Sunday, September 15, 2024

Warren Buffett Adds New Stocks to Berkshire Hathaway’s Portfolio


 Please note that this is a sister publication of WallStreetNewsNetwork ( https://WStNN.com ) and postings will end on this site shortly. Please go to https://WStNN.com for all future posts. 

by Fred Fuld III

3 minutes read time

Warren Buffett, often referred to as the “Oracle of Omaha,” has long been regarded as one of the most successful and astute investors in modern history. As the chairman and CEO of Berkshire Hathaway (BRK-A) (BRK-B), Buffett has built a reputation for making strategic, long-term investments that have paid off handsomely. His investment philosophy revolves around purchasing undervalued companies with strong fundamentals and holding onto them for the long haul. 

Each year, investors eagerly await Buffett’s moves, as his decisions have the potential to signal broader market trends. In a surprising turn of events earlier this year, Buffett made new additions to Berkshire Hathaway’s vast portfolio by purchasing shares in two companies—Ulta Beauty (ULTA) and HEICO Corporation (HEI) (HEI-A).

Ulta Beauty, a leading retailer of cosmetics, skincare products, and salon services, is a particularly interesting choice for Buffett. Known for its wide selection of both high-end and mass-market beauty products, Ulta has managed to carve out a dominant space in the beauty industry. Despite the broader economic challenges affecting retail businesses, Ulta has continued to show resilience, driven by strong consumer demand for beauty products and an innovative omni-channel strategy that integrates online shopping with in-store experiences. 

The company’s focus on customer loyalty through its popular rewards program has also helped to secure a dedicated customer base. For Buffett, a renowned value investor, the decision to invest in Ulta may reflect his confidence in the beauty industry’s growth potential and the company’s ability to withstand market fluctuations.

Ulta stock has a trailing and forward price to earnings ratio of 15. Although quarterly earnings per share tanked by 12% year-over-year, annual earnings are expected to grow by 7.9% next year. The return on equity is about 55%. The stock, with a market cap of $17.8 billion, does not pay a dividend.

HEICO Corporation, on the other hand, represents a different sector altogether. Specializing in aerospace and defense technology, HEICO is a leading producer of parts for aircraft, satellites, and defense equipment. The company has established a strong reputation for providing cost-effective and innovative solutions to the aerospace industry, an area of increasing importance given the ongoing global demand for air travel and advancements in space exploration. 

HEICO’s unique position as a supplier to both commercial and military sectors makes it an appealing investment for long-term growth, particularly as governments and private companies alike invest in expanding their aerospace capabilities. For Berkshire Hathaway, HEICO fits the mold of a company with strong fundamentals and a clear path to future growth.

The stock has a trailing P/E of 76 and a forward P/E of 61, and pays a small dividend of 21 cents a share. This $36 billion market cap company sports earnings per share growth this year of over 25% with a growth rate next year of almost 17%. Sales growth jumped 43% year-ver-year. Return on equity is currently 14.8%. 

Buffett’s investments in Ulta Beauty and HEICO Corporation are notable not just because of the companies themselves, but because they signal a broader strategy of diversification within Berkshire Hathaway’s portfolio. By investing in a beauty retailer and an aerospace company, Buffett appears to be hedging against risks in the broader economy, while also tapping into industries with significant growth potential. As always, Buffett’s moves have sparked considerable interest, with investors eager to see how these new additions will perform in the years to come. While only time will tell whether these investments will yield the same success as some of his previous picks, it’s clear that even at 93 years old, Warren Buffett remains as sharp as ever in identifying promising opportunities.

Disclosure: Author didn’t have any positions in any of the above stocks at the time the article was written.


8 Ways to Trade Tesla Stock Using ETFs (and without using options)


 Please note that this is a sister publication of WallStreetNewsNetwork ( https://WStNN.com ) and postings will end on this site shortly. Please go to https://WStNN.com for all future posts. 

by Fred Fuld III

2 minute read time

Did you know that there are eight different ways to trade Tesla (TSLA) using ETFs, and without using options?

