Category: Featured

In-depth analysis or commentary on companies, securities, or the economy

Leaning into Value Traps that Everyone Hates… and a New Name, Strattec $STRT $AXL $ALSN $CATO $ANF

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There are certain businesses that investors have washed their hands of: Retailers, OEM auto suppliers, anything in the way of ESG… many others… And this trade probably worked well for the last 5 years. I recently wrote up at least three names that are counter to these trends, but there are many more.

I’m in the process of creating a “basket” of these names that I’m going to commit to buying and holding for at least 3 years.

I’m calling it: the Value-Trap Coffee Can portfolio.


Most of the time, a coffee can portfolio is set up of really good businesses that you should just set and forget. Let them compound.

In this case, the narrative around some stocks can be so toxic, you can convince yourself at any point to sell. But if find management teams that are very savvy, conducting effective turnarounds despite headwinds, and know how to drive shareholder value, sometimes you still want to align with them.

I fundamentally believe you can have bad industries, but great companies (driven by great management teams) and therefore great securities hidden within them. 

So I’m locking these stocks up and throwing away the key to see what happens.


So far, the Value-Trap Coffee Can (VTCC for short) portfolio includes Allison Transmission, Big Lots, and American Axle, but I am also adding Cato (recently discussed on Andrew Walker’s podcast with Mike Melby at Gate City Capital), and Abercrombie and Fitch (written up on VIC, but down nearly 20% since then). After looking into the latter two, I’m convinced they’ve earned their spot. They aren’t my ideas though, so I won’t be writing them up.

I am adding Strattec to the VTCC portfolio, which is an automotive supplier and I’ll get to at the bottom of this note.

Please reach out if you have any others I should be looking at!


Why the VTCC Portfolio Now?

At points in the past, this would’ve seemed nuts, but my response to that is these companies

  • have significant cash / FCF, especially compared to their market caps today
  • have a rising earnings path over next ~12+ months. Especially true now that we went through a downturn and are coming through on the other side of it, and
  • are completely unloved, so are still very cheap.

You can see it’s really more of a cycle + cheap call.


I cover cyclicals for my day job and cyclicals have been pretty much un-ownable since we had an industrial-recession scare back in 2015/2016. OK – they had a nice run when Trump first came in, tax cuts were implemented, and there was a brief sugar high – but after that, the stocks didn’t do well by comparison even if results were fine. I saw many companies I covered trade at super low multiples as everyone figured a cycle was inevitable.

I now think that since we may be entering a new cycle, permission to own is granted.

In other words, maybe value traps won’t be traps for too much longer. (Famous last words DillyD!) But seriously, you can mitigate this problem via position sizing.


A couple pushbacks to that simple thesis:

  • You could completely disagree with me that we are entering an upcycle – people are already saying what we went through in 2020 doesn’t count as a “normal” recession (whatever that means) and is more like a natural disaster. Semantics. Whatever. This is the theory I have and am going to bet that way.
  • Stocks already at all-time highs, too. So how can there be much of a recovery? Well… FANG is like 25% of the S&P500. None of these basket stocks are in tech.
  • Supply chains are a mess. This could derail the thesis, but I think it would be a temporary derailment vs. anything long-term.

It seems very hard to argue to me that any of the sectors I am going to buy a basket of are “overbid” territory. We can also reach new highs if FANG stocks stay flat and cyclicals have a really nice run, too, ya know?

I think retail is interesting because the consensus narrative was that they are dead, that we pulled forward a ton of e-commerce progress… and yet, if you actually looked at some of these player’s results, you’d see they either adapted very well (some did) or the buyer is coming back.

The anti-ESG trade is only interesting to me in names that can solve the problem – by buying back stock themselves at really attractive prices. Some names are in the ESG crosshairs, but either can’t or are unwilling to effect change in their share prices.


Why Strattec?

Strattec is an interesting little auto supplier that makes locks, power lift gates, latches, among other things. It was originally spun out of Briggs & Stratton in 1995. Here’s a [kinda hilarious] video of them trying to sell why people need a power lift tailgate.

They have their OEM concentration issues, like American Axle, but that is the name of the game. They actually have much better concentration than American Axle which you can go see in their 10-k.

Similar to my American Axle thesis, I think we are going to need a massive restocking of cars. Inventory days are ~22-23, compared to the normal 50. However, this cycle is going to take a long time to sort itself out.

