Author Topic: DWDP - Dow DuPont  (Read 53455 times)

BG2008

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Re: DWDP - Dow DuPont
« Reply #130 on: January 12, 2021, 10:52:48 AM »
I dont have a specific read here other than a general observation that Ive started to see with stuff like this, GM, etc. Kind of sleepy but decent companies showing signs of awakening. You can effectively remove the bulk of your position, free up most of the cash, and then go out the chain, 2022, 2023 with some OTM calls, for what I consider to be, peanuts. If my bull scenario plays out, the animal spirits may awaken these type of companies and in such a case they could easily rerate 2-3x higher over the next few years. A few weeks ago I re entered GM through some $50-60 2023 calls. I have nothing now, but was peaking around at the 2023 DDs as well. These things are NOT market resistant. We all see what they do when the market shits a brick. So basically being in cash with a call on ludicrous mode for pennies or dollars is IMO how I'd play it out.

I have increasingly look to this method of capturing exposure while limiting downside.  This is exactly what Nassim Taleb talk about his 90/10 or 80/20.  It's probably better to have 10-20% in LEAPs on various sleepy large caps that may awaken.  Maybe I should just swap my Berry Exposure to LEAPs.  VNO maybe a good candidate as well.  I don't think it re-rates until people move back into offices.  These companies can kind of lull investors into sleep.  Heck, even I get a little worn down after being in Berry for 3 years.  I find that I generally get "tired" after 3 years being in a name and not having it work.   


Gregmal

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Re: DWDP - Dow DuPont
« Reply #131 on: January 12, 2021, 12:35:09 PM »
Yea I try to look at things as if you have a carpenters tool belt. In that belt is everything you need to handle the current market environment. You have your stock, bonds, derivates, etc. The key is finding the most efficient way to accomplish whatever it is that you are setting out to do. With DD, my objective was really just a drama free, better than average-ish large cap return. Sans the covid things, 50%+ in under a year is hard to argue with. But from here, if the goal is 10-15% of drama free return, theres plenty else like BRK or mf REITs where I think I can achieve that with much less risk. If my objective is playing DD for a rerating, then you can go up the chain, reducing your outlay while still having the trade on, just less exposure. GM is a perfect example of this. I held the stock for years. Had a negligible return but ultimately it was a waste of time. But the entire time there were rerating pitches and even in 2015 I remember hearing and seeing a credible path to $100. If AAPL can go from 12x to 40x in a few years, so can these things. I wouldn't be shocked if GM was $150 in a couple years should things get nutty. $4-5 for a call on that is free money if you do it enough. 

rogermunibond

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Re: DWDP - Dow DuPont
« Reply #132 on: January 15, 2021, 06:43:57 AM »
What's the issue with IFF over the past few years?  Organic growth seems tepid, capital allocation to buy N&B from DD is meant to recharge rev/earnings growth?

IFF seems like it should be in a high moat business but seems to be grossly underperforming.

BG2008

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Re: DWDP - Dow DuPont
« Reply #133 on: January 15, 2021, 06:44:56 AM »
Sold out of all of my DD Jan 15th Calls for about $17 versus a $3.50 cost basis.  Had to take my daughter to the pediatrician and missed out on selling at $21 to $22.  Kids are expensive!!!!