That’s right. In addition to just buying and shorting the Tesla stock, there are other ways to speculate on the price of Tesla. 

These ETFs are especially useful for those who do not want to trade options or are not eligible to trade options. These are also beneficial to traders who want to short TSLA in their IRA account (in which shorting is prohibited).

So what are the alternatives?

Here’s an overview of the Tesla ETFs, all of which track Tesla (TSLA) with varying leverage or inverse positions:

  • AXS TSLA Bear Daily ETF(TSLQ): This fund provides 2x inverse (-200%) exposure to Tesla’s daily performance. It is a short-term tool for sophisticated investors who want to profit from Tesla’s price decline. It carries a 1.15% expense ratio, and due to its high volatility (361.41% over 5 days), it’s intended for daily rebalancing​(GraniteShares)​.

  • YieldMax TSLA Option Income Strategy ETF (TSLY): This ETF seeks to generate monthly income by selling covered call options on Tesla stock. It is an income-focused strategy rather than a leveraged or inverse play​(ETFdb).

  • Direxion Daily TSLA Bull 2X ETF (TSLL): This fund offers 2x the daily performance of Tesla’s stock. Like other leveraged ETFs, it’s designed for short-term traders and rebalances daily. It carries a higher risk due to its leverage​(ETFdb).

  • GraniteShares 1.5X Short TSLA Daily ETF (TSDD): Aims to deliver 1.5x inverse (-150%) of Tesla’s daily returns. This is a tool for shorting Tesla’s price moves with moderate leverage​(GraniteShares).

  • GraniteShares 1.75X Long TSLA ETF (TSLR): This ETF targets 1.75x the daily performance of Tesla’s stock, providing bullish investors with leveraged exposure​(GraniteShares).

  • T Rex 2X Inverse TSLA Daily Target ETF (TSLZ): Offers 2x inverse (-200%) exposure, designed to short Tesla’s price movements on a daily basis. It’s useful for those expecting Tesla’s stock to decline​(GraniteShares).

  • T Rex 2X Long TSLA Daily Target ETF (TSLT): A bullish play offering 2x Tesla’s daily performance, similar to TSLL but with slightly different mechanics​(GraniteShares).

  • GraniteShares 1.25X TSLA Daily ETF (TSL): Provides 1.25x exposure to Tesla’s daily performance, allowing for moderate bullish leverage​(ETFdb).

Keep in mind, these ETFs are complex and carry high risks, especially the leveraged and inverse funds, which are typically used for short-term trading strategies rather than long-term investments.

Disclosure: Author has a small long position in TSLA. (Small means way less than 100 shares.)

A Dozen Ways to Survive a Bear Market


 Please note that this is a sister publication of WallStreetNewsNetwork ( https://WStNN.com ) and postings will end on this site shortly. Please go to https://WStNN.com for all future posts. 

by Fred Fuld III

It looks like we may be at the beginning of a bear market. If you want to profit from falling markets stock prices, there are several ways to do so.

Many strategies are available to profit from a bear market and a stock market crash, some of which are speculative, and some that don’t have much risk. It doesn’t matter what your account size is, there are ways to protect yourself, and even profit on the downside. Here are some of those techniques.

1. Sell a Vertical Call Option Spread

This strategy is a little complicated, but I listed it first, because it is one of the least risky, since your losses are limited, unlike many of the other techniques listed here. In addition, I listed it at the beginning, because I use this trading technique all the time.

If you are familiar with options, then selling a vertical call spread is a great way to make money when a stock drops while protecting yourself if the stock goes up. (This happens to be my favorite strategy.)

This involves shorting an out of the money call option and buying a further out of the money call option at the same time. If the stock drops or stays the same, you make money from the short call which exceeds the loss on the long call. If the stock goes up to the strike price of the short call, you still make a profit. It is only when the stock rises above the strike price of the short call that you begin losing money.

