On February 6th, 2025 Huntington Ingalls Industries reported their 4th quarter results. Due to Huntington’s inability to get the Navy’s signature on some contracts, the shipyard’s backlog has significantly changed which in turn affected the market’s opinion. The stock price dropped $32 per share. The Fund took advantage of this and proceeded to purchase 500 shares at $160 per share market price with a $500 fee to close the transaction. Total investment was $80,500. 

The Fund now owns 700 shares of Huntington Ingalls Industries. 

In addition, the Fund sold PUTs on Huntington Ingalls Industries with a strike price of $150. Sold 500 PUTs netting $7.20 each after a transaction fee of $1.00 per PUT. Total cash receipts equals $3,600 (500 * $7.20/each).

The cash proceeds from the sale of Essex Property Trust funded this purchase of stock. From the $122,000 of cash, the Fund proceeded to pay off the Margin Account balance of $38,000 and expend another $80,500 to own Huntington Ingalls Industries. Act on Knowledge.

The post Huntington Ingalls Industries – Bought Stock, Sold PUTs first appeared on ValueInvestingNow.com.

On February 6, 2025 the Value Investment Fund needed cash to take advantage of dramatic price drop with Huntington Ingalls Industries. The Fund sold Essex Property Trust at $300 per share netting $299 per share after fees. At approximately 2:50PM the price hit the sell point of $300. The Fund disposed of all 429.3846 Shares. The transaction followed this outcome:

Sales Price  429.3846 shares at $300.00                           $128,815.38
Transaction Fees @ $1.00 per share                                          429.39
Net Proceeds from the Sale                                              $128,385.99

Basis in Investment                                                           $107,201.00
Gain on the Investment                                                         21,184.99
Taxes Paid on the Gain @28% (Fed & State Combined)     (5,931.80)
Cash From Sale                                                                  122,454.19

Return on Investment
Gain from Sale of Essex Property Trust                             $21,184.99
Dividends Earned:
.       During 2022                                                                       664.77
.       During 2023                                                                    3,920.29
.       During 2024                                                                    4,147.85
.       2025 YTD                                                                        1,051.99
Sub-Total Dividends                                                              $9,784.90       
Total Return on Investment                                                  $30,969.89
Holding Period                                                                        930 Days (2.55 Years Approximately)
Average Earnings Per Year                                                   $12,154.85
Average Annual Return on Investment of $107,201                11.34%

Overall, this is the Fund’s worst performance lifetime to date. It was a solid investment with a goal of selling the stock once it hit $330 per share. However, the dramatic drop in Huntington Ingalls Industries necessitated a funding source and as such, this was the best option for the Fund. In effect, the Fund is swapping an OK performer investment for an opportunity with unusually high upside within a shorter time window. See the Sophistication Section of this website to review this investment principle.  Act on Knowledge.                                                                                               

The post Sold Essex Property Trust at $300 Per Share first appeared on ValueInvestingNow.com.

During the morning of November 1, 2024, Huntington Ingalls Industries – HII reported its third quarter results. HII had several financial setbacks causing the market price of this stock to drop dramatically. Within 30 minutes, the stock price dropped $60 from $250 to below $190. 

When a stock price drops this much in a short period of time, it is an opportunity to sell PUTs and make some quick cash. The Value Investment Fund sold 500 PUTs @13.70 each. Each PUT costs $1 for the respective transaction fee. The Fund netted $6,350. The strike price is $185 with a June 20, 2025 expiration date. In effect, the Fund is projecting that the market price will be above the strike price of $185 and thus, the PUTs will simply expire at that time. 

Here’s the market price for June 20, 2025 PUTs:

If the market price for HII is less than $185 per share, the Fund must spend upwards of $185 per share for 500 shares or up to $92,500 to comply with the terms of the PUTs. 

Recall from a prior article, PUTs are an similar to an insurance arrangement. The buyer agrees to pay the seller a certain value to protect their investment if the price goes below a certain point – strike price. During the last five years, Huntington Ingalls Industries stock price has been below $185 for a total of twelve months due to the market setback driven by COVID in early 2020 thru the end of 2020. See this graph for evidence:

The Value Investment Fund has determined the intrinsic value to approximate $200 per share adjusted to 2024 from the intrinsic calculation performed in 2021. This is a highly stable and solid investment with very little downside risk. Simply stated, it is wonderful investment if the market price drops below $195 per share. Furthermore, selling PUTs with long windows of time to recover from current depressed market value is an opportunity to make some quick cash. Act on Knowledge.

The post Huntington Ingalls Industries – Sold PUTs November 2024 first appeared on ValueInvestingNow.com.

On Friday the 1st of November 2024, Huntington Ingalls Industries’ (HII) shares dropped $60 in the market due to their financial outlook as reported in their quarterly reporting. The current intrinsic value is approximately $210 per share. The Value Investment Fund purchased these shares at $190 each and paid a $1 per share transaction fee.

