Market Performance
[Index | % change WoW ]
S&P 500 | 3397 +1%
Dow Jones | 27930 unch
Russell 2000 | 1552 -2%
Russell Microcap | 591 -2%
10-Year | 0.64% -7bps
Gold | 1946 unch
Oil | 42 unch
VIX | 23 +5%
Market Stats
A few charts from the past week highlighting some of the trends taking shape during COVID…
E-commerce is taking huge market share from brick-and-mortar — will this be a new base or a temporary phenomena from lockdowns?
![Image Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffe9d837a-2aa2-482d-aa86-aba72aad1935_680x615.jpeg)
Hotel occupancy is still terrible… I traveled to North Carolina a few weeks ago and occupancy was still in the single digits at my hotel…
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F80ebb954-4a37-4793-a6a8-08d36251f198_700x394.jpeg)
Coal had already been dying a slow death before COVID came along… then oil and gas prices got clobbered and electricity demand went away…
![Image Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F82d7ebcd-b291-4bc5-a816-0ab45dd5b038_873x531.jpeg)
Lastly, here are a few stocks with large short interest lately… (Admittedly some of these look like interesting long ideas.)
![Image Image](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F47473632-722a-4630-bb58-ad11beadac53_678x881.jpeg)
Quick Value
Amerco (UHAL)
For starters, this is a family business controlled by the Shoen family with ~43% of outstanding shares. Compensation to family members hasn’t really been egregious, so that’s nice.
Amerco is a moving and storage company operating under the well-known brand U-haul. They’ve got a base of 2065 company-owned stores and 20100 independent dealers helping rent trucks, trailers, and self storage units. Moving and storage make up 91%+ of revenue while insurance products make up the remainder.
Revenue has grown considerably over the past 5 years (~5% per year) but so have expenses. Pre-tax earnings in 2020 were $378m ($19 per share) compared to $768m ($39 per share) in 2016.
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F43725c58-76e3-49de-b8b9-0b4b9f560363_671x639.png)
And so has gone the stock price… Virtually unchanged over 5 years…
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe6bf9118-0825-48a4-b894-bc54010c62b7_657x199.png)
Part of this is related to the increasing self-storage strategy over the past several years…
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F520a347c-2da4-4abf-af50-142540c1ca0c_918x118.png)
Amerco is adding tons of square footage through new real estate investments and upgrading locations each year… From 10m square feet in 2008 to 43m in 2020 — an increase of 14% per year. Because of this rapid expansion, occupancy rates are very low at 68% — down from 80% in 2016…
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F724af687-0aa6-41e6-8527-012219e6cc43_605x145.png)
These things typically rent at $14-15 per square foot each year so this is a big chunk of revenue not yet being captured!
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb06d231d-4faf-479a-9537-3dc6f2aa6c9b_829x518.png)
But this is still a cash generative business… And management has been redeploying cash at a fast pace. Operating cash flow has consistently averaged around $1bn each of the past 3 years… Cash invested in new equipment / real estate (net of sales) has averaged $1.2bn.
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F7ed00ebe-3fcd-470a-bab4-d18f84fc061a_667x220.png)
The U-Haul truck rental fleet has expanded too…
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9aa8e1d9-9a3e-47f0-8407-0708f60ca09c_800x491.png)
At $350 per share and 19.6m shares outstanding, this is a $6.9bn market cap. With $4.8bn in debt and $825m in cash as of June 30, 2020, its a ~$10bn enterprise value.
EBITDA is right around $1.2bn per year (9x EV/EBITDA). Operating cash flow is ~$1bn per year (6.9x P/CFO).
There are some favorable trends at play here — home ownership, self-storage economics, long-term thinking by management, etc. And the stock price has all but thrown in the towel on any meaningful expectations. Could it be a recipe for long-term earnings growth?
As for COVID concerns, June 30 quarter saw overall sales down 8.5% but self storage and storage/moving products were each up >10%.