To make it simple, here is an example:

Stock is at 50

Sell (short)  one call with a strike price of 51 for 3 (an option that is trading at 3 means $300)

Buy one call with a strike price of 52 for 1 ($100)

If the stock drops to 45, the 51 call drops to $0 and you make $300 because you shorted it, and the 52 call drops to $0 losing $100 because you own or were long it, netting you a profit of $200.

If the stock rises from 50 to 100, you lose $4900 on the 51 call that you shorted, but you make $4800 on the one that you bought, so you only lose $100.

Generally, you want to use options that expire in 40 to 60 days, and close out your position in 15 to 25 days.

Disadvantages of the selling a vertical call spread
  • Your profit is limited
  • You need approval from your broker to do option spreads
  • Both legs of the spread need to be placed simultaneously (easy to do with most trading platforms)
  • May need to wait 25 or 30 days to see a profit

2. Shorting Stocks

This is one of the most speculative ways of making money in a bear market. In simple terms, you make money when the stock goes down and you lose money when the stock goes up. What technically happens is that you borrow the shares and immediately sell them (this all is done electronically through your brokerage firm) and since you owe those shares, you eventually have to buy them back at some price, hopefully a lower price, in order to return those shares. The difference between your sale price and eventual purchase price is your profit (or loss, if you buy back at a higher price).

Can you make a lot of money shorting stocks in a bear market? Yes. Is it speculative? Very. Can you lose a lot? Most definitely. This is why it is so risky. When you short a stock, the lowest point it can drop to is zero. Whereas, if the stock goes up, the amount it can rise is unlimited. Let’s say you short 100 shares of a stock at $20 a share. If you put up funds equal to 100% of the value of the shorted amount, and the stock drops to zero, you’ve made a 100% return. However, suppose the stock goes from 20 to 100, you end up losing 400% of your money with lots of margin calls along the way. This is called a short squeeze. But even on a short term basis, an investor can lose money very fast.

Unfortunately for those who do their trading in retirement accounts, such as IRAs, shorting stocks is not allowed.

So in summery, do I think you should short stocks? Absolutely not, unless you are a professional trader. The risk is almost infinite. If you understand options real well, hedged short selling might be OK (see the next strategy), as long as you are an advanced trader, and know what you’re doing.

3. Hedged Short Selling

Hedged short selling is a strategy whereby you short a stock and at the same time, you buy a close-to-the-money call option. That way, if the stock shoots up, you are protected with the call option. If the stock drops, you will lose what you paid for the option, but you will make money on your short stock position.

Example: you short 100 shares of a stock that is currently trading at 50 (so you short $5000 in stock), and you buy a call option with a strike price of 52 for 1 ($100).

The stock goes to 40. You make $1000 from the stock dropping from 50 to 40, and you lose the $100 you paid for the call option, with a net profit of $900.

The stock stays the same at 50. You don’t make any money on the short sale fo the stock and you lose $100 on the call option for a net loss of $100.

The stock goes up to 60. You lose $1000 on the short stock, but the value of the call option will increase from 1 to 10 ($100 to $1000), netting $900 on the difference, for an overall loss of $100.

In other words, in the example above, you can only lose $100, if the stock stays the same or goes up, but if the stock drops, the profit can be substantial.

Actually, to be more accurate, if the stock goes to 51 and stays there, you will lose $100 on the short stock sale and $100 on the call option, for a total maximum loss of $200. Even still, it may be worth the small loss in case you are wrong about a bear market.

Disadvantages of the hedged short selling
  • You need approval from your broker to short stock and buy options
  • Both positions should be placed simultaneously (easy to do with most trading platforms)

4. Short (Bearish) ETFs

The Exchange Traded Fund known as the Bearish ETF or Short ETF is another option. What these ETFs do is provide a return opposite to the return of the index, sector, or industry that it is tracking.

