How Joel Greenblatt Uses Options
Tilting the risk reward ratio in your favour with LEAPS!
How Warren Buffett uses options
Oh yes, Buffett is a big user of these bad boys.
This year I’m making it a priority to pick up options as a tool to complement long-term investing—how to enhance my returns and generate income.
For anything investing, I always go back to the source of insights—Buffett’s letters and Berkshire’s AGM.
This post will share how Buffett used options to lower Coca Cola’s purchase price and generate float at the same time.
Dollar General Business Breakdown
Dollar General is a well-managed company whose business model has shown to be resilient against economic downturns and the threat of e-commerce. In this COVID-19 environment, the company has delivered crushing results. With SSS up 12.2% and gross profit up 24.4%. This is likely due to a combination of hoarding, less traveling due to safety measures and thus we see a significant uptick in items per transaction. However, I do not expect growth to persist at such a high clip. The market appears to be very buoyant about the company’s growth prospects given that they are trading at historically high valuations.
Are earnings accretive acquisitions good?
It does not matter whether earnings is accretive post-acquisition. In other words, whether the EPS does up, down or sideways in the short-term does not matter.
Why I Own Disney Shares
The happiest place on earth. It is near impossible to replicate Disney’s share of mind even if you have all the money in the world.
The Disney name is well-known to billions of people. It has a meaning, an emotion perhaps, attached to it globally.
It is hard to find another brand that is unanimously known as the happiest place on earth.
With Disney+, it is now able to ship this happiness at an unprecedented scale.
Year 2020 In Perspective
Despite the backdrop of COVID-19, the year 2020 has been good to me. Writing online made me a better learner and allowed me to meet people smarter than me from all around the world.
I broadly summarize my key learnings into investing and writing online.
Terry Smith on Accelerated Share Repurchases
There is only one combination of facts that makes it advisable for a company to repurchase its shares: First, the company has available funds — cash plus sensible borrowing capacity — beyond the near-term needs of the business and, second, finds its stock selling in the market below its intrinsic value, conservatively-calculated.
Why Did Bill Ackman Buy Into Hilton?
Hilton first got my attention earlier this year when Ackman doubled down. This was after his incredible timing (both with buying and selling) with his hedge, profiting over $2b (on a $27m premium) during the sharp drawdown in March.
Because of its cyclical nature, a traditional hotel company’s earnings are extremely lumpy.
This begs the question—Why would Ackman be interested in Hilton?
The Advice I Didn’t Need
You become what you feed your mind. Regardless of how smart, savvy or inspired you are, if you don’t guard the door of your mind, you are giving the tacit approval of the disempowering, uninspiring, and cynical.
Return On Invested Capital
Value is driven by 3 things: growth, return on invested capital (ROIC), and the cost of capital (COC).