I have some shares being put to me today-the option adjusted cost will be around 195.
IBM will now make up about 11% of the assets in this account and 5% of my total assets. I'm willing to have 10% of my assets in IBM based on what I believe to be its current discount to its intrinsic value.
I've also doubled my stake in PSX with an option adjusted cost of about 56.
Next week I may buy more of both in my IRAs because options expire today which frees up lots of cash.
I've been watching BP and may establish a position if the stock continues to weaken. I think their legal environment is improving but the market is still very skittish about the outcome. I like that uncertainty.
morning axp, appreciate your honesty ! I forgot what premium you got for those puts but that's what i mean about the RISK of selling puts into a 14 VIX and buffett hype. You are now stuck 15 what was the put premium, I forgot 3 $$ or so ? thanks.
Amount of put premium? $3 per share sounds about right but at the time of the sell I was just concerned with a good price to add to my IBM holdings. I look elsewhere for higher paying option premiums.
I've been in IT for over 20 years and I honestly don't understand it as an investment. They provide servers and also storage which is a pretty competitive market. Their software is generally antiquated based on my experience. I know several companies that moved off Lotus Notes, and have never looked back. Aside from these businesses they farm work and consulting to India. There balance sheet sux in comparison to peers which usually have billions in net cash. Buffet's other tech investments have been questionable such as Intel. In addition, 22 times eps for VRSN seems like he is way late...he should have been paying attn when they sold some of there businesses to Symantec. If I were forced to invest in this sector I would put my money in Oracle at a pe of 14 with billions in net cash long before looking at any of the aforementioned.
I've been an employee of IBM not too many years ago, and have friends still there.
But to label IBM a server and storage company is a gross mis-representation imo.
The server business has been in run-off for years. Storage is far from the core. Cloud and services are key to this business. Their service business is sticky and has been growing for many years, Buffett described it as like an STD. Although cloud is growing fast everywhere, no one has found out how to make money at it yet.
I'll give Lou belated credit, he was right.
Even when IBM was king of the cats, back in the 70s, they had inferior products compared to their competitors. Theri speciality was schmoozing upper management and convincing them that "no one ever got fired for going with IBM". People think they will keep doing it.
As I have posted here before, I think Intel is a decent investment. They still understand the business, thy know what it takes to make good products and will do so, and it pays a nice dividend. In general, I like upstream companies in tech, although I sold my GSM.
same here.... my only explanation is support of legacy, and the outsourcing of projects, project management, and IT maintenance jobs from companies' with small, core IT personnel, who cannot keep own personnel as not leading edge, so contract almost everything else out. In addition, they are very expensive, and in my experience, charge a lot for barely qualified staff. It's also still true that you never get fired for hiring IBM, and its a useful internal polotical scapegoat.
AIG seems a little too opaque for me - I wouldn't be sure what I was buying. I made a small sale last week, but I'm not making any more net sales. I was thinking of selling some puts, but all the premiums seem low, not just IBM. In particular, what about KO? about a $1 premium on the January 40. Anything else?
Increased my IBM stake in IRA #1 from 3.5% to 4.5% also more than doubled it in my Roth IRA to about 15% of its assets. I paid 185.55/sh
IRA #1 is still over 50% cash which is used to sell put options.
No, these were 205 but I was also short the 185 in greater number-thus a net cost of about 195.
At the time of the sell I had too much cash which is no longer the case so I'll be much more selective in the future if I sell any at all. As you may know the IBM option premiums just don't pencil out any more for the risk one takes.