Since my last GLW position was a success. I am deploying the cash to work again. I still need to put in more time to study GLW. I want to learn all the possible down side of their business. Meanwhile, i will use Covered Call strategy to build up the position.
Looking from the surface, the numbers are very good. And the management made it clear that they do have strategy and long term plan on hand. Market sentiment toward GLW is very negative. To me, that is a good sign. I can normally buy it at deeper discount if a company lost its favor.
2/22/2012 GLW 13.55 5/19/2012 1.195 75.9 13 80 4.76% $5,084.10 87 19% $108,400
I bought 8,000 shares again. Unlike last time, this time, i sold in the money call. Strike price is still $13. That gives me more downside protection.
If success, it will get called away and i will realize 4.76% profit in 87 days. Or annualized 19%. This is not awfully high. But i rather give up some return for safety.
If GLW is trading below $13 by 5/19/12, then, i got to keep the premium and stock. That will bring my cost down to $12.355. That's a level that i don't mind holding. Knowing they will have a poor Q1, i think the chance of price drop below $13 is rather high. We will see.
Meanwhile, I will budget more time to study GLW
Thursday, February 23, 2012
Tuesday, January 31, 2012
Corning (GLW)- What can go wrong and how much they worth
I am determined to dig out all the info i can find. After factor in all the negatives, I should be able to come up with a minimum price for GLW.
1. Tax rate for Q1 2012 will be 20%. As oppose to Q4 2011's 15%. Therefore, we will see some impact toward net earning.
2. Display section's profit will drop significantly. And Display section contribute 80% of the company's total profit (How much is significant? I need to find out)
1. Tax rate for Q1 2012 will be 20%. As oppose to Q4 2011's 15%. Therefore, we will see some impact toward net earning.
2. Display section's profit will drop significantly. And Display section contribute 80% of the company's total profit (How much is significant? I need to find out)
Friday, January 27, 2012
Corning (GLW) - Start buying - $12.65
I learned from Buffett that when a stock is at deep value, it will be scream at you. You will not miss it. Now, today, Corning is at $12.65, not quiet screaming yet. But it is making big enough noise for me to buy in.I own GLW stock before, I exited the position when it touches $20. So, i know some general info about this company. What trigger my purchase decision today is purely its price.
Their recent quarter shows their earning is dropping. Despite their revenue growth is record breaking. I believe that is the main reason why the stock pull back. I will do more research later. So far, the management shows me that they consistently innovate and guiding the company to the right direction. Therefore, any short term hiccup only create good opportunity to buy-in
It is taking me long time to fully evaluate GLW. All the surface number looks good enough. But I want to protect my investment while I am studying it. So, I am doing the usual Covered Call strategy.
Bought 8,000 shares of GLW at $12.65 each.
Sold Feb $13 call for $0.2 premium
Although i believe this company is worth a lot more than $13 in next 2 years. I am setting $13 because (A) it is only 22 days holding period (B) It is not impossible the stock will drop below my entry point. Consider they will have a bad Q1 2012
If my position get called away, my investment is generating 4.35% in 22 days. Or annualized 70% return. I should not complain about that kind of return.
If stock price remain below $13 on Feb 18, i will keep the stock and I will still be very happy. Because it means I am getting GLW for 12.45 ($12.65-0.2=12.45)
I am reserving some cash and will buy 2nd batch of GLW if it fall near $11/share. This can be a good long term value hold.
Update : 2/18/2012 This position successfully call away. Reaching my desired return
Thursday, December 29, 2011
Cautiously Adding Microsoft $26
I am adding 5,000 shares of MSFT at $26/share
Immediately, i sold March $26 call and pocketed $1.03 premium. I will also receive $0.2 dividend by 2/14/12.
This is how this investment look:
12/29/2011 MSFT 26 3/17/2012 1.23 53.4 26 50 4.73% $6,096.60 79 21% $130,000.00
If it got called away by 3/17/2012, my annualized return will be 21%. If it fail to get called away, then, my cost for that 5000 shares will be $24.77
Upside: I am very happy with 21% annualized return
Downside: I feel safe to hold MSFT at $24.77 cost.
Immediately, i sold March $26 call and pocketed $1.03 premium. I will also receive $0.2 dividend by 2/14/12.
This is how this investment look:
12/29/2011 MSFT 26 3/17/2012 1.23 53.4 26 50 4.73% $6,096.60 79 21% $130,000.00
If it got called away by 3/17/2012, my annualized return will be 21%. If it fail to get called away, then, my cost for that 5000 shares will be $24.77
Upside: I am very happy with 21% annualized return
Downside: I feel safe to hold MSFT at $24.77 cost.
Monday, December 19, 2011
Amazon, a company that I rely on. Building a position
Majority of my business are coming from Amazon.com. Naturally, I have first hand experience with the strong growth it delivers.
12/1/2011, I couldn't resist it anymore. I bought 200 shares of Amazon at $197.454/share. I am no stranger to Amazon stock, i bought it in 2007 and sold it at lose. I bought it again in 2009 and sold it for gain. I did it again early this year and capture some meaningful gain. My total gain on Amazon, after offset by lose is $43k.
