Speaker 1 (00:00):
Hi everyone. I’m Tim Melvin. And I’m back with yet another better way to wealth. And we’ll talk a little bit about three stocks that I’m watching this week that I think have the potential to deliver extraordinary returns. If the situation sets up right for us. So one that I have my mind, my eye on very closely is simple. BRW this is called the Sabir S a B a capital income and opportunity fund few months ago, this was the Voya prime rate fund, but Seva is actually a fixed income investor that engages in quite a bit of a closed end fund arbitrage. And they ended up pretty much buying control of this fund, changing the name and changing the purpose of the fund. Now, the fund is going to be managed by Boaz Weinstein and his team. And you’ve probably never heard of Mr. Weinstein, but you are today because I’m here to tell you the guy is the best fixed income trader on the planet.
Speaker 1 (00:57):
Today. I’ll remember when the London whale trade happened in a row, trader went off and made a bunch of stupid trades in London, cost Jamie diamond, about $2 billion at JP Morgan. The guy on the other side of a great many of those trades was Boaz Weinstein because he spotted them correctly as very stupid trades. Now, last year, he had some bets on that things would go ridiculously wrong. They did in 2020, and he ended up being up 80% in the month of March alone. This guy is very good at what he does. He’s going to be overseeing the portfolio. Now they’re going to be investing primarily in high yield credit. It’s a pretty broad mandate. So if he wants to bet that things are going to go wrong in this fund, he is very much allowed to do that. He’s also going to engage in closed end fund arbitrage.
Speaker 1 (01:45):
He’s going to buy up shares of closed end funds that are trading at steep discounts for nav and lean hard on the fund managers in the board to take whatever steps are necessary to reduce the current discount to nav. Now, Mr. Weinstein is setting an example. He just did a huge tender offer and bought back half of the shares of the company. Just about half of the shares of the company to reduce the discount of this fund. Now that he’s running it, the current discounts are only about 7%, but still we’re paying 93 cents on the dollar for a fixed income of fund. That’s going to be managed by one of the best teams in the fixed income business, overseen by the guy I consider to possibly be the best fixed income investor of all time. He’s that good? So we’re looking at this fund. They’re going to do some spec arbitrage to which in generates very steady returns.
Speaker 1 (02:36):
He’s been in on that game since day one, and he’s very, very good at it. So this is going to be a fantastic fund. We’re just kind of looking for a little bit of a pullback here, get the discount a little bit wider, you know, a couple of bumpy days in the market. And I think this will be a great fun to add to your portfolio. Now, the exciting news, if you’re a fixed income investor, they’re going to pay a managed distribution out of this thing. It’s going to be an 8% or higher dividend yield with the discount that age, probably going to be closer to nine. So if you’re a native income, this belongs on your buyer list, you need to be looking to pick it up on a down day, cause I can tell you I am. My next one is core point logic.
Speaker 1 (03:15):
Now core point was spun off years ago. This was the old Lakita hotels. Blackstone did a leveraged buy out of these guys back in 2006 and then an IPO of the hotel part of the business in 2014. And they, they’ve kind of struggled. They’ve had good months, bad months, but really haven’t done much. They paid a decent dividend and a couple of years ago they decided, Hey, we’re going to get rid of the properties. We don’t like. They’re focusing on, you know, the Lakita hotels that are close to entertainment centers, to downtowns, to airports, to business centers, the ones that have higher revenues per room and higher occupancy rates. So they’ve sold a bunch of hotels. They’ve used that to pay down debt, which we all know is my absolute favorite use of cash raised by selling assets. But recently they said, Hey, you know what?
Speaker 1 (04:02):
COVID, it’s all, this has all been really hard to put up with just being in the hotel business right now. So let’s sit down and as a board, we’re going to review all of the possibilities that might be available to us. We’re going to do what they call a strategic review. One possible outcome of the strategic review, ongoing Corepoint is the sale of the company, the stocks 13 and change. I come up with probably 18 to 20 bucks as a fair sales price for this thing. This could happen quickly because Blackstone is still the largest shareholder and they do still own 30% of the company now. So they know the business fairly well, and they just bought along with Starwood capital, a very similar chain of hotels the easy stay, an extended stay America and they paid, you know, pretty premium price for that.
Speaker 1 (04:55):
So I think that we could see a sale or takeover of this company sooner rather than later, and tack on as much as an instantaneous 50% gain. We are going to collect some dividends along the way. Oh, no officer waving corporate, which is not currently paying the dividend. Sorry about that. So you know, quick 50%, if they do decide to keep running the company, then they’ll have to kick the dividend back in and that’ll come back to this part. I really do think they’re going to sell a corporate lodging symbol CP LG sometime very soon.
Speaker 2 (05:25):
Speaker 1 (05:27):
Final stock this week is one of my favorite companies in the world that Smith and Wesson SW BI the stock has been pulling back because the number of background checks in June of 2021 were a lot less than the number of background checks in June of 2020. What people are failing to think about is June of 2020 was pretty much a record year. Think that what was going on in June of 2020, not only did you have the raging through cities all over the United States, we had riots in distress and it just civil unrest in the streets, more and more people that people that never even thought about buying a gun, went out and got a gun. Last year. Permits are still at a decent level Smith and Wesson still selling plenty of guns. So, and I don’t think that’s going to go away.
Speaker 1 (06:20):
Remember we have a democratic administration in the white house. We haven’t heard the final gun control proposition. You can count on that. Should the Democrats hold on to the house and the Senate in 2020 to flip the coin on that from, from what the pollsters and pundits are telling me right now we will see a lot more gun reform. You know, the greatest gun salesman of all time was Barack Obama. When Obama got into the white house gun sales took off, cause everybody was concerned about new regulations, bans on certain types of guns. And I think Joe Biden may very well take a run at breaking Mr. Obama’s first term record during his first term, as president of the United States will say point his gun demand is not going away. This thing’s coming back down into an area where it’s starting to look very attractive.
Speaker 1 (07:11):
If it continues to fall closer towards the $20 level, I’m probably going to want to get involved in the stock. They’re generating a ton of cashflow. They’re using it to buy back a ton of stock in the open market. And as I said, it’s one of my favorite companies were Smith and Wesson family. I mean my wife has a Smith and Wesson 40 caliber. I have a nine millimeter and I have my personal carry gun, which is the Smith Smith and Wesson five rounds, 38 on the J frame. Love that little guns, perfect little carry pistol for down here in the south. So we’re a Smith and Wesson family. We have owned this stock before completely willing to own it again, if it keeps pulling back and gets down closer into that 20 area around the multiple that I want to pay for the company, I’m going to be an aggressive buyer and you can bet that I will be letting my paid subscribers know today’s the day to load up on Smith and Wesson. So don’t worry guys. I’m Tim, Melvin, that’s all for today. This has been a better way to wealth. Thank you for watching. I’ll talk to you tomorrow.
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