I did finish that November Portfolio Review, by the way.
Minimum Wage/StJ – I had a paper route in 1973 and I made about $20/week (good for a 10-year old!) and that was probably about $2/hr and, on the highway near where I walked was a billboard for a VW Beetle at $1,999 and my realistic plan (not imagining I was going to get better jobs at the time) was to save half my wages for the next 5 years so I could buy a new car as soon as I got my learner's permit.
Even at that level, making sub-minimum wage in a part-time job, it was realistic for me to plan on owning a new car – that's certainly not true for people making $7.25 today!
That paper route, by the way, is how I became so political when I was young as I used to read the papers I delivered and it was during Watergate and I found the whole thing fascinating.
Why/StJ – Well, it's an election year, they will do whatever it takes to keep the economy going – and that includes incumbent Democrats who also want to keep their seats.
Kudlow/Tommy – See above – CNBC.
OK, you guys know how I feel about CMG over $820 so it's time for another short in the STP as $820 is $23Bn and EVEN CMG doesn't think they are going to make more than $500M in 2020:
| Year End 31st Dec | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | TTM | 2019E | 2020E | CAGR / Avg | |
| $m | 3,215 | 4,108 | 4,501 | 3,904 | 4,476 | 4,865 | 5,371 | 5,541 | 6,230 | +8.6% | |
| $m | 532.7 | 710.8 | 763.6 | 34.6 | 270.8 | 258.4 | 385.4 | -13.5% | |||
| $m | 327.4 | 445.4 | 475.6 | 22.9 | 176.3 | 176.6 | 309.8 | 390.9 | 501.9 | -11.6% | |
| $ | 10.5 | 14.1 | 15.1 | 0.77 | 6.17 | 6.08 | 10.7 | -10.3% | |||
| $ | 10.6 | 14.3 | 15.4 | 1.25 | 6.47 | 8.21 | 12.0 | 13.9 | 17.9 | -5.0% | |
| % | +19.9 | +34.6 | +7.6 | -91.9 | +419.5 | +26.9 | +41.6 | +69.4 | +28.6 | ||
| x | 99.9 | 68.4 | 59.0 | 45.8 | |||||||
| x | 1.44 | 0.99 | 2.06 | 1.76 | |||||||
| Profitability | |||||||||||
So 46x earnings is kind of steep for a restaurant stock and any misstep can send them flying over and I see no way people will pay 50x so 10% higher would be extreme so we can do something similar to our BKNG spread, that's been very good to us for the STP:
- Buy 2 CMG 2021 $920 puts at $150 ($30,000)
- Sell 2 CMG 2021 $820 puts at $95 ($19,000)
- Sell 2 CMG March $900 calls for $22 ($4,400)
- Sell 2 CMG March $750 puts for $22 ($4,400)
That's net $2,200 on the $20,000 spread that's 95% in the money to start and, of course, we will have 3 more chances to sell $8,800 in premium ($26,400) so the profit potential on this spread is over $40,000 (1,818%) if all goes well (it rarely does). Still, so many ways to win in between makes it a great play while we have $500,000 of LTP money sitting around doing nothing.