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Days Like Today


Guest swf83
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Guest swf83

Even as a long-term investor, days like today are pretty depressing. Do others add to their long positions in FFH on this type of pullback?

 

Thanks-

Scott

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well you didn't think that rally would last forever did you?

 

I've been eyeing many high quality names, however they've run up so much ... with no real fundamental improvement in earnings power at all. Thankfully they're coming down to more sane levels now. Some of these banks are trading at like 20-30x earnings!! Where the business models have been completely destroyed at that.

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Guest swf83

Just curious...why own the LEAPS rather than the common stock? Simply because less capital is required for the LEAPS (compared to buying 100 shares of the stock for which 1 LEAP represents)?

 

Scott

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Just curious...why own the LEAPS rather than the common stock? Simply because less capital is required for the LEAPS (compared to buying 100 shares of the stock for which 1 LEAP represents)?

 

Yes, and for the leverage.  The 260s are slightly out of the money.  If FFh goes up $80 the leaps will rise from $47 for what I paid today to around 120.  That is a nearly a 3 bagger.  The common cost me 250 and will be worth 330 with an 80 increase, which is ~ 20%.

 

The downside of course is if the stock stays at or below 260 until Jan. 2011, then I lose all my money.  I have a strategy of selling Leaps into rallies starting with the highest strike price I own or the nearest expiry date.  I was selling 260 - 2010s a couple of weeks ago. 

 

 

Mark, that is something.... I dont think I was bidding against you - I kept trying to draw the bid down as the stock was tanking.  I had another offer in at 44 that didn't get filled.   

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I now have FFH as my largest holding after going to zero  in the run up in  Feb I guess its a case of fools seldom differing. The fact that I can buy FFH @ 80% of BV is pretty compelling. I suspect that the EXTREME relative undervaluations that FFH has suffered from in the past are going to be much more infrequent going forward.

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