Investment Strategies / Mechanical Investing
No. of Recommendations: 4
Sold DG $95 Jan 2026 Puts at $11.80 today. Be bold when others are fearful. :) I'm guessing today could be described that way. Anyone else still buying or at least bullish?
No. of Recommendations: 2
I bought a bit today. I already have more than I should, but at this price the market is assuming margins will never recover, or worse.
I don't think that's plausible. Nothing I've seen suggests the basic model is broken, and there's obvious cyclical macro pressures affecting margins. This too shall pass.
No. of Recommendations: 2
I've been adding incrementally on the way down. Am planning to back up the truck (well, double my position, whether or not that counts as a truckfull) at 100.
Have toyed with the idea of selling to take the loss and buy back in a month, but I figure the market gods would use that as an opportunity to smite me with a PE takeover or reorganzation.
Since I havent sold I figure we keep bleeding...death by a 1000 papercuts
In the meantime, the fellow behind TSOH substack opened up his paywall briefly and posted this about DG. The scariest figures for me are 1 - the declining EBIT margins over time, 2 - the 1 year charts of WMT vs DG. Feels like a good lesson in not fighting the market
https://thescienceofhitting.com/p/dollar-general-f...
No. of Recommendations: 5
Nothing I've seen suggests the basic model is broken, and there's obvious cyclical macro pressures affecting margins. This too shall pass.
That's pretty much my thinking too, and I bought some more at a little under $113, now a 2.5% position for me.
At today's price, their market cap is $25b, which is almost exactly 11x the average net income of the last 3 (pandemic-assisted) years, or, if you prefer, 15x the previous 3 years' average net income of $1.6b. Given their growth in store count and inflation, I think it's reasonable to estimate that, without the pandemic boost, they might have 'just' had their usual 8-10% growth, so the $1.6b could have been $2.1b, putting them at 12x covid-free earnings.
In the current market, 12x steadily growing earnings for a company with what seems to be a pretty good moat, in a recession resistant industry , with relatively shareholder-friendly, seems to me like a very attractive price.
Regards, DTB
No. of Recommendations: 1
Have toyed with the idea of selling to take the loss and buy back in a month,
That's when having accounts at different brokers can help.
Not that anybody would do that to try to evade wash-sale rules.
No. of Recommendations: 1
"" Sold DG $95 Jan 2026 Puts at $11.80 today. Be bold when others are fearful. :) I'm guessing today could be described that way. Anyone else still buying or at least bullish?"" Good morning, assuming you are NOT using margin, you sold the 95 put, cash secured, for 11.80. Cash tied up 83.2. MAX profit 14.2 % out 850 days. Annual profit about 6.2 %, hopefully in a tax favored account? Do those numbers sound correct? Worst case, you own it at 83.2. GL, Thank you.
No. of Recommendations: 1
You caught me! It wasn't an investment, it was a bet. Even did it in my regular account. That way if the bet doesn't workout I've got a 50% partner to take the loss.
Wouldn't dream of keeping this for the full duration. Just thinking that a cap rate of around $20B is crazy at my breakeven. But of course I could be crazy. My kids say I've got way too much time on my hands.
No. of Recommendations: 0
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