Unfortunately, Strattec was impacted by plant shutdowns due to lack of semiconductors. This is disappointing as the company wasn’t able to sell as much, particularly in its award winning power tailgates in the Chevy Silverado and F-150 pick-ups.

But it’s a double-edged sword. The longer it takes to replenish inventories to “normal” the longer this auto upcycle will likely last. Yes, less sales today, but I think the tailwinds will be there for some time to come. Again, I wrote about all of this in my AXL post.

Even with these headwinds, Strattec still did $110MM in the latest FQ4 (ended June, reflecting the impact of the semi issue) and $485MM for the FY, down from $129MM in the quarter ending June 2019, but in-line for the FY $487MM. However, EBITDA increased by ~50%. Again, this was due to cost improvements and efficiencies in the business that the company says is structural.

Bottom line, I think Strettec will emerge more profitable than ever, and if permitted to run flat out (semi issue abates somewhat) then we will see awesome fixed cost leverage, too.


Strattec Valuation:

Strattec is only a $150MM market cap company, but an enterprise value of ~$147MM.

Over the past 12 months, they cut their dividend during the COVID panic and paid down $23MM in debt. If you fully count JV debt, they have $12MM in debt now, but $14.5MM in cash.

At the same time, let’s say you expect the top line to grow a bit, but they’ll give some margin back, the company is trading <3x EBITDA. And it isn’t like that EBITDA won’t convert into FCF: the company has guided to $12MM in capex, they’ll have no interest expense (basically) and taxes in the range of $8-10MM. That’s $35MM of FCF on a $150MM market cap company.

Not bad! Just last 4-5 more years and I’ll have my money back.

Why $BRK Should Buy $ALSN

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I wrote previously about companies Berkshire Hathaway could potentially buy. One of those options actually was acquired, just not by BRK. But I think Allison Transmission ($ALSN) is another strong candidate. Why do I say that?

  • ALSN is the market leader in fully automatic transmissions for medium-to-heavy duty commercial vehicles
    • They do not play in the super cyclical Class 8 truck market
  • Because of market dominance, they have great margins: ~35% EBITDA margins and spend 6% of sales on capex
  • Generates high ROIC (>20%) and even higher returns on tangible capital
  • It’s a classic industrial, but misunderstood, which has it trading in melting ice cube territory wayyy too early
  • Mgmt has been solid capital allocators, though the stock price doesn’t reflect this yet

I recently initiated a position in ALSN. It came up as I decided to update my model (right after I did some quick work on American Axle) and noticed that the share count had reduced from ~120mm to 106mm in a pretty short period of time… but the stock was actually lower than the last time I looked at it.

I think there are many reasons to own the stock now, not least of which is a cyclical upturn in their end markets, but wanted to frame it differently for this discussion. It’s a “small” company at ~$6.5BN EV, but I don’t think that would stop Buffett.


ALSN is the Market Leader: 

This is a great slide covering ~50% of their sales, showing their dominance in “niches.” I love businesses like this.

Allison invented the automatic transmission for commercial applications and there’s been a long trend in the West away from manual transmissions.

It doesn’t matter as much in long haul, but constant starting and stopping can be annoying with a manual and Allison’s transmissions can also be more fuel efficient (lots of start and stop activity).

So who do they compete with? Well, their main customers are OEMs. Typically, their competition comes from OEMs who decide to do this in house, like Ford. Other competitors are smaller players that clearly don’t compete on the same scale.

This is mainly the North American market, so it should be noted Europe (13% of sales vs. 52% North America) has more vertically integrated players for these commercial vehicles, particularly the commercial trucks. So ALSN’s exposure in Europe is mostly garbage truck, emergency vehicles, bus and other markets.

ALSN, though, is viewed as the leader of technology and is often the most desired transmission.

I won’t dwell too much on their other markets (defense at 9% of sales, which is mostly tanks, or off-highway which is mostly construction and metals & mining exposed, but just 4% of sales).

I will say service, parts and equipment is the second largest part of sales (22%). I like this piece of business because aftermarket provides a nice, steady recurring revenue – driven by the large installed base of transmission already in existence.


ALSN has Great Margins

As mentioned, ALSN has ~35% EBITDA margins. That is actually down from peak due to (i) lower sales LTM, (ii) increase commodity costs, (iii) product mix, and (iv) a ramp in R&D expense. Given dominant share and a recovering market, I think they’ll work their way back up to high-30s EBITDA margins.

