top of page

Weekly rollup | Oct 03-09 2022

Stocks Mentioned: Cheniere Energy (LNG), Kinross Gold (KGC), CF Industries Holdings (CF), Lennar Corporation (LEN), Global Ship Lease (GSL), Zim Integrated Shipping (ZIM)


For ongoing coverage, follow me on my Telegram page


October 03 2022


Stopped out of the LNG short.


October 04 2022


Gold appears to be turning. Kinross Gold (KGC) has broken out from its base and looks the strongest technically. I'm not looking to buy any breakouts (or short any breakdowns) in this wild market. As with BW LPG and Avance Gas, I'm just putting this out in case these fit your trade parameters.


October 06 2022



Fed pivot is not likely unless conditions deteriorate enough to warrant it. The short positions on LNG, CF and LEN got stopped out. The market is choppy and it's best to just let things settle and not get whipsawed. There will be better trading opportunities ahead. Patience.


October 07 2022



Today's historic low unemployment numbers put paid to any notion of an early Fed pivot. 75 bps in Nov and 50 bps in Dec seem to be baked in the cake. Fed Funds futures are pricing in 4.6% by 2023. As for oil, I don't buy the argument that energy can climb higher during a global recession.


October 08 2022


Global Ship Lease (GSL) today announced that its adjourned Annual Meeting of Shareholders was convened on October 7, 2022, but failed to reach the requisite quorum.


Given the passage of time from the record date of August 2, 2022 for determining shareholders entitled to vote at the Annual Meeting, a new record date and meeting date will be determined. Notice of the rescheduled meeting and proxy materials will be provided to shareholders of record as of the new record date when available.


This was the company's second attempt to conduct its AGM, to no avail. My inference from this is that prior shareholders sold off long ago and no longer care. Not surprising, given that management is just piling up the cash on its balance sheet and refusing to give it out to the real owners of the capital. I was a dyed in the wool value investor in my first few years as an analyst. I changed my approach because after analysing companies like GSL and following them for years, I began to understand the pitfalls of that style and why the so-called "intrinsic value" doesn't translate into market value.


It's why closed ended funds can trade below NAV for years and years. Not because the market doesn't care about NAV, but because the fund managers refuse to wind down the fund and close the gap. Why bother when you can milk shareholders for 2% of NAV as expenses each year?


With companies like ZIM, DAC and GSL, at some point, there will be a change in management thinking about engaging in buybacks. When it happens, the move up will be swift. Or a PE firm will swoop down and engage in a hostile takeover, using the company's own cash as a lever. The 1980s (a period when high interest rates were affecting stock valuation, just like today) was the heyday for this approach. These are possible scenarios, none a slam dunk. Value stocks can just chug along hugging the bottom for years.


I haven't completely given up on value, which is why I continue to hold ZIM, now trading at ~50% of cash on balance sheet. But I wouldn't load up my account with value stocks alone, because that approach generates a very poor IRR and leads to massive drawdowns along the way, i.e. it is a poor strategy if you value your risk-adjusted return.

bottom of page