The Fund utilized its margin account to finance the purchase. This requires a 2% fee on the amount borrowed. Total amount borrowed was $38,000. The Fund utilized its cash to pay the 2% fee of $760 and the $200 fee to purchase the shares. Total basis in the shares stands at $38,960 per share. 

The share price ended the day at $189.23. 

Huntington Ingalls Industries (HII) is highly stable and relatively secure investment. Furthermore, it is one of the top 2,000 companies worldwide. The downside risk is low; during the last five years, the lowest market price for this investment was $140 per share back in 2020. The upside is a price above $290 per share. Act on Knowledge. 

The post Huntington Ingalls Industries – Bought 200 Shares first appeared on ValueInvestingNow.com.

On Friday the 25th, the Value Investment Fund proceeded to purchase another 3,000 shares of Warner Brothers Discovery.  The market price at time of purchase was $7.75 per share and the transaction fee per share is 25 cents. Thus, the Fund invested $24,000 even to own 3,000 more shares bringing the total ownership position to 4,300 shares to date. 

Total basis in the 4,300 shares is now $35,932. 

This particular stock is currently trading at less than $8/Share. It peaked at $51/Share back in April of 2021. The key is that its current book value is $14/Share and the cash flow from operations per share over the last 18 months is $3.80 per share. What is driving the financial loss on the income statement over the last three years are the write-down of the goodwill and other amortizable intangibles. At some point, this company is going to start showing positive quarterly results. When it does, the stock price is going to soar and if it can do it four quarters in a row, it is possible the stock price will double in value and keep rising. 

The Fund’s current sale price is $25/share and anticipates it will take 30 months to get there. But when it does, it will generate $71,000 of profit or an annualized return greater than 40% per year. Act on Knowledge.

The post Warner Brothers Discovery – More Shares Please first appeared on ValueInvestingNow.com.

Just before 10 AM this morning on the 7th of March, 2024, the Value Investment Fund purchased 300 shares of Warner Bros. Discovery, Inc. Series A stock from the Entertainment Pool of potential investments. Total investment is $2,622 including transaction fees of 25 cents per share. Purchase price was $8.49 per share. 

Current book value of Warner Bros is approximately $18 per share; cash flow per share exceeds $3. Cash flow from operations is $7.5B with 2.5B shares outstanding. 

The current driving forces on the depressed stock price are the two years in a row of net losses ($10.4B combined). The stock price has dropped $17 per share in two years. The actual loss sustained per share is right around $6. Thus, the market price is well below justifiable depression and the intrinsic value easily exceeds $14 per share. Thus, a good opportunity for a value investor. Act on Knowledge.

The post Purchased Warner Bros. first appeared on ValueInvestingNow.com.

Wells Fargo crossed the $57 per share threshold this afternoon just after 2PM ET. The last time Wells Fargo hit $57 per share was back in February 2022. The only issue holding Wells Fargo from achieving more than $65 per share is the restriction imposed by the Federal Reserve which is now over five years old. It looks like at least another year to finally get released. The Value Investment Fund set a sell order at $57 per share. Transaction fees are $1 per share. Here are the results:

Gross Sale of 500 Shares of Wells Fargo at $57 Each                                     $28,500.00
Transaction Fees at $1 Each                                                                                  (500.00)
Net Proceeds from Sale                                                                                    $28,000.00
Basis in Stock                                                                                                     20,071.50
Taxable Gain                                                                                                       $7,928.50 

There were two tranches of Wells Fargo:

• 100 Shares from 01/15/21 (1,145 Days) with a basis of $3,200.00; Net $5,600.00 for a return of $2,400 or $2.096 per day or a 23.9% return.
• 400 Shares from 04/17/23 (324 Days) with a basis of $16,871.50. Earned $5,528.50 or $17.06 per day or a 36.91% return on the investment.        

During this time period, Wells Fargo paid out $724 in dividends. Therefore, the effective return from this investment equaled an annualized 34.59% including the return with dividends. 

From the proceeds, the Fund paid off the remaining balance of the Margin Account plus the 2% fee of $508.35. Total amount paid out to the Margin Account $25,925.73. Therefore, the cash account for the Fund increases by $2,074.27.

Overall, Wells Fargo turned out to be a reasonable investment. It took longer than expected to recover from the market dip, but still it turned out well. Act on Knowledge.

The post Sold Wells Fargo – 34.59% Annualized Return first appeared on ValueInvestingNow.com.

This morning 03/05/24, the Value Investment Fund purchased 100 shares of Choice Hotels. The market price is $109.46 per share at opening. The Fund pays a $1 per share transaction fee into an accounting pool account that covers the costs of actual broker fees, website activity, professional fees and maintenance fees for the website. Total investment is $11,046.00. 

