Tanstaafl/Motox – No there isn't but that's a big problem, unfortunately. The government should have extended any mortgage payment by 3 months and paid the interest charges (or even let the payee pay interest only) for 3 months. That would have put real money into the system without changing things too much. Then they could have handled renters by maybe giving a credit for the period of the shutdown. Not a free lunch, just a deferred one.
AMZN/8800 – Too scary to bet against. I would argue that you've moved people AMZN habits forwards by 5 years so, if they hold onto these new customers – they could get some monstrous growth when this is over. Still not worth 110 times earnings but I've been saying that for years and no one seems to care.
| Year End 31st Dec | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020E | 2021E | CAGR / Avg |
|---|---|---|---|---|---|---|---|---|---|
|
$m
|
88,988 | 107,006 | 135,987 | 177,866 | 232,887 | 280,522 | 334,053 | 391,394 | 25.8% |
|
$m
|
178 | 2,233 | 4,186 | 4,106 | 12,421 | 14,541 | 141% | ||
|
$m
|
-241 | 596 | 2,371 | 3,033 | 10,073 | 11,588 | 14,227 | 20,464 | |
|
$
|
-0.522 | 1.25 | 4.90 | 4.55 | 19.8 | 23.0 | |||
|
$
|
-0.522 | 1.25 | 4.90 | 4.55 | 19.8 | 23.0 | 28.3 | 39.7 | |
|
%
|
+292 | -7.08 | +336 | +15.9 | +22.9 | +40.7 | |||
|
x
|
99.4 | 80.9 | 57.5 | ||||||
|
|
4.35 | 1.99 | 1.63 | ||||||
Even making $20Bn a year, it's hard to swallow their $1.15Tn valuation. AAPL makes $20Bn a quarter and Buffett just lost $54.5Bn in his portfolio. Berkshire's valuation is just $430Bn and they make $20Bn year….
Good article on the Berkshire meeting.
Tesla's Illusory Liquidity: An Update And Cash Burn Estimate
Speaking of Berkshire, Buffett has been buying his own shares, about $2Bn worth (0.5%) in Q1 and it's likely he did say around $190-200 so, below that, I think he'll buy more. The snapshot of their portfolio was 3/31 – not the best time for a snapshot and they "only" lost $4Bn (out of $10Bn) on airline bets while the rest is probably better blue-chips that are likely to bounce back.
For the LTP, we're going to assume we're making an entry too early so the plan is to take a high spread now (in case we're wrong and it pops) and wait until they drop to sell more puts and, if they never drop – we can live with just this position.
- Sell 5 BRK.B June 2022 $150 puts for $18.50 ($9,250)
- Buy 10 BRK.B June 2022 $150 calls for $48.50 ($48,500)
- Sell 10 BRK.B June 2022 $200 calls for $21 ($21,000)
That's net $18,250 on the $50,000 spread so there's $31,750 (173%) upside potential at $200 but, as I said, we actually would prefer it go lower and sell 5 more puts for $20 ($10,000) and then spend $25,000 (net $15,000) to roll the $150 calls to the $100 calls (now $87 or $87,000). That would put us into the $100,000 spread for net $33,250 and we could also sell some short calls while we wait to bring that down to under $25,000. See, we'll be disappointed if Berkshire goes straight up and all we make is 173%!
When I think about a roll, I look at the strikes above and the June 2022 $250 calls are $6.50, so the cost of that $50 roll to the $200s is $15.50. So we can be reasonably confident, if BRK.B drops by $50 (28%), that we'll get our roll and that would be about $125 so our short puts would be $25 in the money but we sold them for $18.50 – so not a big deal – though it will give us an ugly balance for a while.
That's what we HOPE will happen but let's say we just get a $20 drop… The $220 calls are $14 so $7 to roll down $20 is a good deal and we'll take that if we can get it as a first step. That makes the $130s our first target, they are now $63, so +$14.50 is a long way to go before we get that roll.
