Anyone an expert in index reconstitution and want to collaborate?

Here's my theory...

$GTX is going to be a massive beneficiary of passive index flows.

Here's my logic: $PHIN, a company in the same sub industry as $GTX has 32% of shares held by passive investors (Vanguard, State Blackrock, etc).

$GTX has 2.6% of shares held by passive investors.

Why the difference?

I’m a small investor, and it’s sometimes hard to get in touch with management or investor relations.

Today, I’m going to walk through the specific tactics that I use to get in touch with management/IR: I love talking to investor relations / management.

Why?

A couple reasons:
1) It helps me confirm the facts.
2) It helps me get up to speed on a company faster.
3) It allows me to “feel” whether insiders are excited or not about their stock.

Koyfin has become my favorite investing tool.

Here’s how I use it: When I’m getting up to speed on a new company, my favorite tab is Snapshot:Overview:

At a glance, it shows you
- NTM and LTM valuation
- Consensus expectations
- A nice chart
- Recent news

Great write-up from @ClarkinM this week on $MGTA.

It’s a biotech liquidation.

Here’s the quick pitch: On May 3, $MGTA announced a reverse merger with Dianthus Therapeutics.

The stock closed down 14%.

Why?

Investors had been hoping for a liquidation.

Per the current deal, legacy $MGTA shareholders will get no cash.

Instead they will own 21.3% of the new company.

Joel Greenblatt was recently interviewed on the Investor’s Chronicles podcast.

At the end of the interview, the host asked whether Greenblatt still likes spin-offs.

Here’s what he said: "My first book I wrote is called, “You Can Be a Stock Market Spin-off” and about 40% or 50% of it was about spin-offs.

The questions is why.

I’m writing another book and the example I use to describe spin-offs is the following"

Warren Buffett has a strange approach to spin-offs.

He's made a lot of money investing in them.

But he would never spin off a Berkshire subsidiary.

This thread will explain why: First, let's explore Buffett's spin-off investments.

From 1957 to 1969, Buffett investment partnership compounded at 29.5% annually.

He invested in 4 categories of investments:

1) Generals – Private Owner Basis
2) Generals – Relatively Undervalued
3) Workouts
4) Controls

I recently scanned my spin-off / special sits watch list for insider buying.

I found 7 stocks that are worth highlighting: $ASPS

It's an old 2009 spin-off.

At one point,it was one of the best performing spin-offs of all time, then it came crashing down to earth.

The investment case boils down to a wave of foreclosures coming which will drive revenue and earnings growth for Altisource.

Today, I’m going to talk about the biotech sector and why it looks interesting.

Then, I will share 2 case studies.

In both cases, you didn't need to be a specialist to make money.

Finally, I will share some biotech names on my watch list: First, let's talk about the Biotech sector...

It's in a bear market.

The biotech index is down 52% over 744 days.

Based on the length and intensity of historical biotech bear markets, we are probably nearing its end.

There's been a ton of spin-off news recently...

This thread will get you up to speed: New Spin-off Announcements:

$WOR it's spinning off its steel processing biz.

RemainCo generated $1.39BN of sales (25% of total) and $347MM of adjusted EBITDA (64% of total).

It will retain and focus on the Consumer Products, Building Products and Sustainable Energy Solutions.

Took a look at $AMX's recent spin-off of its tower business and was excited for two reasons.

#1. Tower biz is a great biz

#2. Crazy distribution ratio 1:20

#3. There has already been heavy selling pressure

Here's what I learned... First the spin rationale:

$AMX trades at 5x EBITDA. Tower cos trade at 10x to 20x.

By spinning off the tower biz, $AMX could shed a bunch of debt.

I quit my job at Citi in April 2018 to focus full time on spin-offs.

Within 11 months, I was a partner at a private equity firm.

Here's the story: After 5 years at Citi, I was ready for a change.

The long hours (I left my house before my daughter was awake and came home after she was asleep) were taking toll.

Plus, my mentor at Citi (the guy who had hired me) had left to run another group.