My purchase price is high. And this company never go on sale. P/E is nearly 100. The growth of Amazon is amazing though. quarter after quarter revenue growth is over 50%, even at such a big base. And the management is very good. History shows they do not care about current margin. They are focusing on the future. Invest heavily on the future growth. I found that approach very smart. Now, I am using my trusty Covered Call strategy. I understand even if the company is a good company, if i over-pay, I will not benefit from the position.
My position looks something like this:
12/1/2011 AMZN 197.454 12/17/2011 5.45 31.45 200 10 4.05% $7,964.55 16 92% $197,454.00
Option execution date is 12/17/11.
Today is 12/17/11, stock price dropped to $181. So, i still own the 200 shares. And the Dec 11 CALL premium brought my stock cost down to $192.004 (i am ignoring the personal tax consequence, just to simplify things) OK, to make those 200 shares to work, I have the following 2 choices.
Jan 2012, $195 option call, if success, can translate to 22% annualized return in total 67 days. That is a very good return consider 15% return is my ultimate target.
Feb 2012 $200 option call, if success, can give me 32% annualized return in total 95 days. I like that a little better. Because I am bullish about online shopping. I am bullish about Amazon's strategy. My own business's result support my point of view. I do see phenomenal growth rate from Amazon's order. Even their profit margin is volatile. If they continue gain market share, they eventually can demand higher margin. Third party merchant has no choice but to pay commission to Amazon. The platform they built for third party merchant is so well. Brings merchants tremendous success, a success that the merchant otherwise can't achieve.
To summarize my reason. I choose $200, (my cost is 192+) because i am bullish in Amazon. I choose Feb is the premium v.s. risk is within my satisfactory level. It will be after their earning report. If this option position fail to get executed, then, I'll continue hold the stock and sell longer term CALL. I am somewhat hopping it does not get executed. If on other hand it get executed, i made 32% annualized return in 95 days. Not bad~ I anticipate a volatile 2012. So, the cash i get back can be used to pick up other bargain stocks.
Note: Due to its high P/E. The near term downside can be very big.
Due to its high growth rate and strong market share. The foreseeable long term downside is minimal.
12/1/2011, I couldn't resist it anymore. I bought 200 shares of Amazon at $197.454/share. I am no stranger to Amazon stock, i bought it in 2007 and sold it at lose. I bought it again in 2009 and sold it for gain. I did it again early this year and capture some meaningful gain. My total gain on Amazon, after offset by lose is $43k.
My purchase price is high. And this company never go on sale. P/E is nearly 100. The growth of Amazon is amazing though. quarter after quarter revenue growth is over 50%, even at such a big base. And the management is very good. History shows they do not care about current margin. They are focusing on the future. Invest heavily on the future growth. I found that approach very smart. Now, I am using my trusty Covered Call strategy. I understand even if the company is a good company, if i over-pay, I will not benefit from the position.
My position looks something like this:
12/1/2011 AMZN 197.454 12/17/2011 5.45 31.45 200 10 4.05% $7,964.55 16 92% $197,454.00
Option execution date is 12/17/11.
Today is 12/17/11, stock price dropped to $181. So, i still own the 200 shares. And the Dec 11 CALL premium brought my stock cost down to $192.004 (i am ignoring the personal tax consequence, just to simplify things) OK, to make those 200 shares to work, I have the following 2 choices.
12/1/2011 | AMZN | 197.454 | 1/21/2012 | 8.45 | 31.45 | 195 | 10 | 3.04% | $ 5,964.55 | 51 | 22% | $ 197,454.00 |
12/1/2011 | AMZN | 197.454 | 2/18/2012 | 11.05 | 31.45 | 200 | 10 | 6.89% | $ 13,564.55 | 79 | 32% | $ 197,454.00 |
To summarize my reason. I choose $200, (my cost is 192+) because i am bullish in Amazon. I choose Feb is the premium v.s. risk is within my satisfactory level. It will be after their earning report. If this option position fail to get executed, then, I'll continue hold the stock and sell longer term CALL. I am somewhat hopping it does not get executed. If on other hand it get executed, i made 32% annualized return in 95 days. Not bad~ I anticipate a volatile 2012. So, the cash i get back can be used to pick up other bargain stocks.
Note: Due to its high P/E. The near term downside can be very big.
Due to its high growth rate and strong market share. The foreseeable long term downside is minimal.
Thursday, November 10, 2011
New position - BRKB ($75.6)
I have some BRKB at $66.21 a share. That position had sold covered call $65 Dec 17. If nothing dramatic happen, it will get called away. So, i am building a new position to replace it.
When i shop around today, i was debating between AMZN, AAPL. Amazon is a company that i love the most. And i know its has room for long term growth. PLUS, the management is setup the company to capture long term growth. (they don't care about short term profitability) I admire that a lot. I know first hand that this company will have at least another 5 years of high growth. HOWEVER, current valuation is way too high. PE at 111. Downside risk is too high. I have to control my emotion and not invest in this company.
