diversified Announces Sale of Advanced Circuits WESTPORT, Conn., January 11, 2023 — Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, today announced it has entered into a definitive agreement (the “Agreement”) to sell its majority-owned subsidiary, Compass AC Holdings, Inc., the parent company of Advanced Circuits, Inc. (“Advanced Circuits”… [Read More...]
Employment Gains
“Davidson” submits: Employment rises in both Household by, 723,000, and Establishment, by 223,000, reports. Yesterday Job Openings showed a rise as did Quits. Employment trends remain in positive trends despite the spate of layoffs in the COVID-favored issues on which has been the focus of many. Today’s positive response vs the negative response last month to rising employment suggests a market psychology shift to believing that economic activity can continue even with rising rates, at least for the immediate future. From the employment report this morning:“Total nonfarm payroll employment increased by 223,000 in December, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, health care, construction, and social assistance.“ Individual… [Read More...]
Subs: Up to 8 Dispensaries
Chairman Kazan on the stock price below. IMO this is 100% accurate: “The cannabis industry stocks rose nicely after Joe Biden’s pardoning of simple procession of cannabis and his announcement that the Department of Health and Human Services (HHS) along with the Justice Department will look at how to treat cannabis federally. Seemingly and more importantly was the anticipation that Senate Majority Leader Schumer was going to pass the SAFE Banking Act with the Hope Act by including them in the National Defense Authorization Act (NDAA). When this did not happen, stocks in the industry collapsed with many hitting all-time lows. While it is possible that the SAFE Banking Act could still pass in the Lame-Duck congress, investors’ sentiment clearly doesn’t believe it. While… [Read More...]
Subs: 31.7%
I know some folks out there are worried about this but I’m just not. Ackman sees this as a Berkshire-like vehicle that throws off cash and has fantastic tax attributes. I’m happy to continue to ride this as I think they start to grow in the next housing downturn that I expect will come next year Item 1. Security and Issuer Item 1 of the Original Schedule 13D is hereby amended and supplemented by replacing the second and third paragraphs therein with the following information: “The Reporting Persons beneficially own 15,837,529 shares of Common Stock (the “Subject Shares”). The Subject Shares represent approximately 31.7% of the outstanding shares of Common Stock, based on 49,900,872 shares of Common Stock outstanding as of October 26, 2022 as reported in the Issuer’s Form… [Read More...]
Inflation is NOT Oil’s Fault
“Davidson” submits: That crude oil prices and inflation have a correlation is long known. The issue like many misperceptions In financial thinking is which comes first and is oil causal for inflation or vice versa. The comparison 12mo PCE, 12mo Trimmed Mean PCE, $WTI spells out the reality. This is especially visible since 2002. The PCE inflation indicator includes energy prices. It is the 12mo Trimmed Mean PCE that is the Federal reserve favored inflation indicator as it smooths month-to-month spikes, hence the term “Trimmed”, making it less reactive to short-term fluctuations and more indicative of longer-term trends. The clearly visible major price spikes to $120+/BBL in 2008, the period 2010-2014 and again in 2022 are each spoken of causal for inflation. It should… [Read More...]
“Administration Desperate…..”
“Davidson” submits: The Baker Hughes Rig Count is unchanged. Harold Hamm who just completed the take-private of his Continental Energy commented on the current state of the oil industry: “This Venezuelan deal, that’s a good example of the desperation that this administration is dealing with,” Hamm said, referring to the administration’s attempts to rein in inflation at the pump. “They know what they did. They know they took the federal lands off the table,” Continental Resources’ CEO told the FT in an interview. “They know better and shame on them…?They want to put oil and gas out of business.” Crude Oil Prices Today | OilPrice.com The current pace of US crude production has remained flat nearly 6mos with SPR releases… [Read More...]
Subs: Production Up and Costs Down
This is playing out as expected. The key here is scale and quality and Glass House is getting both. The key point here is they still have plenty of expansion in the greenhouse to drive the cost per unit down lower. Patience will be greatly rewarded here… The Release: Glass House Brands Reports Third Quarter 2022 Financial Results -Reports record quarterly revenue of $28.3M, up 72% from Q2 2022 -Biomass production1 up 164% year-on-year and biomass revenue increased 180% year-on-year -Record low quarterly cost per pound of $134, down 15% sequentially2 -Gross margin of 31%, increases from 2% in Q2 2022 and more than double year-earlier level -Raised $22.5 million of new capital to date -Q4 Revenue guidance reduced to $30-$32 million -Target… [Read More...]
Oil Fundamentals Don’t Support Price Decline
The fundamentals are piss-poor is you think prices should fall based on supply-demand. The risk is for a shock higher “Davidson” submits: Rig implementation which stalled in recent months shows a small rise in oil rigs. $WTI declined below $80/BBL today. Considering consensus views of pending economic correction and the unusual rise in T-Bill and 2yr Treas rates coupled with hedging investment portfolio downside risk by selling and shorting $WTI, the conclusion one arrives at is a speculative trade has been placed for substantial decline in all markets, equities to commodities. It continues to be my best interpretation that one-sided speculation for economic decline will prove incorrect as US industrials continue their reporting well above expectations with strong backlogs for at… [Read More...]
Subs: When The Thesis Plays Out
This really did play out perfectly We bought TPL for 3 simple reasons, it was the largest landholder in the most prolific oil-producing area in the US, had little to no debt, and had a brilliant (Murray Stahl) strategic shareholder pushing for positive change. So far, so good.. Investor Presentation: TPL 11:22 Results: TEXAS PACIFIC LAND CORPORATION ANNOUNCES THIRD QUARTER 2022 RESULTS Earnings Call to be held 7:30 am CT on Thursday, November 3, 2022 DALLAS, TX (November 2, 2022) – Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or “TPL”) today announced its financial and operating results for the third quarter of 2022. Third Quarter 2022 Highlights •Net income of $129.8 million, or $16.83 per share (basic) and $16.82 per share (diluted) •Revenues of $191.1 million •Adjusted EBITDA(1) of $169.8 million … [Read More...]
Subs: Go Private?
There has been some hysteria on social media about Ackman taking the company private or merging it into Pershing. Many are posting that shareholders could “get screwed” in either scenario. Merging into Pershing is the more likely scenario. Bill has long wanted to create a Berkshire-like vehicle for investors and Pershing absorbing HHC could do it. I would not be a seller in this scenario and would be happy to go on that ride. HHC would produce a nice cash flow for Pershing to continue to invest in other companies. I have little fear in this scenario. The Results: THE HOWARD HUGHES CORPORATION® REPORTS THIRD QUARTER 2022 RESULTS Solid third quarter results driven by Ward Village® condo sales and strong MPC performance HOUSTON, November 2, 2022 – The… [Read More...]
Bottom?
“Davidson” submits: There are multiple approaches to assessing overall market psychology at crucial tuning points. Two relevant correlations, the S&P500 Net Non-Commercial Futures and the S&P 500 Daily Point Change(volatility) have an extensive history and have been reported on multiple sites. These histories from 2008 and 2000 respectively make identical points despite having different perspectives. The first, futures net positions, and the second, daily volatility, indicate high levels of pessimism and uncertainty, i.e., investor confusion on what to do, and have a history of identifying important market lows. Prices are determined by consensus market psychology but also provide feedback as a self-promoting mechanism. Those who rely only on price direction to invest amplify that direction as others join the trend believing the same. This… [Read More...]
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