For example, the Short Dow30 ProShares (DOG) provides a return that is the inverse of the Dow Jones Industrial Average. If the Dow goes down 2%, the DOG is expected to up 2%. The Short QQQ ProShares (PSQ) ETF gives a return that is the inverse of the NASDAQ 100 Index.

The nice thing about these short ETFs is that your losses are limited. Also, if you are long individual stocks that you don’t want to sell, these can be good for protecting your overall portfolio on the downside.

5. Leveraged Bearish ETFs

If you like volatility, you will love the leveraged bearish ETFs. What these ETFs do is provide double, and in some cases triple the inverse return of indices.Some examples include the UltraShort Consumer Services ProShares (SCC) and the ProShares UltraShort S&P S&P 500 (SDS).

In addition there are several triple leveraged bearish ETFs. Direxion Daily MCSI Real Estate Bear 3X Shares (DRV), Direxion Daily Energy Bear 2X Shares (ERY), and ProShares UltraPro Short Russell 2000 (SRTY) are just a few of the many leveraged bearish ETFs.

The volatility of these ETFs is substantial, and so are the wide bid and asked spreads that I’ve seen occasionally.

The advantage of these trading vehicles is that they are a way of shorting on margin, with a limit on the downside. The disadvantage is that the losses can be quick and large, especially with the triple leverage short ETFs.

6. Bear Funds

It may be hard to believe, but there are actually a large number of bearish mutual funds for the long term bearish investors. These include the Grizzly Short Fund (GRZZX), the PIMCO StocksPlus TR Short Strategy Institutional Fund (PSTIX), and the ProFunds Bear Investors Fund (BRPIX). These funds have minimum investments ranging from $1,000 to $5,000,000.

7. Puts

First, a little about option pricing.  Puts and calls are priced on a per share basis, so a put at $1 would cost $100 for a 100 share option, or a call at $3.50 would cost $350.

A put is the option to put your stock to someone at a particular price within a certain period of time. In other words, if you own a stock that is trading at 22 and you buy a put at a dollar which gives you the right to put your stock to someone at $20 per share within three months, there are a couple of things that could happen. The stock could tank to $14 a share and you could put your stock at 20, or just resell the put for 6 (the difference between 14 and 20) and collecting the profit. You would be far better off than just doing nothing. And if the stock goes up or stays about the same, you are just out your $100 for the option. Puts can be useful for experienced traders.

8. Cash

There is another way to make money in a bear market. Sell everything, and keep your money in cash, with the safest way being a T-bill money market fund, that only owns T-bills. (Money market funds that invest in repos are supposed to be just as safe, but I consider them slightly more risky than T-bills.) The advantages are that you can’t lose money and you can receive an income from the investment.

The alternative cash investment is putting your money in a bank certificate of deposit or savings account. Your money is safe up to the FDIC limits, but the interest rate will be very low.

9. Anti ETFs (Bearish ETF of Popular Bullish ETFs)

The Anti-ETF is a new investment vehicle that has cropped up recently. The goal of these ETFs is to provide the reverse return of another popular actively managed exchange traded fund, as opposed to the bearish ETF which attempt to track the inverse of an index, like the ProShares Short S&P500 ETF (SH).

The most popular is the Tuttle Capital Short Innovation ETF (SARK), which has a goal of achieving the inverse of the return of the popular ARK Innovation ETF (ARKK) managed by Cathie Wood.

10. Anti Stocks (Bearish Single Stock ETFs)

Maybe there is a stock you want to short, but you don’t qualify for an account that allows shorting. Or maybe you want to short a stock in a retirement plan, such as an IRA. If you want to short a particular stock, such as Tesla, Nvidia, Paypal, Pfizer, or Nike (the AXS 2X NKE Bull Daily ETF (NKEL) would have been a good one today as it was down 12% today 9/30/22), there are ETFs which have a goal of returning the opposite return of a particular stock

11. Series I Bonds

If you think the bear market will last for a year or more, Series I bonds are the way to go. These bonds never drop in value and currently pay 9.62%. Plus, they are backed by the U.S. Government. For more information on these bonds, check out the article Series I Bonds Now Paying over 9%.

