1) this chart shows that a) they are good takeover candidate and b) they have leverage to falling interest rates.
2) no buyback because they are not making real money currently. However if their cost of capital fall even slightly they will have spare money to buyback shares.
3) Valid point on EC made by CEO: there is very shallow market for company's stock. Avg volume ~100k. At 20% of volume buying 5mln of shares is half a year (I know if they start buyback liquidity might probably increase, but IMO it's interesting point anyway). Selling planes to buyback shares is not valid strategy given they are already sub-scale.
4) No activist involvement - no VISIBLE I would say. Given points 2&3 - what would you expect them to do? They are kinda traped right now with 20% of illiquid company. The only viable exit strategy is through takeover. I think they are working on it (they are very quiet, probably for regulatory reasons. Chris wrote on twitter that they are cooperating with management and can't speak publicly about company). I think they are smart. Are there any other options for them to realize value that I can't see?
Overall I see it as low risk asset play, which is nice addition to portfolio. Patience is the key.
I didn't mean to imply that AVAP should sell planes to do buybacks with my attempt at being funny. Agree they are sub-scale and that wouldn't be a good idea.
I basically agree with all of your points.
When Raper/Rangeley bought the stake, I simply expected or hoped for a quick announcement/deal/plan. Maybe naive or too optimistic on my part.
From the start, this was a "play the player" spot for me. I wouldn't have bought AVAP without the activists involved. I know they still are, but I guess I don't have the patience here to wait this one out.
I am still long AVAP. Few points:
1) this chart shows that a) they are good takeover candidate and b) they have leverage to falling interest rates.
2) no buyback because they are not making real money currently. However if their cost of capital fall even slightly they will have spare money to buyback shares.
3) Valid point on EC made by CEO: there is very shallow market for company's stock. Avg volume ~100k. At 20% of volume buying 5mln of shares is half a year (I know if they start buyback liquidity might probably increase, but IMO it's interesting point anyway). Selling planes to buyback shares is not valid strategy given they are already sub-scale.
4) No activist involvement - no VISIBLE I would say. Given points 2&3 - what would you expect them to do? They are kinda traped right now with 20% of illiquid company. The only viable exit strategy is through takeover. I think they are working on it (they are very quiet, probably for regulatory reasons. Chris wrote on twitter that they are cooperating with management and can't speak publicly about company). I think they are smart. Are there any other options for them to realize value that I can't see?
Overall I see it as low risk asset play, which is nice addition to portfolio. Patience is the key.
Hey, thanks for your fast & thoughtful reply.
I didn't mean to imply that AVAP should sell planes to do buybacks with my attempt at being funny. Agree they are sub-scale and that wouldn't be a good idea.
I basically agree with all of your points.
When Raper/Rangeley bought the stake, I simply expected or hoped for a quick announcement/deal/plan. Maybe naive or too optimistic on my part.
From the start, this was a "play the player" spot for me. I wouldn't have bought AVAP without the activists involved. I know they still are, but I guess I don't have the patience here to wait this one out.
Guess Muddy isn't entirely done with Fairfax yet. They just put put this tiktok/reels-style video: https://twitter.com/muddywatersre/status/1777349072111682017
Interesting approach?
I’m not sure if I missed it but why did you sell out of Nintendo?
Hey, I suppose you meant to comment on my latest note, which I'll add here in case anyone else is reading this comment (https://substack.com/@jefke/note/c-65698180)
I didn't elaborate on it in that note, because I don't have a "good" reason except risk reward / stock price VS other opportunities.
The long term story of Nintendo seems intact.