That said, the market is completely freaked out about EVs and lower margins in that category. For ALSN, it is the number one bear case. It was asked about 3 separate times on the latest earnings call, despite the existence of electric vehicles still being relatively nascent (I won’t hold my breath for the electric tank either).

This does tie into the misunderstood point, which I hash out below.


ALSN Generates a Great ROIC

Note, ROIC does get hit in cyclical downturns (2014-2016, 2020), but through cycle it is well above ALSN’s cost of capital and run-of-the-mill businesses. Enough said.


ALSN is a Classic Industrial, but Misunderstood

I think its pretty clear that ALSN is a classic industrial. An old school business. Maybe not classic given its high margins and dominant position in its market, and many, many industrials struggle to generate good returns without a lot of leverage.

ALSN does have many growth avenues, such as emerging markets which still have high manual transmission penetration. Second, there are underserved portions of the North American market it could enter, shown on the previous market share slide.

But the market is completely freaked out about EVs.

As I wrote about with Autozone, the penetration of EVs will take some time to work out in the passenger car market. The misperception with Autozone is that the market forgets how big the car parc of ICE engines is compared to new production.

It will, in my view, take even longer to happen in commercial. Add in the fact that these trucks consume so much energy from towing, it really will be tough to figure this out.

But why freak so much about EVs? Its because EVs don’t require a transmission and Tesla’s Class 8 truck doesn’t have a transmission. There. That’s the bear.

That said, ALSN is already the leader in hybrid transmissions (particularly hybrid buses), they have frequently highlighted examples where Allison transmissions have been used in electric trials over the past FIVE years, and there is a strong case that commercial EVs may benefit from a transmission (it could likely reduce the strain on electric motors, thereby reducing the need for larger, heavier batteries).

Is it a threat? Sure. I think EVs are inevitable. But will it take time? Yes. And the costs side has to be figured out so much more so on the commercial vehicle side than the passenger side (let’s not even talk about how we’re going to mine all these precious minerals for EVs…). And let’s not forget nearly a quarter of ALSN’s business is parts & services too, which will continue to benefit from a large installed base.

Maybe I’d be more concerned if ALSN had no position, had no experience, and the commercial vehicles were here and rapidly taking share. Maybe I’d be more concerned if ALSN wasn’t a FCF monster. But ALSN is priced as if this doomsday is already the case.


Mgmt has been excellent at capital allocation

It isn’t everyday that you come across a slide like this. First ALSN got their debt down after being PE owned. Then they continued to paydown debt after IPO’ing, but largely turned to share repurchases, dividends, and modest M&A. It’s pretty clear to me, that while the company is increasing spend on R&D, every dollar of FCF will be coming back to shareholders.

They repurchased 5% of their stake in the 1H’21… they’ve repurchased 50% of their shares outstanding since 2012! All while delevering, not levering up.

ALSN IPO’d in 2012, so you can see they clearly turned cash to repurchases

Back to Berkshire – look, if this cash is better spent on other businesses, let Buffett make the call. But at this point, the market is just not giving them credit for the cash!


Why Now?

Why buy the stock now? You make your own call, but for me, we are witnessing a cyclical upswing. ALSN will be growing sales and EBITDA for at least the next 3 years just to get back to a baseline.

Using consensus FCF numbers, ALSN currently trades at 14.5% FCF yield on 2022 FCF estimates and 15.7% on 2023. This likely means they’ll be buying ~12% or so of the stock back + the dividend. With that much buying pressure, plus a cyclical upswing, I think it is very hard for a stock to NOT work.

On EV / EBITDA, ALSN trades at 6.5x ’22 EBITDA. I regularly see paper companies trade for around that. That seems too cheap to me.

Sponsors have owned the business before and they may own it again. It can support a lot of leverage…Or, Mr. Buffett might give it a look.

American Axle: Play the Auto Restocking Cycle $AXL

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American Axle is a crappy company. But I currently view that we are going to see a large increase in auto production to (i) meet demand which we are unable to do right now and (ii) restock to baseline inventory levels. So with the stock at a ~40% FCF yield, I’m interested.