The predesignated sale price is $141.00 per share to net $140 per share. Act on Knowledge.

The post Purchased Choice Hotels first appeared on ValueInvestingNow.com.

Today, March 4, 2024 just after 2PM, Norfolk Southern Railway’s stock surpassed $260 per share. The Value Investment Fund proceeded to sell the stock and net $259 per share after paying a $1 per share transaction fee.

The fund is proceeding to sell several of its investments in order to clear the Margin Account per the terms of the special loan account. Terms require the Investment Fund to completely pay all monies borrowed at least once a year to protect the lender’s position. In effect, the Fund must carry a ZERO balance for 14 days in accordance with the terms. Renewal date is 03/10/24; thus the Fund must clear the margin account and then wait until almost month’s end to borrow again.

The Margin Account requires a 2% closure fee on the original borrowed amount. In this case, total capital borrowed was $60,104 over two tranche purchases. Therefore, the fee paid to close out this capital draw was $1,202.08. The financial outcome is as follows:

Gross Sale of 300 Shares at $260.00/Share               $78,000.00
Transaction Fees to Dispose                                           (300.00)
Net Proceeds from Sale                                             $77,700.00
Closure Fee from Margin Account                               (1,202.08)
Basis in Stock                                                             (65,524.33)
Gain on Sale of Norfolk Southern Railroad               $10,973.59
Dividends Earned During Holding Period                     1,080.00
Total Earnings                                                            $12,053.59
Average Cost Basis:
Tranche #1 Purchased on 04/27/2023 (313 Days)     $17,324.76
Tranche #2 Purchased on 09/29/2023 (158 Days)       17,530.40
Average Basis of Margin Account Interest Paid            3,237.35
Total Average Basis                                                    $38,092.51

Average Annualized Return on Investment                    31.64%

Cash Reconciliation:
     Net Proceeds                                                $77,700.00
     2% Closure Fee                                              (1,202.08)
     Loan Payback                                                60,104.00
     Net Cash From the Sale                               $16,393.92

     Gain on Sale of Stock                                  $10,973.59
     Interest Paid to Margin Account                      5,420.33 *Dollar Amount Recovered at Point of Sale
     Net Cash from the Sale                                $16,393.92

Overall, a decent return on the risk given that the Fund used borrowed capital to make the investment. Using a margin account is a sophisticated tool taught in Phase III of this site’s lessons about value investing. Act on Knowledge.

The post Sold Norfolk Southern Railroad – 31.64% Annual Return first appeared on ValueInvestingNow.com.

Value Investment Fund – Status on September 30, 2023

.                                                                                                                      September 30, 2023          August 31, 2023            September 30, 2023
.                                                                              # of Shares     Cost Basis  Net Market Price*  Net Fair Market Value*   Net Fair Market Value*
REITs 
.   – Essex Property Trust, Inc. (Tranche #1)              71.6846           $20,000.00       $211.09                        $17,010.04                        $15,131.91
.   – Essex Property Trust, Inc. (Tranche #2)              77.7000             20,000.00         211.09                          18,437.43                          16,401.69
.   – Essex Property Trust, Inc. (Tranche #3)            100.0000             22,221.00         211.09                          23,729.00                           21,109.00
.   – Essex Property Trust, Inc. (Tranche #4)            180.0000             44,980.00         211.09                          42,712.20                           37,996.20
.       Sub-Total                                                          429.3846           107,201.00                                          $101,888.67                        $90,638.80
.   – AvalonBay Communities                                   100.0000             17,581.38        170.74                         $18,770.00                        $17,074.00

Railroads
.   – Norfolk Southern Railroad (Tranche #1)           100.0000             21,624.01        195.93                         $20,401.00                        $19,593.00
.   – Norfolk Southern Railroad (Tranche #2)           200.0000            40,895.12         195.93                                -0-                                39,186.00
.      Sub-Total                                                           300.0000            62,519.13                                              $20,401.00                       $58,779.00

Entertainment
.    – The Walt Disney Company (Tranche #1)         180.1801            20,000.00         $80.05                         $15,005.40                       $14,423.42
.    – The Walt Disney Company (Tranche #2)      200.0000             21,200.00          80.05                           16,656.00                         16,010.00
.    – The Walt Disney Company (Tranche #3)         198.0198             20,000.00          80.05                           16,491.09                         15,851.48
.    – The Walt Disney Company (Tranche #4)         100.0000               9,096.09          80.05                             8,328.00                           8,005.00
.       Sub-Total                                                          678.1999             70,296.09                                            $56,480.49                       $54,289.90
Banking 
.    – Wells Fargo (Tranche #1)                                  100.0000              4,267.50           39.86                           $4,029.00                         $3,986.00
.    – Wells Fargo (Tranche #2)                                  400.0000            15,804.00           39.86                           16,116.00                         15,944.00
.       Sub-Total                                                           500.0000            20,071.50                                            $20,145.00                        $19,930.00