AAPL is a company with solid performance. It is losing steam recently. Price drop from 426 to $385. I think the earning power is still there. their future sales growth might not be as strong as before. But their pipeline can support them to turn out few more years of good profit. They do have enough time to develop new exciting products. Best of all, the stock price is not expensive at all. What stop me from putting significant amount of money in it is the uncertainty.
Berkshire (BRKB) on other hand is at a solid ground. I feel confident to invest in it and leave it alone for next 5 years. Plus, the covered call premium is above average. AND, they are buying back their own stock. Which set a floor of the stock at around $70. So, downside risk is minimal.
11/10/2011 Action:
Bought 2,000 shares at $75.6/share
Sold Jan 2012 $75 call for $4.40
that translate to invest $151,200 for 72 days. If success, then, earning will be 5.03%. Or annualized 25%
Buffett is holding a lot of cash and he can use them in the volatile market. The long term view of Berkshire is very positive.
Result 1/20/2012 :-- Success !
When i shop around today, i was debating between AMZN, AAPL. Amazon is a company that i love the most. And i know its has room for long term growth. PLUS, the management is setup the company to capture long term growth. (they don't care about short term profitability) I admire that a lot. I know first hand that this company will have at least another 5 years of high growth. HOWEVER, current valuation is way too high. PE at 111. Downside risk is too high. I have to control my emotion and not invest in this company.
AAPL is a company with solid performance. It is losing steam recently. Price drop from 426 to $385. I think the earning power is still there. their future sales growth might not be as strong as before. But their pipeline can support them to turn out few more years of good profit. They do have enough time to develop new exciting products. Best of all, the stock price is not expensive at all. What stop me from putting significant amount of money in it is the uncertainty.
Berkshire (BRKB) on other hand is at a solid ground. I feel confident to invest in it and leave it alone for next 5 years. Plus, the covered call premium is above average. AND, they are buying back their own stock. Which set a floor of the stock at around $70. So, downside risk is minimal.
11/10/2011 Action:
Bought 2,000 shares at $75.6/share
Sold Jan 2012 $75 call for $4.40
that translate to invest $151,200 for 72 days. If success, then, earning will be 5.03%. Or annualized 25%
Buffett is holding a lot of cash and he can use them in the volatile market. The long term view of Berkshire is very positive.
Result 1/20/2012 :-- Success !
Wednesday, October 19, 2011
Buying Wells Fargo again ($25.5)
I bought 5k shares on 10/17 for $24.66. Today, I am buying another 5k shares for $25.3
Needless to say, I like the Q3 earning report that I see. The management is demonstrating great discipline and excellent execution skill. They handled the Wacovia merger beautifully. I have to think that it is very challenging to merge those 2 giant operation in the short 3 year term.
I will have some covered call position (AMZN and BRKB) execued this Friday. So, i will have some free cash that allows me today's action.
I bought 5,000 shares of WFC at $25.3. Immediately sell Nov $24 covered call. Premium is $2.05. And early November, WFC will give out $0.12 dividend.
So, the action looks something like this:
10/19/2011 WFC 25.3 11/19/2011 2.17 45.45 24 50 3.44% $4,304.55 31 40% $126,500.00
If by Nov 19, 2011, WFC stock price is above $24/share, then, this position will be called, and I will declare this move a success. Potential gain is 3.44% in 31 calender days. Or annuallized 40%
If the price is below $24 a share, i will be happy to hold it a the cost of $25.3 - 2.05-0.12= $23.13.
I am reserving some cash that in case WFC drop near $23, I will pull the trigger and buy another batch. The future stock price for WFC will move up and down base on macro environment. What will stay solid is their increasing customer base. Their enhanced market share. Best of all, their strong management team. Those element will not be changing anytime soon.
I do not care too much if this action success or fail. I do know current price is a great bargain.
RESULT: Success
Needless to say, I like the Q3 earning report that I see. The management is demonstrating great discipline and excellent execution skill. They handled the Wacovia merger beautifully. I have to think that it is very challenging to merge those 2 giant operation in the short 3 year term.
I will have some covered call position (AMZN and BRKB) execued this Friday. So, i will have some free cash that allows me today's action.
I bought 5,000 shares of WFC at $25.3. Immediately sell Nov $24 covered call. Premium is $2.05. And early November, WFC will give out $0.12 dividend.
So, the action looks something like this:
10/19/2011 WFC 25.3 11/19/2011 2.17 45.45 24 50 3.44% $4,304.55 31 40% $126,500.00
If by Nov 19, 2011, WFC stock price is above $24/share, then, this position will be called, and I will declare this move a success. Potential gain is 3.44% in 31 calender days. Or annuallized 40%
If the price is below $24 a share, i will be happy to hold it a the cost of $25.3 - 2.05-0.12= $23.13.
I am reserving some cash that in case WFC drop near $23, I will pull the trigger and buy another batch. The future stock price for WFC will move up and down base on macro environment. What will stay solid is their increasing customer base. Their enhanced market share. Best of all, their strong management team. Those element will not be changing anytime soon.
I do not care too much if this action success or fail. I do know current price is a great bargain.
RESULT: Success
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