Check Out OMAB, One Of My New Positions

MONTERREY, Mexico, Feb. 5, 2015 (GLOBE NEWSWIRE) — Mexican airport operator Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., known as OMA (OMAB) (BMV:OMA), reports that terminal passenger traffic at its 13 airports increased 12.2% in January 2015, as compared to January 2014. Domestic traffic increased 11.5%, and international traffic increased 15.8%.

Look I understand; Mexico has a bad rapport…mostly because they can’t seem to maintain laws, their public officials double deal with the mobs to decapitate college kids, and mostly they are a third world country.

But in between being a third world country, they get to be neighbors with us. And as long as they know better than to have relations with dirty commies, there’s no trouble here.

And on that subject, it’s not like Cancun is Mexico anyway. Cancun is America. We just call it Mexico so we can duck labor laws and hide out for a bit. And hang out with Jesse Ventura (who is bat shit crazy, by the way).

So go ahead and ask yourself, who benefits the most from a strong dollar, super cheap fuel (driven by an entire domestic oil boom going bust right above them), and American labor recovery.

The answer my friends is a Mexican airline company. One that has its foot in every stage of the business (from the travel all the way right down to the vending machine you buy from before loading for the trip) like OMAB does.

OMAB is distributing 8% right now, and growing at double digits. Strong currency will make travel for Americans cheap. Think back to our recent history; or even our less recent history when Americans were buying up French property like it was nothing, then burning francs in their faces when they protested.

Dropping the “arrogant American, foreigners are chimps” act, Mexico is making strides to get their act together. Honestly the last chip that needs to fall in place is for the American drug “war” to end (who the shit starts a war with an inanimate object? Crazy people, that’s who…). If that goes, then pretty much the entire purpose and life force of the Mexican mafia dies with it; you would watch Mexico make leaps and bounds forward.

Right now they’re too busy demanding American citizens be forced to disarm (ha…ha ha…hahahah ahahaha…) to make an effective plea to the public. America would be receptive to the “your prohibition movement is getting our people killed” argument if they stopped targeting constitutionally enshrined freedoms and pissing everyone off.

There are many reasons I like OMAB, which range from their performance to their pricing and also their positioning. They have a good lock going on travel around America and Canada’s favorite playground – locations spanning the Gulf Coast to the islands in the center – and increasingly I think you’re going to see the Central and South America’s become more and more important.

The United States have ignored the Southern continent zones for too long. We’re busy playing around in an increasingly less relevant desert for oil that we’re brimming with, and meanwhile a huge resource laden land mass much closer to us is free to be overrun with Bolshevik wannabes. With the self-imposed collapse occurring in several of these places right now, the time is right, and the mood of the resident nations is looking for a change. The U.S. and capitalism can be there so long as we strike good deals and keep the playing field fair and level.

I purchased shares of TIS for $25.57, bringing my cash position down to 50%.

TIS is a smaller scale North American company that specializes in toiletry paper products. They have good financials and a reliable little operation. A nice little cash generating machine which, as of today, is available at an 8% discount to yesterday.

Not exciting or interesting at all, yet well positioned.

I’ve also got a hunch that companies like TIS will have surprise growth ahead. As I look at more or less the complete dissolution of an entire economy in South America, I can’t help but think that this kind of boring business will have some interesting opportunities over the next few years.

Venezuela is not going to stabilize without outside help. Maduro is too stupid to pull this off alone; the bus driver is going to need to allow some major imports of foreign goods at market prices to stabilize his economy. Or, more likely, whichever successor is first to be found standing over Maduro’s lifeless body will. An entire country is not going to be supplied by any one source, so I’d put good odds that manufacturers of basic products like this, all over North and South America, will stand to profit as supplies redirect southward.

Venezuela may be the worst, but hardly the only party here. There are a handful of similar styled countries in South America that have looming problems and will likely end up becoming ripe targets for North American supply.

This pretty well sums up why I haven’t done anything over the last month. I don’t trust anything or anyone right now, other than a comfy 60% cash position and my own nerves.

And if I have to sit on that cash position for a year, doing nothing much at all, then watch me.

You should generally presume that the future will behave averagely from the present. But there are times when you are confronted with the extraordinary; times like the 3rd most significant decline in a key commodity on record. And when those times happen, you should chuck the ordinary and assume you are living in extraordinary times.

We saw the tech sector get run through last spring. Then the oil space. What comes next? Wherever we are, it’s best to believe that it will be anything but average.

After all, nothing else has been.

HCLP was up more than 10% today which is of course a very generous reprieve. My book was up just under 2% today which is…um 40% more to go.

For sure, the fastest path to redemption lies in the irons that bound me…the oil sector. If I am going to get a big 50% year (which is not uncommon around these parts, actually), then these oil names are definitely one possible, tantalizing path.

I need to have self control though. I cannot just start loading back up at every little blip.

HCLP numbers were hot but I think that has more to do with men and women rediscovering that, yes, actually there are specialty plays within the oil space that are insulated (at least momentarily) from price shock.

There was never a great reason to sell off HCLP so hard, since as you will recall their operation grew tremendously and it was all contractually accounted for.

Actually, a iBC regular wrote up a rather excellent analysis in the comments of my last post. You should read it here.

To stand, 60% cash and searching like a hawk for the next kill.

I own BAS, VOC and HCLP, so yes today is welcome relief. I have a lot of upside to get back to break even (and honestly, more yet to hit my old highs). But I also know better than to start shooting off fireworks and spitting on oils detractors.

So far, word out of the oilfield services is that operations continue apace. This is not unexpected though, as the concern has always been for what would happen if oil prices don’t make further wells economical. Right now, future spending is null and that will be what ultimately drives the prices of companies like BAS (hence the massive drawdown in the name).

As for HCLP, the company is awesome and they have long term supply contracts signed which mandate minimum deliveries, so they are more prepared to weather the storm. But ultimately, again, demand for their product (frac sand) trumps financial tomfoolery like supply agreements.

VOC is a direct play on oil prices, and here I am getting hosed. I need price recovery. I thought I knew what VOC’s oil extraction cost was (which should have spared me concerns of a total collapse), but now the Trust is playing loose and fast, claiming the expenses have dramatically changed. Right… It smells bad, but I would stop short of calamity. Unpleasantness, though, may be an apt description.

I hope the accountants involved all burn in hell.

Greetings from the 9th floor and allow me to talk non-finance for a while. We’ve been chewing on this tape long enough to have earned a break.

Months ago I swore to Madame Thaler that I would be a more involved family sort the last few months. It’s not that I was ever an uninvolved man; only that I promised to apply extra efforts to attending events and seeing loved ones who we had only occasioned with in the past few years. We let the children of our extended family come stay over night and entertained them with trips to water parks and zoos. We doted on the youngsters. We entertained and visited often.

The effort reaps dividends and I recommend you try it if you find yourself isolated from your clan. Our kin are one of those special associations that almost always enhance our quality of life. Sure spending time takes away from business affairs, but why are you working so hard anyway? A common answer is, “for others”.

But the others would rather you be a part of their lives. The great man or woman is one who can apply himself or herself in both fields of life (often at the expense of their own personal time – work and family are exhausting).

Naturally some of you are estranged from your families. I would not tell you to reconnect; plenty of those estrangements are for good reason. But find yourself a family all the same and exercise yourself to include them in your thoughts and life.

It’s difficult to organize these events and often it falls on you (as the enterprising up-and-coming) to make it all come together. But when you finally are surrounded by people you haven’t seen in years, the cost seems so negligible. It is a very rewarding experience.