I bought more today in IRA #1 using cash from an option that expired Friday. I have more cash becoming available again this Friday so I'll be buying more if it's under 61 next week.
In my opinion the market is in for a long awaited correction but I'm willing to buy more LO because of the cash component of the merger with RAI.
"Berkshire Hathaway Inc. reports quarterly financial results after the market closes." Aug 1st, Friday
I sold some LO before there was a deal announced and at higher prices. Today I'm buying it because I like returns being offered and I also want the RAI shares I'll receive.
In IRA #3, I increased my position in LO by 50% to 3.7% of the assets in this account. It's now only 30% cash with about 45% of that cash available for investment next month when August options expire.
Also bought a 10 year CD that yields only 3.3% in IRA #2 raising the fixed assets in this account to 4.25% but this figure excluded convertible preferred stock which would add another 2.1% to the total.
Yes, I bought more here but sold call options against those new shares. Cost about 9.6/share plus the option premium of .65/share.
Also sold cash secured put options against it today in my IRAs.
Grandma also owns some shares but she was already short covered call options.
This is a cigar butt company which hopefully has a few puffs left.
Talk about your poor timing-RAI lost a $26 billion lawsuit because a smoker died.
Grandma may have to start smoking so she too can sue.
In other news-hop picking starts in about one month.
I checked her RAI history and she sold in in April of 2012 in the low 40s.
That's why she was only up 17% last year and about 8% this year because of trades like that.
She's also long BX and short some January 35 call options against half her shares. BX traded over 35 now and I bought her more shares to help replace the shares I assume will be called away next year. Selling call options can be very frustrating.
She does have an IBM July 195 call option that expires worthless today so she occasionally makes $$.
I kind of dropped the ball. I was selling put options against it in other accounts but COP just kept running.
Most of her gains are long term this year so buying back the call options for a loss wouldn't have helped her much.
She took a 1.25% position in RAI today at 58.2/share. She likes the LO deal.
She sold some COP shares to fund the purchase. She's currently only 4% cash. She's now has over 22% of her assets invested in tobacco-PM, LO, RAI, MO and IMPERIAL TOB.
It was called away for the dividend yesterday because she was short the July 72.5 call options-certainly not her best move. The remaining shares are all more than paid for via profits.
Cash now makes up more than 5% of her assets with potential WW3 brewing.
If you like their E-cigs perhaps you should look at Imperial as I have.
As far as LO goes- in my opinion it's a wonderful place to wait out the next correction in the market which may have already started.
It's not as bad as I originally thought with regards to debt because the British are coming-"RAI also announced today that it has reached an agreement with Imperial, the fourth-largest international tobacco company, under which Imperial has agreed to purchase the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities for a total consideration of $7.1 billion in cash. RAI expects to receive net cash proceeds of approximately $4.4 billion after taxes. The addition of these brands to Imperial's U.S. operations will more than triple its share of the U.S. cigarette market, position it for long-term success in traditional tobacco products and the growing e-cigarette category, and elevate it to the status of a major U.S. competitor for the first time.
As part of the divestiture, Imperial will acquire certain assets owned by Lorillard including its manufacturing and R&D facilities in Greensboro, N.C., and approximately 2,900 employees, including a national sales force. The closing of the sale of these assets to Imperial is conditioned upon, among other things, RAI's completion of the acquisition of Lorillard.
BAT, RAI's largest shareholder, has reiterated its strong confidence in the prospects of RAI and is fully supportive of, and has agreed to vote its shares in favor of, the transaction. As part of the transaction, BAT will maintain its 42 percent ownership in RAI through an investment of approximately $4.7 billion (based on RAI's closing share price of $60.16 as of July 2, 2014, the same share price used to determine the stock component of Lorillard shareholders' consideration."
After issuing new shares to BAT and netting $4.4 billion selling assets to Imperial they'll only need around $8 billion.
There's money to be made in these three stocks especially if they're able to raise cheap money. Buy on any weakness.