Dividend Receivables (Essex/AvalonBay)                                                                                                               -0-                               1,156.88
Cash on Hand (Basis, Gains, Dividends, PUTS)                                                                                                3,243.57                           1,752.98
Totals (Starting Cost Basis = $100,000)                                         $277,669.10                                          $220,292.56                     $243,621.56
Accrual adjustment for taxes                                                                                                                                 4,617.33                        10,348.07
Totals Net of Taxes (Recapture)                                                                                                                   $224,909.89                     $253,969.63
Margin Account (AvalonBay/Norfolk Southern/Disney Purchase)                                                                 (45,817.38)                      (85,521.38)
This portfolio’s value is AFTER TAXES of 28% on all realized gains. Total taxes paid to date                      35,508.50                        36,921.63
Comparative Gross Return Since Inception                                                                                                     $214,601.01                    $205,369.88
Unrealized Earnings (Value of Respective Market Prices Less Cost Basis & Fees at Point of Sale)      $(18,660.48)                    $(36,957.40)

*Net of transaction fees of $1.00 per share; thus, the amount in the schedule equals the actual market price per share at closing less $1.00 per share.

Value Investment Fund – Potential Obligations

The Value Investment Fund’s current exposure related to PUT options is as follows:

Norfolk Southern Corporation – sold in September (200 Shares) with a strike price of $145 and an expiration date of January 21, 2024   $29,200
L3 Harris Technologies – sold 12/30/22 (100 Shares) with a strike price of $150 and an expiration date of October 20, 2023                      $15,100
Marriott Hotels – sold 12/30/22 (100 Shares) with a strike price of $90 and an expiration date of January 19, 2024                                       $9,100
Essex Property Trust – sold 03/17/23 (100 Shares) with a strike price of $200 and an expiration date of October 23, 2023                          $20,100
Norfolk Southern Corporation – sold 09/29/23 (200 Shares) with a strike price of $185.00 and an expiration date of June 21, 2024           $37,200
The Walt Disney Company – sold 07/18/23 (300 Shares) with a strike price of $85 and an expiration date of June 21, 2024                        $25,800
*Total financial commitment = $136,500

Market prices on September 30, 2023 are:

• L3 Harris Technologies (Expiration 10/20/23)        $174.12 (Strike Price of $150.00) Current Deviation =    16.08%
• Essex Property Trust (Expiration 10/20/23)            $212.09 (Strike Price of $200.00) Current Deviation =      6.04%
• Marriott Hotels (Expiration 01/19/2024)                  $196.56 (Strike Price of $90.00)   Current Deviation =  118.40%
• Norfolk Southern Corp (Expiration on 01/21/24)    $195.93 (Strike Price of $145.00) Current Deviation =   35.12%
• The Walt Disney Company (Expiration on 06/21/24) $81.05 (Strike Price of $85.00)   Current Deviation =   (4.65%) 
• Norfolk Southern Corp (Expiration on 06/21/24)     $195.93 (Strike Price of $185.00) Current Deviation =     5.91%

*Deviations > 25% are considered favorable.

1st Quarter Earnings Summary:

• Gains from Securities                                         $20,412.00 *Comerica Bank 
• Dividends                                                               2,131.53
• Sale of PUT Option Contracts                               1,840.00
  Sub-Total 1st Quarter Earnings                     $24,383.53

2nd Quarter Earnings Summary:

• Dividends                                                             $1,441.88

3rd Quarter Earnings:

• Norfolk Southern Dividends                                 $135.00
• Wells Fargo Dividends                                            175.00
• Essex Property Dividends                                       991.88
• AvalonBay Dividends                                             165.00
• Sale of PUT Option Contract (NSC)                    1,720.00   
• Sale of PUT Option Contracts (Disney)               1,860.00
  Sub-Total 3rd Quarter Earnings                          $5,046.88

Total Earnings to Date 2023:                                        $30,872.29
Realized Return Year-to-Date 2023:                               21.378%
Taxes Paid Year-to-Date 2023:                                       $8,644.24 ($30,872.291*.28)

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  Value investing utilizes a buy low, sell high tenet of systematic processing of stock and other security investments. Value investing reaps substantially greater returns than all other major market measurement indices (DOW, S&P 500, Russell 2000, NASDAQ, etc.). The average annual pre-tax return is >20%. When you subscribe, you receive access to all existing articles, books, lessons, webinars and reports explaining how value investing works. In addition, each month, the subscriber receives additional articles, reports and buy/sell points for high quality stock purchases. Follow along as the fund updates regularly and discover how to invest like a pro and earn excellent returns on your investment. Subscription is for one year of access to the value investing pool of information.

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The post Value Investment Fund – September 30, 2023 first appeared on ValueInvestingNow.com.