This is a great post - despite what you say I really like the journal-type posts that go into the author’s psychology, and the intellectual honesty you display here is phenomenal.
Just taking a peak at the stock chart as it’s not a company I know at all - what has been the cause of the recent decline? My impression from this post is that $22 is a rather attractive level, so if that hasn’t come with any major problems for the business I might put it towards the top of my to-do list.
I believe Dream at $22 is attractively priced. The decline since this post has been cased by a few things.
1) Canadian real estate in general has declined. The ETF XRE is the Canadian real estate index and it has gone down a fair bit and the chart lines up with Dream's well. That said, Dream has gone down much more.
2) On December 31st, Dream is paying a special dividend of $1, in addition to its normal $0.15 dividend, so $1.15 of the drop is attributable to those payouts.
3) In this post - https://canadianvaluestocks.substack.com/p/canadas-housing-market-and-dream - I discussed two dynamics that were bound to benefit Dream immensely. At the time, governments were offering developers incentives to build new housing, and the federal government was bringing in a ridiculous amount of immigrants who all represented new housing demand. Well our government finally figured out that our levels of immigration were unsustainable and reduced its immigration targets to actually reduce our population. That's a good thing for Canadians, but less so for a company that builds and sells new housing. I think a fair bit of the dynamic I discussed was priced in to Dream's price, so when the government changed its immigration plan, I think that hurt the market's of Dream's future profitability (rightfully so, but maybe overstated).
4) I believe end of the year tax loss selling has also played a part.
There are a few question marks - some investors disagree with some recent capital allocation moves in particular - but I don't think anything major has happened that would reduce one's estimate of intrinsic value. It definitely deserves a spot on your list, and if you have any questions when you're doing your work let me know.
This post is a gem. I have read it three times now. I really appreciate the depth you went into for the position in the context of your personal life. Not many go into detail on their largest positions like this. I think it's easy to look back in hindsight and say you did something wrong (or could have done something better). Personally, I don't think there was as much to unpack here as you do. It seems like there is such a fine line between conviction and misstep. You didn't blow up and are still in the game and that is enough. I don't own any Moberg but did have 35-40% of my portfolio in Cipher going into the whole trial snafu and it certainly stung. I panic sold in the 14s then bought it all back in the 15s after doing some more work. Time will tell if I look like a hero or fall victim to hubris.
A great piece, marvelous writing - investment or not. I read your Dream writings a few times and benefited a lot! Very much appreciate your intellectual honesty!
I don’t know that you did anything wrong honestly. There’s a lot of diverse, durable assets in DRM. I think you could justify going big. And you knew what you were doing. I did 40% by 2018. Markets IMO are getting stupider, at least with smaller stocks. It’s going to be a critical skill to ignore the big swings. Thinking of all your stocks as private companies is the way to go. If DRM had been private the last few years you would have thought its value was stable or growing the whole time.
I think the leverage was probably a mistake, or at least the amount was perhaps. I haven't done a full accounting of what that may have cost me - it would be a lot of work, I am not going to borrow to invest again anyway so there's no future action to be taken regarding it, and I think whatever I find out would just anger/sadden me - but I think there was little need to do it, at the time I did it, and in the amount I did it in. I should have done that more thoughtfully. That's the one thing I think I'd do differently.
Other than that, I agree that the thought process of thinking about it as a private asset and holding on to a good company you know well are good behaviours that shouldn't be discouraged because it didn't necessarily work out over a short time frame (in the context of and investing lifetime).
This is a great post - despite what you say I really like the journal-type posts that go into the author’s psychology, and the intellectual honesty you display here is phenomenal.
Just taking a peak at the stock chart as it’s not a company I know at all - what has been the cause of the recent decline? My impression from this post is that $22 is a rather attractive level, so if that hasn’t come with any major problems for the business I might put it towards the top of my to-do list.
Thanks Matt.
I believe Dream at $22 is attractively priced. The decline since this post has been cased by a few things.
1) Canadian real estate in general has declined. The ETF XRE is the Canadian real estate index and it has gone down a fair bit and the chart lines up with Dream's well. That said, Dream has gone down much more.
2) On December 31st, Dream is paying a special dividend of $1, in addition to its normal $0.15 dividend, so $1.15 of the drop is attributable to those payouts.
3) In this post - https://canadianvaluestocks.substack.com/p/canadas-housing-market-and-dream - I discussed two dynamics that were bound to benefit Dream immensely. At the time, governments were offering developers incentives to build new housing, and the federal government was bringing in a ridiculous amount of immigrants who all represented new housing demand. Well our government finally figured out that our levels of immigration were unsustainable and reduced its immigration targets to actually reduce our population. That's a good thing for Canadians, but less so for a company that builds and sells new housing. I think a fair bit of the dynamic I discussed was priced in to Dream's price, so when the government changed its immigration plan, I think that hurt the market's of Dream's future profitability (rightfully so, but maybe overstated).
4) I believe end of the year tax loss selling has also played a part.
There are a few question marks - some investors disagree with some recent capital allocation moves in particular - but I don't think anything major has happened that would reduce one's estimate of intrinsic value. It definitely deserves a spot on your list, and if you have any questions when you're doing your work let me know.
Appreciate it - will do.
This post is a gem. I have read it three times now. I really appreciate the depth you went into for the position in the context of your personal life. Not many go into detail on their largest positions like this. I think it's easy to look back in hindsight and say you did something wrong (or could have done something better). Personally, I don't think there was as much to unpack here as you do. It seems like there is such a fine line between conviction and misstep. You didn't blow up and are still in the game and that is enough. I don't own any Moberg but did have 35-40% of my portfolio in Cipher going into the whole trial snafu and it certainly stung. I panic sold in the 14s then bought it all back in the 15s after doing some more work. Time will tell if I look like a hero or fall victim to hubris.
Thanks Dean. Means a lot coming from you.
Fellow holder. Held dream through over 50% drawdown too. Not quite as concentrated though.
A great piece, marvelous writing - investment or not. I read your Dream writings a few times and benefited a lot! Very much appreciate your intellectual honesty!
Thank you for the kind words, and I appreciate knowing you took value from what I wrote
I don’t know that you did anything wrong honestly. There’s a lot of diverse, durable assets in DRM. I think you could justify going big. And you knew what you were doing. I did 40% by 2018. Markets IMO are getting stupider, at least with smaller stocks. It’s going to be a critical skill to ignore the big swings. Thinking of all your stocks as private companies is the way to go. If DRM had been private the last few years you would have thought its value was stable or growing the whole time.
I think the leverage was probably a mistake, or at least the amount was perhaps. I haven't done a full accounting of what that may have cost me - it would be a lot of work, I am not going to borrow to invest again anyway so there's no future action to be taken regarding it, and I think whatever I find out would just anger/sadden me - but I think there was little need to do it, at the time I did it, and in the amount I did it in. I should have done that more thoughtfully. That's the one thing I think I'd do differently.
Other than that, I agree that the thought process of thinking about it as a private asset and holding on to a good company you know well are good behaviours that shouldn't be discouraged because it didn't necessarily work out over a short time frame (in the context of and investing lifetime).
a brutally honest journal, thanks for sharing.
Thanks for reading, glad you liked it