This could be a value trap, but my thesis is simple:

  • SAAR came way down during COVID, but demand held in
  • Semiconductor shortages have limited production to catch up, which will sort itself out over time. But it will take time. And this will result in a prolonged auto upcycle
  • Credit is cheap + average age of vehicles has continued to tick up which tells me there’s room for even more restocking.
  • US personal savings averaged $3.5 trillion during first 5 months of 2021, nearly 3x the level seen in 2019. We could see a decline in the average age of vehicles in the car parc for the first time in many, many years
  • Inventory continues to decline. Days supply of autos is now around 20 days compared to long-term averages of 60 days. Auto producers need to meet current demand + restock inventories to some sort of normal level

Add this all together, I think the next 3+ years will need to see above average production to catch up.

Here is SAAR, auto inventories and the average age of cars on one chart:

What is a levered bet on this? Shitty auto suppliers. And that is where American Axle comes in to play (and I’m open / reviewing others). AXL trades for ~4x EBITDA for a reason – when auto production collapses, they get crushed. But on the other side, they can generate great FCF when the cycle is in their favor.

How often do you see sell side pointing out the FCF yield is ~40%?. That is also an appeal here – the FCF yield to equity is quite high and I don’t think expectations are high for this company. At the very least, there is a lot of doubt in this cyclical name that the cycle will be short-lived.

$AXL used to have “a balance sheet problem.” While it might’ve only been 3x levered, it was on a business worth 4x, so it mattered. That’s a 75% LTV, which is pretty high. But they generate cash flow now and will definitely in this market.

I should go ahead and point out why they are not great:

  • AXL is a Tier 1 auto supplier, which is a tough business and cycles hard
  • ~40% of sales are to GM. If GM needs to take a plant down, like in the case of no semi’s, that won’t be ideal. This also means GM has significant power of AXL. Fiat Chrysler is another ~20%
  • Pretty capital intensive, as 6-7% of sales is spent on capex in normal times.
  • Investors view anything related to powertrain parts as secularly challenged from EVs (however, AXL did note it is quoting $1.5bn of new & incremental work, with 80% related to hybrids / EVs). In an EV world, perhaps there is less AXL content needed

So there lies the main risks. The other hard part is where this company should trade. I am not calling for a re-rating. I just think earnings / FCF will likely be much higher than consensus expects for the next 3 years. Leverage is down to 2.5x and once they get to 2.0x or less, I think that FCF will really start accruing to the equity.

If this stock underperforms – I’ll know why. I bought a value trap.

Container Shipping is on Fire: Opportunity in Leasing Stock Triton $TRTN

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As everyone I am sure is aware, container shipping rates right now are astronomical. The re-opening of the economy and associated supply-chain bottlenecks has created a situation where people will pay up just to make sure their items are actually on that boat!

This has caused blow-out earnings for the shipping lines. Maersk reported a 166% increase in EBITDA for Q1’21 for example.

However, I don’t think this is sustainable and no one else does, probably. Shipping is also a fraught industry to invest in – when times are good, capacity is brought online. These ships are long-lived assets so when times aren’t good, the supply is still there.


There’s alternative however, with a much stronger industry structure, ROEs, cash flow, on and on. That is container leasing. Triton is the largest player in the space after it merged with TAL in 2016.

I like Triton stock because:

  • Leader in the market – scale in the leasing industry matters and drives much higher margins + lower cost of capital
  • Fundamentals are in terrific shape
  • They are signing long leases at high rates – abnormally long and abnormally high (over a decade) – which will give strong visibility into cash flows for foreseeable future
  • Can flex capex spend with the market – has a history of shutting of capex and buying back stock + dividend
  •  Triton stock trades for ~6x ’21 EPS, 1.3x ’21 BV – historically generated mid-teens+ ROE in normal times. This should improve

The business historically went something like this:

  • Triton buys containers and places them on lease with shipping companies.
  • Historically, these would be 5 year leases. However, with limited technological obsolescence (just renting a steel box in most cases), the age of the asset didn’t really matter. So they can pretty quickly re-lease the box, but the lease rate may change
  • The assets (boxes) last about 15-20 years with pretty minimal maintenance. Maybe slightly more for a refrigerated box, called a reefer (yes the actually  name), but the lease rates would also be higher. So historically there’d be 3+ leases involved
  • End of life – they sell the box for some residual value, which also helps recoup part of their investment. It used to be they buy a box for $2,000-$2,500 and could sell it for ~$1,000. Right now, they can sell the used box for about $1,500, which is pretty nice.

