Commodity Adjusted EBITDA @FCFNextYear

This is why your memory stocks are down not because the price “decoupled” from fundamentals anon

I’m long some these AI stocks like the rest of you degens but my feed is currently flooded with people rationalizing that a 30-50% drawdown in some AI supply chain names make no sense because jevons paradox etc etc. I’ll make two market structure observations. 1. In cyclical industries like memory just like in commodities the stocks cannot simply be viewed as conventionally “cheap”. Stocks can lead the commodity price on the downside of the cycle. This happened in energy in 2018 when the $XOP peaked in mid-May while oil prices didn’t peak until early October but then promptly declined 40%+ by Christmas. All to say, stock prices are forward looking into perpetuity and will not always peak with/after underlying commodity prices (looking at you DRAM bulls) 2. People claiming a 30-50% drawdown is too severe are implicitly suggesting that pre-decline share prices were the efficient prices. This is hard to assert in isolation because as we’ve observed, a lot of the recent price action was driven by leveraged trading out of Korean retail. This was not fundamentals driven buying going in and an unwinding of the trade does not then necessarily represent a stock “decoupling” from its fundamentals. Retail’s ability to re-lever and buy back in will be a big part of determining if and when we can take out the previous highs.

Dudes on this website be like "My base case is believing everything management says."

@compoundpapi Is he trying to get long some $NOA.TO ?

@onecentinvest welcome to Canadian small cap investing!

@compoundpapi Yup, speaking of look at this fee reduction from BMO. Down to 25 Bps on an active product. Its truly a race to the bottom. newswire.ca/news-releases/…

@compoundpapi This generally makes sense

@compoundpapi I have no idea tbh. I never really understood how these transitions worked ie: does the investment mandate change etc.

@compoundpapi Maybe a nothingburger but, interesting to note that the new PM team for Taller's funds is the quant equity team. So, the AUM is moving from a bottom-up fundamental team to quant

@Mr_Neutral_Man The front month is down 5% but, the strip curve for crude is down far less. The very long end of the curve (24M+) is still mostly anchored and the equities respond to the full strip curve not just the front month

@compoundpapi small sample size but, this wild to me.

@taobanker I blame the K-1

@compoundpapi every one of these prompts contributes to his retirement savings

@compoundpapi behold the incremental buyer

@ShaleTier7 Bonanza Creek + Extraction Oil & Gas

@compoundpapi @buccocapital There’s also this:

BuccoCapital Bloke @buccocapital

12 months ago

Here is V2 of my company "Initiation Report" Deep Research Prompt. Serious thanks to the community for the feedback. This thing is pretty badass now. _____ I've made several updates: • No longer too positive: People rightfully called out that the previous model rated everything

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72 94 2K 387K 6K

@compoundpapi @rockcreekfreak Bullish

@compoundpapi @acorn_capital Unfortunately, my base case is that they are most likely going to learn the hard way (just like Engine did on $DND.TO) about corporate governance in Canada.

My base case is that the deal closes. In that context, $CEU.TO offers a better IRR from here b/c the deal will take some time to work through for $GFL including shareholder turnover, sentiment rebound, wait and see on integration etc. If the deal were to break, I still like $CEU.TO vs. standalone $SES.TO from here because I don't model much multiple expansion for $SES.TO from current levels. That being said, I concede that because the $SES.TO "waste" narrative has been making the rounds on X, the podcast circuit and in quarterly fund letters it could be a self fulfilling prophecy if oil prices don't side swipe cash flows/sentiment (multiple remains elevated) before they are able to do a bunch of accretive SW M&A to pivot the business. While I don't agree with the thesis, I will shoutout @LaughingH20Cap who I think has made the most compelling case for it. All of this is contingent on oil prices remaining at least somewhat constructive throughout the forecast horizon. If oil prices were to collapse I would not want to be an owner of either stock.

The $GFL / $SES.TO merger getting this contentious wasn't on my bingo card. My position is unchanged: this isn't the optimal outcome for either party. That said, $SES.TO shareholders are getting a good price today. At 11x forward (announced price) or ~10.5x using current $GFL price, investors should take their ball and go home. For continued energy beta via OFS, I'd point you to $CEU.TO, a best-in-class specialty chemicals biz trading at 9.5x that's tied to production (vs. drilling activity), much like $SES.TO's base biz. My comment below on preferring $SES.TO standalone is b/c a combo with $GFL is sub-optimal for both sides. $GFL shareholders want truly non-cyclical CFs. Adding OFS pressures the multiple by muddying the story and weakens $GFL's ability to do accretive SW M&A, especially opportunistic M&A in economic downcycles. For $SES.TO shareholders, the standalone growth profile gets watered down by the broader $GFL. That's not to say $SES.TO is a "waste" biz whose chart will grind up and to the right, as many suggest. When the next energy downcycle hits (and it will), the multiple will compress dramatically. But $SES.TO holders should be given the chance to trade around that growth profile and energy cycle volatility. My near-term view on $SES.TO is positive: the Iran situation should inject a geopolitical risk premium into oil that we haven't seen in a decade+. Layer on renewed focus on security of supply, which will point major crude and products buyers to NAM. $SES.TO's core business will benefit because it supports Canada's long-life resource base and an oil price anywhere close to US$80 is great for basin-wide profitability and will support healthy activity levels. If $SES.TO's multiple keeps grinding higher as generalists conflate commodity CFs in a constructive oil price environment with business quality, this opens the door to accretive M&A of actual waste assets and a longer-term pivot. That's the additional optionality in the $SES.TO thesis, but it requires that the oil price remains high enough for long enough. Once again, this highlights $SES.TO's exposure to energy beta.