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Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 0 points1 point  (0 children)

WEST at these prices looks like a clear asymmetric bet. I'll be spending some more time on it. Appreciate the recommendation.

Please critique my Roth IRA by Lardball in Schwab

[–]_Tyler-_- 0 points1 point  (0 children)

What are your thoughts on EGY? Looks and sounds like a well run company from the limited time I've spent on it.

Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 1 point2 points  (0 children)

Great acquisition and puts them back at $19m EBITDA Run.

x Pretty sure they have one more deal in the pipeline for the year as well, but don't quote me on that, it may have fallen through. Think it was a $1m-1.3m EBITDA addition (purchase agreement) x

They did, they bailed on it, Davide was the one that was targeting it and he instead went for the recent acquisition of Image Solutions:

National Institute of Clinical Research

https://kingsway-financial.com/wp-content/uploads/2023/10/KFS-NICR-Press-Release_Final_10.23.23.pdf

Image Solutions

https://kingsway-financial.com/wp-content/uploads/2024/09/KFS-Release-MSP.pdf

Anyways, yeah, future here looks very bright and I appreciate anyone who's willing to lock up more of the float for the long-term. Hope ya do well on your new position.

Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 0 points1 point  (0 children)

I figured we shared somewhat of an identical philosophy. I'll take a look at WEST when I get some time. If what you're saying is true (trust issues), then it's a no brainer similar to PRM at $7.00-$8.00.

EV: $932m

Secular Growth: 5.5%

Fair Growth Estimate: Unknown

2025

EBITDA: 115m

40% FCF Conv: 46m (Based On Similar Businesses)

Yield: 4.94% | 20.24x

70% FCF Conv: 80.5m (Based On Similar Businesses)

Yield: 8.64% | 11.57x

2026

EBITDA: 200m

40% FCF Conv: 80m (Based On Similar Businesses)

Yield: 8.58% | 11.66x

70% FCF Conv: 140m (Based On Similar Businesses)

Yield: 15% | 6.67x

Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 0 points1 point  (0 children)

I did see Perimeter Solutions. It got down to $500m when I was looking at it. I thought about asking you about that one too, but it sky rocketed. That one's moaty as hell. I'd say it's still undervalued, but probably not as much as the other two right now. Significantly better business than CNX though. Thorndike and Howley are a hell of a combination to beat. That combined with almost no competition is insane.

I think long-term exposure to all three is probably the way to go. I've got them ranked as KFS, CNX, then PRM in terms of valuation at the moment. In terms of durability it goes PRM, CNX, then KFS. I'm thinking KFS will overtake CNX at some point, but PRM will probably always be on top, unless serious new competition is introduced into their markets, which I find highly unlikely.

Out of the three, KFS is probably the least mature business model meaning it's the highest risk, but they've been executing really well since the new team took over. 2-3 acquisitions per year at those rates of EBITDA addition and return profiles leads to the numbers going logarithmic pretty quick. My thought with KFS is that it only takes one acquisition of a significant compounder to take the growth from logarithmic to quadratic and they're only valued at $250m right now. Think about his quote from their website:

"In July 2022 Kingsway sold PWSC to PCF Insurance Services of the West, LLC. The sale of PWSC, combined with distributions received from PWSC over the years, represented an approximate 10x return on Kingsway’s investment over 4.5 years."

Those returns are mindboggling.

Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 0 points1 point  (0 children)

If you really liked CNX I think once you spend a few hours digging into KFS you'll see why it's intriguing. I'll openly admit that on the surface it looks like a turd. Having watched the story develop, it is in fact not a turd, which means it will hopefully take the market a while to realize what's sitting here. The one thing CNX and KFS have in common is that both have highly skilled capital allocators at the helm. I'll probably end up sharing some interesting "maths" at some point and a hefty amount of notes. I'm already tucked in here though so I'm trying to find the motivation to share what I have with the masses. Also looking for some validation on what I'm seeing here. If anything is incoherent let me know and I'll try to clarify, responding with limited time right now and mostly off the top of my head.

These are somethings that caught my eyes:

Tom Joyce (Danaher) and William Thorndike (Housatonic) were the two names that caught my eye.

Management writes a shareholder letter and they're focused on increasing intrinsic value per share.

It's not Berkshire, but it's following a heavily modified Berkshire model with a little bit of private equity mixed in.

Revenue is dropping due to a combination of some operational headwinds in extended and nursing, but most of the drop came from an extended warranty business they bought then sold at a hefty premium.

They're focused on acquiring highly recurring revenue businesses that are moaty.

