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Sebastien Buttet  

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  • Two Proven Investment Strategies That Work, And One to Avoid [View article]
    I have been selling deep out-of-the money LEAP puts lately and like this strategy. Markets are difficult to trade these days and this strategy buys some time while providing decent returns.

    As an example, I collected $4 for the Jan 13 $40 strike on BA that would oblige me to pick up BA for $36 in one and half year. On the other hand, if BA closes above $40 in Jan 13, I make a 10% return on capital for one year and half (about 7.5% annually).

    I did similar trades for BRK.B and CVX.
    Aug 19, 2011. 05:07 PM | Likes Like |Link to Comment
  • Time to Buy Hewlett Packard? A Resounding YES [View article]
    I agree with you that there is absolutely no rush to get into the stock and that patient investors might get it at even lower values. That being said, I offer two catalysts for the stock to move up above and beyond valuation:
    1. Finally, the reorganization plan has been spelled out.
    2. There is a negative Apotheker premium priced into the stock. SAP's board fired Apotheker after one year. HP's board could move in this direction as well.

    Let's wait and see.
    Aug 19, 2011. 04:40 PM | 1 Like Like |Link to Comment
  • A Heuristic Formulation of the Margin of Safety [View article]
    Hello imark - thank you for your comment. The markup is not based on the economy's growth rate but rather is a function of investors' attitude towards risk. Very risk averse investor would use a larger mark-up while more aggressive investors and frequent traders can live with a lower one.
    Jul 27, 2011. 08:51 AM | Likes Like |Link to Comment
  • A Heuristic Formulation of the Margin of Safety [View article]
    Hello Data - thank you for your comment. The difference between the standard method and the one proposed in the article is the point of reference.

    In the standard method, the reference point is the analyst's evaluation of the company. In the article, the point of reference is the market price.

    The standard method goes something like this: after doing my homework, I believe that company ABC is worth $100 per share. ABC at say $50 is a buy.

    Article says: Suppose that ABC trades at $50. Is ABC a buy? A 30% gain would place the issue at $65, a big discount to $100 but a 30% gain nevertheless. If you firmly believe in your $100 valuation, then ride ABC to $100. Otherwise, sell and get a 30% return.

    As I argued in a reply to another comment, the method is not a substitute to evaluating the company. However, once you found a company that you like, it provides good entry points.
    Jul 27, 2011. 08:48 AM | Likes Like |Link to Comment
  • A Heuristic Formulation of the Margin of Safety [View article]
    Thank you for your comment Gino. I agree with you about having clear and detailed assumptions for stock picking. The method I am advocating is not so much about which stock to buy but rather when to buy them. In other words, when all the hard work about evaluating an issue is done, what is a good entry point? In that regard I find the proposed 30% rule very convenient and it worked pretty well with GOOG as of late. Perhaps "When to buy stocks with sound fundamentals?" would have been a better title.
    Jul 26, 2011. 07:29 AM | Likes Like |Link to Comment
  • Google a Great Buy at $500 [View article]
    I am long GOOG and have a similar price target in the mid-600s. One way to get there is as follows: Earnings grow at 20%+ per year. So put a 20 multiple (for a PEG of 1) on earnings per share of $33, you get $660.
    Jun 30, 2011. 05:02 PM | Likes Like |Link to Comment
  • 2 Ways to Play the Rebound in Financials [View article]
    ouch!!
    Jun 30, 2011. 10:28 AM | Likes Like |Link to Comment
  • 2 Ways to Play the Rebound in Financials [View article]
    Thank you for the comment. With the banks increasing payout ratios in the near future, the value of the warrants should go up nicely. Any idea where to buy them? Through your broker?
    Jun 30, 2011. 10:28 AM | Likes Like |Link to Comment
  • 2 Ways to Play the Rebound in Financials [View article]
    Thank you for pointing it out and sorry to have left the warrants out of the article. They definitely belong in here!
    Jun 30, 2011. 10:25 AM | Likes Like |Link to Comment
  • Microsoft Has Almost 80% Upside Potential [View article]
    impressive analysis!! Being long MSFT, I hope you are correct.
    Jun 29, 2011. 10:09 AM | 2 Likes Like |Link to Comment
  • When to Buy Stocks With Low P/E Ratios [View article]
    thank you Howard! The market got some of its mojo back the last couple of days. Let's hope the momentum continues (provided you're net long of course!!)
    Jun 28, 2011. 09:16 PM | Likes Like |Link to Comment
  • When to Buy Stocks With Low P/E Ratios [View article]
    thanks. I checked one of your idea on SKM. It offers tremendous yield for sure. I'll do more research.
    Jun 28, 2011. 12:44 PM | Likes Like |Link to Comment
  • When to Buy Stocks With Low P/E Ratios [View article]
    you're welcome and hope that you are right about the state of the world economy. I have been long ANR for a while (riding the ups and down) and recently added to my positions. In the low-40s I find it offers lots of value.
    Jun 28, 2011. 12:12 PM | Likes Like |Link to Comment
  • When to Buy Stocks With Low P/E Ratios [View article]
    you're welcome. ABT stock could easily move to the mid-60s and bonus the stock has a good div yield.
    Jun 28, 2011. 12:10 PM | Likes Like |Link to Comment
  • When to Buy Stocks With Low P/E Ratios [View article]
    Everything else equal you are probably right. That being said, shares of FCX are generating a lot of interest among investors even though earnings estimates are hard to come by (See June 6th edition of Barron's).
    Jun 28, 2011. 05:52 AM | Likes Like |Link to Comment
COMMENTS STATS
62 Comments
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