Last week, I hit 10K followers 🥳

To celebrate, I'm sharing my 10 best rules for profitably investing in spin-offs: 1. Forget that “spin-offs outperform”

In aggregate, they generally will but each situation is unique.

If you go in thinking “spin-offs outperform” you will have a positive bias which will be costly.

My largest position is $NXDT and I think the setup looks compelling.

I bought more shares this week.

Here’s the pitch… First I gotta give credit where credit is due…

@ClarkinM was the first one to write up the idea.

If you somehow don’t subscribe to his blog, you should:

clarkstreetvalue.blogspot.com

Now back to $NXDT

Spinoff Case Study of Kontoor Brands (KTB)

Recommended: June 3, 2020
Price: $17.70

Closed: November 19, 2020
Price: $41.49

Return: ​​134%

Here’s what I was thinking at the time 👇 When first spun-off in May of 2019, I wrote:
1. “The business is surprisingly defensive. In the Great Financial Crisis, revenue only declined 11%. Cash flow actually grew. The current payout ratio of 65% implies management has high confidence in the resilience of the business.”

Seth Klarman annualized a 17% net return over more than three decades.

That outstanding performance made him a famous person in the Value Investing Community.

Today he turns 65 years old, an excellent opportunity to look closer at his investment secrets👇🏼 1. Be Lonely

Klarman was an expert in investing where no one else would.

Whether geographic, industry-wise, in special situations, or unpopular companies, Klarman always was where no one else wanted to be.

This is the “easy” and most effective way to outperform.

Joel Greenblatt says a call option is similar to owning 100 shares of a stock and 1 put on that stock (1 put has 100 shares).

Once I understood this, it made valuing LEAPS easy 👇 100 shares of a stock and 1 put is almost the same as owning a call option. Say you have a call option and the hypothetical strike price is $50. If you wanted to create that call option you could buy 100 shares a put with a $50 strike…

William Green lately interviewed Joel Greenblatt for his new Podcast Series.

It was a fantastic talk and Greenblatt gave many interesting insights into his investment Philosophy

Here they are👇🏼 1. Simplify

Investing, like many other things, is a complex subject.

Greenblatt always strives to simplify such processes.

He breaks them down into the most essential parts and focuses on them.

He doesn’t look for the perfect way but for a simple one that works consistently.

Connor Haley has achieved a 47% annual return since he founded Alta Fox Capital in 2018.

On 645 pages, he and his team analyzed the best-performing stocks of the last 5 years.

Here’s what he found👇🏼 1. Size of the Companies

Unsurprisingly, the biggest winners are among the smallest companies.

The Nano-Cap’s Median Total Shareholder Return (TSR) was 1114%.

However, as you can see, Mid- and Large-Caps also achieved phenomenal returns of over 400%.

Spin-offs in the 1950s

Maurece Schiller was one of the first investors to write about special situations investing. In 1959, he wrote the book “How to Profit from Special Situations in the Stock Market”.

Here’s a look at Schiller and his chapter on spinoffs 👇 After leaving Dartmouth, Schiller went to Wall Street to work as an investment advisor. He began studying the way corporate actions affect stock prices. He called them special situations and was drawn to their “safety of principal” and “assured profits”.

/ Thread on Investing in Dying Industries /

sourced from:
1. @michaeljburry's 2000/2001 MSN money posts
2. @TheRoaringKitty's youtube video where he outlines his thesis
3. Brian Gains of Springhouse Capital, guest lecturer at Greenblatt’s Columbia class (link to all these below) 1. Michael Burry’s 2000/2001 MSN money posts

“I have found…that in general the market delights in throwing babies out with the bathwater. So I find out-of-favor industries a particularly fertile ground for best-of-breed shares at steep discounts.”

Daniel S. Loeb is an American billionaire and founder as well as CEO of Third Point.

One of the biggest and most successful Special Situation Hedge Funds in the world.

Today, we’ll look at the Investment Strategy that made him so successful (+ examples)👇🏼 1. Activist Investing

An activist investor buys a significant stake in a company and then tries to influence management’s decisions.

Dan Loeb is famous for these type of investments.

He wrote many iconic letters in which he harshly criticized managements and CEOs.