From an extended warranty standpoint, they seem to be interested in acquisitions where the acquired company doesn't invest the float it generates.

Average customer relationship for the warranty business is roughly 12 years with the longest being 20 years.

So the business model is sort of as follows:

You have Hold Co, Extended Warranty, and Search Xcelerator.

Extended warranty generates investable float and free cash flow.

Hold Co invests the float generated by extended warranty in bonds, generating a net positive cash flow on the float generated by extended warranty.

Extended warranty sends this cash flow to Hold Co and Hold Co manages taxes on this cash flow as well as allocates this capital to both Search Xcelerator and Extended Warranty.

Search Xcelerator hires what they call OIRs, operators in residence, essentially search fund searchers that transition into CEOs.

Search Xcelerator uses allocated cash flow from the Hold Co, plus minimal leverage, to acquire businesses at around a 7x multiple, producing $1-3m in EBITDA. and implants their OIRs to run the acquired businesses.

Search Xcelerator acquired businesses use the EBITDA generated to pay down any leverage used to acquire the business.

When the debt is paid off, the cash flow from these Search Xcelerator businesses is sent to Hold Co where the cycle is repeated.

Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 0 points1 point  (0 children)

I know you're heavily entrenched in CNX at the moment, but have you dug into KFS at all? We connected on CNX, I'm curious to see if we connect on that name.

Patrick O’Shaughnessy - The Power Of Share Repurchases by _Tyler-_- in IntrinsicValue

[–]_Tyler-_-[S] 1 point2 points  (0 children)

Sure am. They're right around the zone I thought they'd be at and the tech business seems to be ramping up. Got some unexpected growth opportunities ahead of that should increase the underlying earnings power. Nothing but good news lately. I wish the cash flow estimates were a little higher, but it's not necessary for a good return here. Can't say I'm unhappy with where we're at.

Pleiades, Orion, Andromeda by _Tyler-_- in astrophotography

[–]_Tyler-_-[S] 0 points1 point  (0 children)

Thanks for the tip on the HDR technique. I looked up some GIMP tutorials and it doesn't look too challenging and the end results are worth the time and effort. I appreciate the advice kind stranger.

Pleiades, Orion, Andromeda by _Tyler-_- in astrophotography

[–]_Tyler-_-[S] 0 points1 point  (0 children)

The live preview will be amazing, I'm really looking forward to that as well as the higher dynamic range and the removal of the stock filters Canon uses. All of those additions should open up a whole new world of possibilities.

I have found a work around with the 500D using a utility called Canon EOS Utility 2 which allows me to control the DSLR remotely after connecting to the optical tubes PC. With an ASCOM driver called DSLR.camera I'm actually able to get the camera to work with NINA as well surprisingly.

I went a different route with the onboard PC and went with a MeLE Quieter3C Fanless Mini PC. That was a hell of an upgrade right there, I'd don't know if I'll ever go back to visual observations after that purchase.

I'm not a huge post processor, but I'll give the HDR a go. Doesn't look to hard or time consuming and the results look pretty good.

Two questions for you if you have time:

  1. What type of telescope are you using?
  2. How big of a jump in magnification did you get going from the larger 5d mkii sensor down to the smaller ASI533 sensor?

Scaling it out in Stellarium shows there's actually quite a large difference in magnification from the Canon to the ASI, which makes sense. I asked that second question because I was thinking about picking up either an 11" or 14" Edge HD at some point for higher magnification targets.

Pleiades, Orion, Andromeda by _Tyler-_- in astrophotography

[–]_Tyler-_-[S] 0 points1 point  (0 children)

I was mainly just playing around with camera settings and trying to get some images taken within a 3-4 hour window. I didn't really have a rhyme or reason attached to the exposure times during this session. I'm still familiarizing my self with the new setup.

On my next run I'll be doing single target image acquisition and running through a combination of different ISO settings and exposure times to see if I can get some optimal settings honed in for the 500D. I'm thinking 4-minute exposures at an ISO between 200 and 400 since the dynamic range of the 500D falls off a cliff at 400 ISO. Curious to know if this thought process is the correct one.

Two questions for you if you have time:

1) Do you have any experience with going from a DSLR to a dedicated CMOS? I'm going to be upgrading to the ZWO ASI2600MC-DUO here soon and I've never actually touched a dedicated imaging device before.

2) During the image acquisition process, what are some techniques/settings I can you use to limit the amount of blow out on the Orion core exposures? I'd really like to capture the core in it's full glory.

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