Selling Mastercard (MA)
Sold half my MasterCard Inc (MA) position at $89.43. The stock has nearly doubled since I bought it back on June 2nd ($46.98). It's even gone up further since I sold short puts on July 24th. When I bough the stock I thought I was buying a company with a forward p/e of 17. And while analysts have increased earning forecasts, this company is not growing like Starbucks (SBUX) or Google (GOOG). Why should I pay such a high multiple for a financial services company that has held a duopoly* for so long. And I see that duopoly in danger from technologies and regulation. The chart however looks great, and makes me want to hang on for a bit longer. What do? Sell half and wait.
Photo by 小猫王's
*I tried to find some sites with a better explanation of a duopoly than Wikipedia. I could not - Wikipedia, a non-for-profit enterprise is the poster child for the greatness and democracy of Web 2.0. I donate to them. You should too.
Disclosures and Confessions: I own Mastercard (MA). I own no Google (GOOG) but have traded it and its options in the last two years. I currently own no Starbucks (SBUX) but have traded it in the last two years. I am currently short SBUX Jan 2007, 15 strike puts.
Disclaimer: Nothing in this blog is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any security.
Photo by 小猫王's
*I tried to find some sites with a better explanation of a duopoly than Wikipedia. I could not - Wikipedia, a non-for-profit enterprise is the poster child for the greatness and democracy of Web 2.0. I donate to them. You should too.
Disclosures and Confessions: I own Mastercard (MA). I own no Google (GOOG) but have traded it and its options in the last two years. I currently own no Starbucks (SBUX) but have traded it in the last two years. I am currently short SBUX Jan 2007, 15 strike puts.
Disclaimer: Nothing in this blog is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any security.
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22 Feb 2007, 11:29 PM
David Neubert wrote:
In early June, I bought Mastercard (MA) around $47.00. I thought I was buying a stock with a forward p/e of 15 which compared nicely to American Express (AXP) at the time. That seemed low and I thought that the stock deserved a p/e multiple of closer to 20. I sold half my position in November at $89.46. Today, I sold the rest at $101.40. Both August and November had positive earnings suprises that help goose to the stock to a forward p/e of 23 according to First Call estimates and today's ...
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