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USG value trap or Bargain

By billytickets on Sat, 2007-10-20 12:54

USG at 36 dollars per share is a great "speculative" investment at these levels. Buffett bought in last summer at 46 and who in the world knows more about compounding their money than the 200 billion dollar man. This is abet on the "jockeys" and not the horse. Company insiders and a German company who own at least 10% have been recent buyers and that with the recent price drop have made these shares a GREAT long term investment. My advice is to buy at 36 and average down if the stock breaks below 30. This is not something to put 70% of your portfolio in but if you are trying to buy the financials or homebuilders because of depressed "bargains". This is your best Reward/Risk ratio

billytickets on Sat, 2007-10-20 18:52
Title: Fear

Courage is not the absence of fear but the conquering of it

George on Sat, 2007-10-20 22:24
Title: USG

I added USG to my Fat Pitch Financials Portfolio last year. I was a bit early on that purchase, but I still believe that USG has a lot of value. I should really consider adding more shares to my position.

billytickets on Tue, 2007-10-23 13:35
Title: How many Got on the USG

How many Got on the USG train before it "spiked up" today

George on Tue, 2007-10-23 13:50
Title: Re: How many got on the USG

Darn, I didn't end up adding more shares of USG yet. I was hoping to pick up some more under 35. Maybe I should consider sell 3-6 month puts at 35. Billy, do you ever sell puts?

billytickets on Tue, 2007-10-23 16:39
Title: I dont but what would the

I dont but what would the cost be? Thanks

George on Tue, 2007-10-23 23:24
Title: It would cost me $10.70 in

It would cost me $10.70 in commissions for 5 contracts for 500 shares of USG. The Jan 08 $35 put contracts are selling for $1.80. Therefore, you can sell 5 contracts for $900 minus the $10.70 commission. If USG drops below $35 before Jan 08, you are forced to buy 500 shares of USG at $35 if the put owner excersizes their options. I believe this is referred to as naked put writing. I learned about this from Tilson several years ago when he was at the Fool.

Nick on Thu, 2007-10-25 20:49
Title: Naked puts.

Just to clarify for my own edification: If the puts expire worthless you've made $889.30. If the option purchaser exercises their option you must put up $17500 ($35 x 500). As long as you are liquid enough and want to purchase 500 shares this is a nice plan. The only issue I see is that you can be exercised at anytime and therefor must be willing to sit on cash or sell something else at an inopportune time (otherwise it would have already been sold).

Have you used this strategy before? What were Whitney's thoughts on the subject?

George on Thu, 2007-10-25 21:02
Title: Re: Naked puts

I've haven't used this strategy yet, but I've been close to putting into action with WWY last year. I wish I had.

I'm not sure where I read Whitney Tilson's thoughts on this. I think it was a special pdf report issued by the Fool, one of those free bonuses. If you look at his funds filings, you can see that he trades in options and I'm sure some of them are puts on his favorite companies that aren't quite cheap enough.

The opportunity cost is your forgone use of the money elsewhere. Use your personal discount rate to determine if the potential return from the put sale is worth having cash tied up for a few months.

George on Mon, 2008-01-07 11:00
Title: Sold Naked Puts

Just to follow up on an old thread here, I sold my first naked puts last Friday. I sold 2 April 08 $30 puts on BID for $1.95 per contract. I'll write more about this on Fat Pitch Financials in the near future.

billytickets on Tue, 2007-10-23 20:02
Title: Wal mart

Anyone who gets in in the mid 43s has done something smart

billytickets on Tue, 2007-12-11 01:07
Title: Arent you glad you bought

Arent you glad you bought this one?

billytickets on Fri, 2007-12-14 11:53
Title: The person who gave this a

The person who gave this a negative OBVIOUSLY knows nothing about investing.This article speaks for itself and only a person with little knowledge of value investing would give a negative