12. Selling Calls Against the Stocks You Want to Hold

You may have stocks in your portfolio that you want to keep fr one reason or another, such as not wanted to take a huge capital gain. In that case, you might want to consider writing calls against those stocks.

As you can see , you have plenty of options (no pun intended) for making money and preserving your capital in a bear market. There are obviously additional risks involved with shorting stock and options, which you need to delve into with your broker before utilizing those strategies. If we are in a bear market, hopefully you can protect your portfolio and make some money on the downside.

Disclosure: Author owns TSLA.

Stocks Going Ex Dividend in September 2024

Please note that this is a sister publication of WallStreetNewsNetwork ( https://WStNN.com ) and postings will end on this site shortly. Please go to https://WStNN.com for all future posts.

The following is a short list of some of the many stocks going ex-dividend during the next month, which can be helpful for traders and investors interested in the stock trading technique known as “Buying Dividends” or “Dividend Capture.” This strategy involves purchasing stocks before the ex dividend date and selling them shortly after the ex-date at a similar price, while still being eligible to receive the dividend payment.

Although this technique generally proves effective in bull markets and flat or choppy markets, it is advisable to exercise caution and consider avoiding this strategy during bear markets. To qualify for the dividend, it is necessary to buy the stock before the ex-dividend date and refrain from selling it until on or after the ex-date.


However, it is important to note that the actual dividend may not be paid for several weeks, as the payment date can be delayed by up to two months after the ex-date.

For investors seeking a comprehensive list of stocks going ex-dividend in the near future, WallStreetNewsNetwork.com has compiled a downloadable list containing numerous dividend-paying companies. Here are a few examples showcasing the stock symbol, ex-dividend date, periodic dividend amount, and annual yield.

Nike, Inc. (NKE)9/3/20240.371.78%
Bank of America Corporation (BAC)9/6/20240.262.59%
Fidelity National Information Services, Inc. (FIS)9/10/20240.361.97%
Macy’s Inc (M)9/13/20240.17374.46%
Horizon Technology Finance Corporation (HRZN)9/16/20240.1111.99%
Royal Caribbean Cruises Ltd. (RCL)9/20/20240.400.96%
Mercer International Inc. (MERC)9/25/20240.0755.03%
Humana Inc. (HUM)9/30/20240.8851.01%

To access the entire list of over 100 ex-dividend stocks, subscribers will receive an email in the next couple days with the full list. If you are not already a subscriber, you can sign up using the provided signup box below. Don’t miss out on this valuable information, and the best part is that it’s free!

Sign Up for the WStNN Newsletter for Free

Dividend Definitions

To better understand the dividend-related terms, let’s define them:

Declaration date: This refers to the day when a company announces its intention to distribute a dividend in the future.
Ex-dividend date: On this day, if you purchase the stock, you would not be eligible to receive the upcoming dividend. It is also the first day on which a shareholder can sell their shares and still receive the dividend.
Record date: This marks the day when you must be recorded on the company’s books as a shareholder to qualify for the dividend. Typically, the ex-dividend date is set two business days prior to the record date.
Payment date: This is the day on which the dividend payment is actually made to the eligible shareholders. It’s important to note that the payment date can be as long as two months after the ex-date.

Before implementing the “Buying Dividends” technique, it is crucial to reconfirm the ex-dividend date with the respective company to ensure accuracy and avoid any unexpected changes.

In conclusion, being aware of the stocks going ex-dividend can be advantageous for traders and investors employing the “Buying Dividends” strategy. WallStreetNewsNetwork.com provides a convenient resource to access a comprehensive list of such stocks, allowing individuals to plan their investment decisions effectively. Remember to stay informed and consider market conditions before employing any investment strategy.

Disclosure: Author owns BAC.