Why do shipping companies lease instead of owning their own containers? It outsources capex in an already capex-heavy industry. It’s off balance sheet financing for them. The shipping lines do still own their own containers (about half of the market), but that’s been trending down pretty consistently over time. It just makes more sense for them to focus on shipping and flex leases up and down with the market.


Investment Thesis

I don’t think I need to dwell on why fundamentals are good right now or why buying Triton stock at 6x earnings is optically cheap. I’m going to focus on the lease rates and new longer duration contracts being signed right now.

If you are worried about the current conditions being unsustainable, long, contracted lease rates help that. As shown below, Triton is trying to tell investors that not only is it leasing more containers than basically ever….  putting assets to work… the lease durations are now approaching 12-13 years.

If you like SaaS, you’ll *love* container leasing companies.

We’ll have to think about these rolling off in 2031-2033, but meanwhile, the company will be earning above average ROEs.

Here is a chart from their Q1 basically showing lease rates are 1.6x the general average. You can see there was a dip in 2019, but the company pulled back – the size of the bubble indicates how many containers were put on lease (so very few). In a sense, Triton is an asset manager just like a Blackstone – you kind of need to trust that they will be deploying capital when times are good and pulling back when times are bad.


What could go wrong?

I should mention what could go wrong. We have seen this situation before – following the GFC, world trade snapped back and lease rates surged. Unfortunately, they all basically expired in 2015/2016. This was also when we were in a quasi-industrial recession. This was also when steel prices were in the gutter, which makes up most of the price of a box and makes it tough to sell used boxes at a fair price. Hanjin, a major shipping line, also effectively liquidated (in a BK case, most of the time a shipping line will just keep its assets rolling in a Ch. 11 because the containers are critical assets to operating – Hanjin just disappeared.)

In many ways, 2015/2016 was worse that the GFC. I mean, it actually was worse. The GFC wasn’t actually that bad because global trade remained pretty steady.

Even with a trade war, it’s hard to knock off the secular trend of the western countries importing from Asia. If it isn’t from China, it is from Malaysia, Vietnam, and so on.

Did I strike to buy Triton stock in 2015-2016?? No. I was gun shy as I’ve been following the industry for quite some time and they never seemed to generate real FCF (CFO-Capex). It was an asset gathering game.

But then in 2019-2020, when the market wasn’t particularly great, they actually proved they could shut-off capex. They starting generating a ton of FCF and showing signs to shareholders that they care about the stock (they even issued a pref as well to help fund buybacks)

Another sign they care about capital allocation is this fantastic sources and potential uses of cash in their deck:

Basically they are telling you they could buy back 12% of the stock in one year. Share count is down about 15% in 2.5 years, but now I think they’ll be deploying cash into higher ROE opportunities, which is fine by me.


Financing

One thing I should mention is typically Triton finances itself through the ABS market. They get 80-85% LTV against the asset value for very long duration. Happy to answer any questions on this, but I’m not too concerned with the ABS market financing.

Triton issued $2.3 billion of ABS notes during the third quarter at an average interest rate of 2.2%. Most of the proceeds were used to prepay $1.8 billion of higher cost notes, which is expected to reduce interest expense by more than $25 million over the next year

They are also diversifying financing – so they just issued an IG secured bond and have talked about moving up to IG ratings. If their cost of capital goes even lower, it will be great for the business in the long run.


EPS Estimates

Last thing I’ll say is basically Triton is covered by one company. You’d think modeling it would be easy enough, but we are talking about hundreds of thousands of containers, utilization can change, etc etc. However, I think EPS estimates are probably still too low in the long-run. It’s been that way in the short-run, so far, but we shall see. It’s hard for sell side to model operating leverage + high lease rates + deploying cash into such a significant amount of assets.

Part Owner of MGM, $HFRO Now Trading at >25% Discount to NAV

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Quick one, but the closed-end fund HFRO looks like an interesting idea. It currently trades at $10.21, yet NAV is $13.84 as of last reporting. That is a 26% discount to NAV. However, you may think the discount needs to be wider for some of the risks I outline. Either way, I think its an interesting one to watch.

Bottom line: If you give full credit for the liquid assets, the balance of the fund is trading at a 45% discount to reported NAV. 

