Well today I sold my remaining 100 MAS LEAPS at $0.80. With the market bouncing around a 2 month high I just couldn't justify holding this highly leveraged position with the expiration date only a little over a year away.
So how'd I do? Well, I originally purchased MAS just over two months ago (http://mevsemt.blogspot.com/2011/08/another-real-estatehousingconstruction.html) for a total outlay of $5,656. I sold all 125 contracts at $0.80, so I my cash out was $9,960, netting me a profit of just over $4K. In other words, not to shabby!
Questions? Comments? Email mevsemt@gmail.com.
Showing posts with label zz Masco. Show all posts
Showing posts with label zz Masco. Show all posts
Monday, October 24, 2011
Saturday, October 22, 2011
Dialing It Back...
On Friday I made two transactions: I sold my remaining 550 shares of AHS (at $4.25) and reduced my MAS 2013 LEAPS by 25 contracts (sold at $0.80 per contract).
If you click on the "zz AMN Healthcare Services" label on the right you'll see AHS has been a lot of work, a lot of ups and downs, and very little profit. But I guess sometimes that's just how it goes, right? Anyway, although I still think the shares are undervalued, they were such a small % of my portfolio that it just wasn't worth holding them anymore.
The MAS LEAPS, on the other hand, have turned out really well over a relatively short amount of time. I bought 125 contracts at $0.45 about 2 months ago, so selling 25 of them at $0.80 is great! Unlike AHS, with MAS I'm just trying to be opportunistic and take advantage of the price Mr. Market is offering, so don't be surprised if I continue selling in the days/weeks to come.
The other reason for selling both AHS and MAS was to make my portfolio a little less risky. The market has rallied nicely since the start of Q4, and as a result the % of my portfolio in cash had fallen to the high 20's. However, after Friday's transactions my cash % is back in the low 30's, and if the market continues to rally I'll probably continue to trim back some positions.
Questions? Comments? Email mevsemt@gmail.com
If you click on the "zz AMN Healthcare Services" label on the right you'll see AHS has been a lot of work, a lot of ups and downs, and very little profit. But I guess sometimes that's just how it goes, right? Anyway, although I still think the shares are undervalued, they were such a small % of my portfolio that it just wasn't worth holding them anymore.
The MAS LEAPS, on the other hand, have turned out really well over a relatively short amount of time. I bought 125 contracts at $0.45 about 2 months ago, so selling 25 of them at $0.80 is great! Unlike AHS, with MAS I'm just trying to be opportunistic and take advantage of the price Mr. Market is offering, so don't be surprised if I continue selling in the days/weeks to come.
The other reason for selling both AHS and MAS was to make my portfolio a little less risky. The market has rallied nicely since the start of Q4, and as a result the % of my portfolio in cash had fallen to the high 20's. However, after Friday's transactions my cash % is back in the low 30's, and if the market continues to rally I'll probably continue to trim back some positions.
Questions? Comments? Email mevsemt@gmail.com
Monday, August 22, 2011
Another Real Estate/Housing/Construction Stock... Really?!
Between Sears and St. Joe you might've thought I had plenty of exposure to real estate/housing/construction and I'd be looking elsewhere for opportunities. If so, you're probably right about the "plenty of exposure" but you're wrong about the "looking elsewhere," as today I bought 125 Jan 2013 $12.50 call options on Masco (MAS) for $0.45 per contract. In plain English these LEAPS give me the right to buy 12,500 shares of MAS on or before January 19, 2013 for $12.50 a share.
So what does Masco do? Well they've got five segments which I'll list below (it's OK if you cringe a little, I did too):
My hope is the economy manages to stay out of a deflationary spiral and we see housing rebound in a year or two. If this is case, Mr. Market's manic depressive mood around Masco should change as well, and the stock could easily climb to the mid-teens. Looking at my investment checklist (http://mevsemt.blogspot.com/2010/08/investing-checklist.html) this stock meets most of the criteria - insider buying, 52-week low, guru buying, discount to Morningstar & my fair value, high degree of leverage on the options, and asymmetric payoff all fit here (althoug insider and guru buying is a bit light).
To give you an idea of the upside I'll take a haircut to Morningstar's fair value of $22 and assume the stock gets to either $15 or $17.50 at expiration. The cost of these LEAPS was $5,656 and if MAS hits $15 they'll be worth $31.3K. If MAS hits $17.50 they'll be worth $62.5K. Can you say asymmetric?!
Lastly, on a cautionary note I should stress that this is a very speculative bet. In the past some of these have really paid off (SD and NRG) and others completely flopped (EXC and so far SHLD). I have no idea how this one will turn out, but I personally feel the risk-reward is worth it. Wish me luck!
As always I'm available for questions and appreciate comments. Email mevsemt@gmail.com.
So what does Masco do? Well they've got five segments which I'll list below (it's OK if you cringe a little, I did too):
- Decorative/architectural products (including Behr paint)
- Plumbing (including Delta faucets)
- Cabinets & related products
- Installation and other services
- Specialty products
My hope is the economy manages to stay out of a deflationary spiral and we see housing rebound in a year or two. If this is case, Mr. Market's manic depressive mood around Masco should change as well, and the stock could easily climb to the mid-teens. Looking at my investment checklist (http://mevsemt.blogspot.com/2010/08/investing-checklist.html) this stock meets most of the criteria - insider buying, 52-week low, guru buying, discount to Morningstar & my fair value, high degree of leverage on the options, and asymmetric payoff all fit here (althoug insider and guru buying is a bit light).
To give you an idea of the upside I'll take a haircut to Morningstar's fair value of $22 and assume the stock gets to either $15 or $17.50 at expiration. The cost of these LEAPS was $5,656 and if MAS hits $15 they'll be worth $31.3K. If MAS hits $17.50 they'll be worth $62.5K. Can you say asymmetric?!
Lastly, on a cautionary note I should stress that this is a very speculative bet. In the past some of these have really paid off (SD and NRG) and others completely flopped (EXC and so far SHLD). I have no idea how this one will turn out, but I personally feel the risk-reward is worth it. Wish me luck!
As always I'm available for questions and appreciate comments. Email mevsemt@gmail.com.
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