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What are you buying today?


LowIQinvestor

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WORK - I have a one liner thesis for Slack. Corporate facebook with a $85 ARPU. Just need to get to 50 mn paid subs which is is doable i think.

 

MTCH - Huge addressable market still left. Network effects. Promising customer segmentation strategy. 22% unit growth in subscribers.

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WORK - I have a one liner thesis for Slack. Corporate facebook with a $85 ARPU. Just need to get to 50 mn paid subs which is is doable i think.

 

MTCH - Huge addressable market still left. Network effects. Promising customer segmentation strategy. 22% unit growth in subscribers.

 

Facebook has already a corporate Facebook version. Work looks more like Discord to me. I actually heard that some upstarts use Discord.

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VIAC, where no money has gone before.

 

What are your thoughts here?

 

Basically the same thing as set forth here:  http://yetanothervalueblog.com/

 

(including concerns about controlling shareholder...)  But I like the funnel in for content with Simon and Shuster and the "selling of the picks and shovels to the miners" kind of strategy for streaming wars (maybe even the cost-plus producing shows they don't own isn't anathema...it works ok for defense contractors); also the single product licensing function for the company seems like a great move; they have historically totally blown it with Star Trek (as compared with Wars) imop.  It's obviously cheap AF, even before any "synergies" (assuming they are soon to be destroyed).  Seems like there's maybe a catalyst with Bakish talking about re-upping their buyback authorization.  I also kind of like Bakish (having watched maybe ten interviews with him) he doesn't seem like a smooth bullshitter, Hollywood ceo.

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VIAC, where no money has gone before.

 

What are your thoughts here?

 

Basically the same thing as set forth here:  http://yetanothervalueblog.com/

 

(including concerns about controlling shareholder...)  But I like the funnel in for content with Simon and Shuster and the "selling of the picks and shovels to the miners" kind of strategy for streaming wars (maybe even the cost-plus producing shows they don't own isn't anathema...it works ok for defense contractors); also the single product licensing function for the company seems like a great move; they have historically totally blown it with Star Trek (as compared with Wars) imop.  It's obviously cheap AF, even before any "synergies" (assuming they are soon to be destroyed).  Seems like there's maybe a catalyst with Bakish talking about re-upping their buyback authorization.  I also kind of like Bakish (having watched maybe ten interviews with him) he doesn't seem like a smooth bullshitter, Hollywood ceo.

 

Thanks, you bring up good points - I was surprised John Malone was so negative on both the "arms dealer" strategy with content (which has worked well for the record labels when it comes to streaming) and the cost-plus arrangements (especially where rights revert back after an initial period), as well your point on product licensing is an interesting one that I haven't seen discussed much elsewhere.

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WORK - I have a one liner thesis for Slack. Corporate facebook with a $85 ARPU. Just need to get to 50 mn paid subs which is is doable i think.

 

MTCH - Huge addressable market still left. Network effects. Promising customer segmentation strategy. 22% unit growth in subscribers.

 

Facebook has already a corporate Facebook version. Work looks more like Discord to me. I actually heard that some upstarts use Discord.

 

Spek,

 

To clarify i meant it as a comparison. Slack’s growth and engagement has been as viral as facebook. Adoption is better than corporate facebook in terms of paying users. I believe they have a long runway. Timing of my buy couldn’t have been worse given today’s price action

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Bought a few WFC $45 calls. Looking for a run into earnings.

 

Hopefully the new CEO won’t do write downs, like many new CEOs like to do.

 

Yeah, or set the future bar low, so he can easily jump over it. FWIW, I don’t  like banks right now - potential for lower NIM and higher loan losses.

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Bought a few WFC $45 calls. Looking for a run into earnings.

 

Hopefully the new CEO won’t do write downs, like many new CEOs like to do.

 

Yeah, or set the future bar low, so he can easily jump over it. FWIW, I don’t  like banks right now - potential for lower NIM and higher loan losses.

 

Greg, why the 45s? Just leverage ?

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Or as someone pointed out the other day, you can use call buying to limit downside risk if you buy what you can afford to exercise at the strike price instead of buying the stock.

 

Scenario A

For example if WFC were at $53 and you had $5410 cash and could buy one $45 strike call for $9 before earnings, you'd lay out $900 + $10 commission up front and have $4500 left to exercise the call to receive 100 shares WFC.

 

Your breakeven price is $54.10 instead of $53.10 unless you earn a little interest on the $4500 cash until expiry so you lose out by $100.

 

But if WFC falls below $45 at expiry, you don't exercise and limit your loss to the $910 you laid out up front, keeping the $4500 in cash you had retained to cover the exercise.

 

Scenario B

The extreme alternative approach is to spend all $5410 on 6 contracts at $900 each and get 5-6x leverage and increase your potential loss to 100% after a 17% drop in WFC price to $45 while increasing any gains. If you want to cash out at any time up to expiry you may choose to sell the calls to someone else or to exercise them and sell the stock, reducing commission and spread costs slightly.

 

Or you go somewhere between these extremes by buying between 2 and 5 contracts to get some leverage and some downside protection.

 

My guess is that it's most likely being used as uncallable leverage over a certain time frame to amplify the upside. But on occasions where the probability distribution of outcomes includes a substantial downside swing it can provide built in protection at a known cost. Sometimes this may have features superior to alternatives like stop losses which are path dependent and might not actually exit the position at the price you set of the fall is fast enough.

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Bought a few WFC $45 calls. Looking for a run into earnings.

 

Hopefully the new CEO won’t do write downs, like many new CEOs like to do.

 

Yeah, or set the future bar low, so he can easily jump over it. FWIW, I don’t  like banks right now - potential for lower NIM and higher loan losses.

 

Greg, why the 45s? Just leverage ?

 

A few reasons, women similar to what Dynamic stated.

 

First, it is leverage, yes.

 

Second is that $45 is where you had all that support during the worst of times right after the account opening scandal. If it held there, then, it would take one hell of a meltdown to take it below there on a short term basis. It hasn't done anything the past month or so; my hope is that something will give. The big banks are still modestly inexpensive and reasonably high quality. So there could be some catching up to do, especially with Wells.

 

I dont entirely anticipate holding it through earnings. We've got a nice runway until then. One of the easiest and most repeatable trades ever was buying Apple a few weeks before earnings and then flipping it the day of, between 2012-2014 it worked like clockwork. You could always still hold, especially if you get yourself a big enough cushion.

 

So basically, with the $45s, I have enough leverage where a move of a few bucks up can work, but enough of a cushion where if it doesnt do anything or goes down a bit, I can always just exercise the call and hold the position. In which case I own WFC- theres worse things in the world. AND if there is such a scenario where the $45 mark comes into question, then it'll obviously be something extraordinary, in which case having the position on will likely prompt me to dig into the potential opportunity much more thoroughly than if I just had it on the potential watch list with a gazillion other companies, while at the same time still limiting my losses.

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In my opinion, if you are right on the stock, no point of buying a bit of options and planing on all these different scenarios. Just buy the stock in a big way if you are confident or don’t bet anything especially not options.

Or just buy a big load of calls to get huge leverage.

 

I had a coworker who earned the down payment for his house buying calls on Apple.

But another coworker (who is very good at stock) lost about 5 years of pay when he all-in a high conviction calls (the stock went up many times after his calls expired worthless)

 

 

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Not to sound like RuleNumberOne, but theres not too much to be high conviction on here, right now, when the market is going up .5% every day. I expect WFC to rally a few bucks into the January earnings. I retain the option to maintain a position thereafter via the calls, but have some flexibility in between without a big capital outlay. Theres worse things to own than a small bit of WFC

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