Should there be some discount? Maybe. But this large? Not so sure… Can you guess when they announced that they want to convert to a holding company?


Background

For background, HFRO is a closed-end fund, but unlike typical funds that just own stocks and bonds, HFRO owns some esoteric assets. For example, they have a preferred stake is a timber REIT with a 10.25% coupon. That is 23% of the fund. Another 12% is a self-storage asset. Interestingly, ~5% of the fund is also MGM, which everyone knows is being acquired by Amazon.  The balance is leveraged loans (12%), CLO equity (21%). Another 8% is a stake in Nexpoint Real Estate Finance, which is a public REIT.

Why does this opportunity exist?

To some degree, people have had trouble with Highland as a manager, which I’ll discuss with their TerreStar stake. Highland, the fund company, also declared bankruptcy and was embroiled in controversy, but that doesn’t mean the funds stopped, it was just the manager who continues to operate.

 The Dallas-based firm founded by Jim Dondero helped pioneer trading of corporate loans rated below investment-grade and managed about $39 billion in 2007, but it took heavy losses during the financial crisis and has been embroiled in lawsuits ever since. The company had been trying in recent weeks to settle some of the litigation it faces, warning its adversaries that it would seek bankruptcy protection if they didn’t compromise, people familiar with the matter said.

Again, this is the manager, not the fund itself. The fund itself is not exposed to these lawsuits.


However, Highland is suing Credit Suisse for marketing some assets in 2007 in Vegas as very valuable that ended up quickly being zeroes. And this lawsuit outcome could be a massive right tail event for HFRO. This is marked at zero right now on the balance sheet of HFRO. However, a jury awarded HFRO, the actual fund, $211MM of damages. This was later knocked down to around $40MM. More detail is on the fund site. Either way, it’s marked at zero and anything above $1 is extra value.


Now, HFRO wants to convert to a holding company. This means it will no longer be a fund, per se, but a holding company. So think of a public private equity firm with permanent capital. Maybe people give even less credit for the marks. Highly encourage you to check out their presentation on why they are doing it.

Look, Dondero has some issues, but he does find some interesting opportunities. The lumber asset, the self storage piece, the REITs and other funds they’ve founded. He is in MGM because he loaned-to-own through their bankruptcy.

People don’t like this pivot. But the asset change over time (below) shows me they will actually be liquidating the assets that can be liquidated. We also know MGM will probably be sold, so there’s another 5%. This means that value will be quickly realized.

Buyback: The fund committed to a $10MM/month buyback program PLUS management buying $10-$20MM stake. $10MM is about 1% of the fund, so pretty significant. However, this only occurs if this approved, though. It also has some pretty damning qualifying language:

Under the terms of the Share Buyback Program, if, at any point during the Buyback Period, the Company’s common shares begin to trade at more than a 25% discount to NAV, the Company will buy back up to $10 million in aggregate value of the Company’s common shares per month

(But hint, voting against the deal is an upside event – if the NAV is widening because people hate this, it is possible this doesn’t go through and it snaps back)

Biggest Risk is Not Believing NAV

Obviously, the biggest risk with owning illiquid things is that no one can easily mark-to-market. However, we now have a quote on MGM. Lumber is obviously doing very well, and yields are super low, so selling a 10.25% coupon preferred does not seem tough to me. Self-storage, too.

This is the majority of assets. I think they could easily liquidate the CLO equity, leverage loans, and Nexpoint stake which are marked-to-market, so that’s 40% of assets alone. Each of these you can get a quote on Bloomberg each day.

There’s only ONE asset I have concern about. It is Terrestar. But note, it is only 70bps of the entire fund. So feel free to mark at zero. Feel free to read up on Terrestar here. But the not-so-great thing about this is Terrestar has been called out in the past as being questionably marked.

Yikes – that is icky.

But again, TerreStar is 70bps of this fund and Highland has been scrutinized for this. Mark it at zero.

Obviously, the larger question then is if you can believe anything Highland puts out? It is a fair question, though a > third of the business is liquid assets.

So you need to decide if the balance deserves a 45% discount (that is what’s implied when you give a 100% credit for CLO equity, loans, and Nexpoint).


In my view, they are clearly telling you they will be liquidating the liquid assets, buying back stock, management will have skin in the game.

It seems like it is getting interesting!

If your response is, “well, the discount can continue to widen…” then what is the appropriate discount for you?