December 3, 2017
December 3, 2017


No question, just a link for you. This article takes apart a recent speech by Chicago Fed President Charles Evans. Along the lines of your most recent post:

No argument for me…

Do you really think you can make 5 in 5 with AYR???? These guys pay themselves a lot of money and they are relatively young…

I don’t really know if AYR is a 5 in 5. However, I think it can trade up to book value which is a double—at that point I’ll reassess.

Re the comment: “The other is Sprott Resource Corp (SCP.TOhttp://www.sprottresource.com/one-earth-farms-corp.aspx) which has farmland in its portfolio.”

I never cease to be amazed at the willingness of people to believe what they want to believe.  Sprott Resources does not have farmland in its portfolio, it owns a majority of One Earth Farms, which has a bunch of depreciating farm machinery, some grain bins, some cows, and a bunch of land rented from Indian Bands in western Canada.  In fact, in Saskatchewan, where it has the vast majority of its operations, it would be illegal for One Earth to own, or (technically, although hard to police) lease farmland because they are owned by a “company which is listed on an exchange.”

But say you run a big farm, and people figure you own the land.

The only reason they can do what they are doing is because they rent land from Indian Bands, whose land is not subject to the jurisdiction of Saskatchewan’s farmland ownership (and leasing) laws. I admire what they are doing, but I do not envy them, and I’m not sure I would be an investor.

This comes from a very knowledgeable friend in the Canadian agricultural space…Caveat Emptor

Hi Harris,
First time question (I usually read quietly :).
Regarding TITN, I like the idea, but after having analyzed it through my criteria, I stopped short of pulling the trigger because of one warning flag (again, just IMO). The total debt on the balance sheet dwarfs EBITDA (based on trailing 12-months). I am aware that these can change quickly(in a direction for a more favorable ratio) for a fast-growing company, but growth through acquisitions may also continue to add debt to the balance sheet. Now, if everything goes fine in the world and the company continues to grow revenues and EBITDA, they may eventually catch-up, but if/when SHTF in the credit markets and the economy slows affecting everything around, companies like this risk facing a difficult patch because, while revenues and cash flow may experience a [hopefully] temporary dry patch, the debt on the balance sheet persists and is unrelenting. I wonder if you see this debt/EBITDA picture differently for TITN or in general. Thank you for sharing!

I really see it at two businesses. There is the ‘bad business’ which is selling new equipment. This is small margin and capital intensive. Most of the debt on the balance sheet is related to this business. Fortunately, the debt comes at a ridiculously low cost of capital, is secured by equipment and a bunch of it is non-recourse to the parent. If the economy stalls, they just send the tractors back to CNH and the debt goes away.

The other business is the ‘good business’ which is selling used equipment, parts and doing repairs. You get into the ‘good business’ by selling equipment and acquiring dealerships. There is some debt associated with this business, but really not all that much. If you exclude the floor-plan equipment financing, the company is really not that leveraged.

Turns Out Dumping 1,300 Tons Of Swiss Gold Isn’t A Resume Builder After All


Nope. Not a resume builder… Not at all…Funniest part is not that central bankers sold the gold on the lows, it’s that they sold the gold so that they could invest the money in interest bearing govt bonds (except due to zero interest rates caused by the same central banks, bonds yield almost nothing).

My friend Bill Fleckenstein stole my thunder by posting these first, but for those of you without a subscription to his site, I’m reposting. If you watched these already—watch them again. They’re that good.

Sam Zell Speaks–I Listen





In keeping with the Mongolia theme, here is a 1 hour piece on the Mongolian hip hop scene. I’m not sure why I’m suddenly the clearinghouse for things like this, but I actually found it interesting to watch.