Showing posts from June, 2020

IB Net Payout Yields Model

American Airlines: No Other Bulls Exist

Amazingly, Seeking Alpha is unable to find another Bull to highlight their view on American Airlines (AAL) . All of the other contributors on the financial site pretty much think the airline is going bankrupt. When just about every so-called financial expert is on the same side of a trade usually the opposite happens. Passenger traffic continues to rebound in the best signal the market will return to normal by next year. More research: American Airlines: Stop The Bankruptcy Talk Disclosure: Long AAL. Please review the disclaimer page for more details. 

Canopy Growth Just Admitted Massive Failures

Canopy Growth remains locked out of the major cannabis opportunities in the U.S. The Acreage deal is failing due to a lack of funding for the MSO. The company is still aggressively spending chasing smaller global opportunities in competitive markets. The stock is far overvalued here with a $6.5 billion valuation, over 16x FY21 sales estimates. On June 22,  Canopy Growth  ( CGC ) hosted a virtual investor meeting where the company discussed the future of cannabis in great detail. Whether intentional or not, the large Canadian cannabis company highlighted how the business model continues to waste too much money chasing the wrong markets. My  investment thesis  remains highly negative on the stock here with a market cap of nearly $6.5 billion and a long road to profits ahead. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. Update 6/25 Canopy Growth just modified the deal with Acreage Holdings (

AT&T: Negatives Of Selling Gaming Unit

AT&T is exploring selling their video gaming unit for a reported $4 billion. The company has $154 billion in net debt so the cash isn't as meaningful as the lost revenues from WBIE. The deal value is an apparent low valuation compared to public gaming stocks such as EA or Take-Two Interactive Software. The stock will suffer from the constant hit to revenues per share while the 6.8% dividend yield is covered from the extra cash. Due to the massive scale of  AT&T  ( T ) following the buyout of Time Warner, the company has looked for non-strategic asset sales to lower massive debt levels. One new target is the video game business from Warner Bros. due to the multi-billion valuation estimate thrown around by analysts. Read the full article on Seeking Alpha.  Disclosure: No position. Please reveal the disclaimer page for more details. 

Delta Air Lines: Eliminating Disaster Discount

Delta Air Lines entered the crisis already trading at a disaster discount. The airlines are quickly approaching load factors where average flights are break-even. The stock has upside from the 52-week high of $63 due to eventual multiple expansion. Delta Air Lines  (NYSE: DAL ) continues to rebound from the Buffett lows as airline traffic rises off the April lows. One of the most crucial metrics for valuing the airlines going forward is the load factor. My  investment thesis  is highly bullish on the airlines even with this recent rally in the stock as the load factors are rising and the potential for eliminating the disaster discount coming out of this down cycle improves the long-term potential of Delta. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details.