Sold Union Pacific – 23.66% Return in 72 Days
Value investing is about buying low and selling high. The investor creates a model to set buy/sell triggers and exercises this program with investmetns. Back on October 29, 2020, the Railways Pool of the club’s Value Investment Fund purchased 114.9557 shares of Union Pacific at $173.98 each including a $1 per share transaction cost. In that post, the sell point was set at $215.17 which occurred this morning in the market. Union Pacific actually cleared $221 at one point this morning.
The fund’s preset sell, automatically sold when the price hit $215.17. The fund netted $214.17 per share after paying a $1 per share transaction fee.
The return on the investment is $40.19 per share as follows:
Purchased on 10/29/2020 114.9557 shares at $173.98 each for a total cash outlay of $20,000.00
Sold on 01/08/2021 114.9557 shares @ $215.17 netting $214.17; total net proceeds 24,620.06
Gain on sale 4,620.06
Effective return on investment 23.10%
Holding Period including day of sale and day of purchase 72 Days
Annual Return (Extrapolated) 117.10%
Furthermore, during this period the Railways Pool earned another $111.50 from dividends issued by Union Pacific. Thus, the final total return is $4,731.56 with a total cumulative effective return of 23.66%.
This was the only remaining investment in the Railways Pool for the Investment Fund. Currently, all of the potential investments in that pool are at their respective peak values. Thus, there are no current opportunities to buy any railroad stocks. Over the weekend, the Investment Fund will shift monies from the Railways Pool into another potential investment, most likely in the Banking Pool.
Still open are 59 PUTS on Union Pacific that expire on 02/19/2021 at $170.00 per share. This opportunity appears unrealistic as it is unlikely the market and this respective sector will see a downturn of this magnitude. However, if it does happen, the fund’s facilitator looks forward to an opportunity to own a high quality stock at a such a low price.
This is yet another example of how effective and productive value investing is as a method of stock investing.
The current formula for a buy for Union Pacific is an 18% market price decrease from the current peak of $221.28; this sets the buy price for Union Pacific to $181.45 per share. The new sell point is 102% of peak, thus the new sell point is $225.71.
For those of you unaware of value investing principles; there are four. The first is to only buy high quality stocks reducing risk of loss. Secondly, buy the high quality stock at or near intrinsic value. Union Pacific’s intrinsic value is approximately $175 per share. Third, use financial analytics to support reasonable market recovery points as the sell point and finally, adhere to patience. Market fluctuations will cause Union Pacific’s price to change, maybe not in the near-term, but over the long-term; it will happen.
If you want to learn how to get returns like this, join as a member of the club. Complete the program and begin to make good returns on your investment with little risk. Act on Knowledge.
Do you want to learn how to get returns like this?
Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.
There are four key principles used with value investing. Each is required. They are:
- Risk Reduction – Buy only high quality stocks;
- Intrinsic Value – The underlying assets and operations are of good quality and performance;
- Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
- Patience – Allow time to work for the investor.
If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above.
Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:
- Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
- Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
- Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.
Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:
- Lessons about value investing and the principles involved;
- Free webinars from the author following up the lessons;
- Charts, graphs, tutorials, templates and resources to use when you create your own pool;
- Access to existing pools and their respective data models along with buy/sell triggers;
- Follow along with the investment fund and its weekly updates;
- White papers addressing financial principles and proper interpretation methods; AND
- Some simple good advice.