Guess the stock S18|The magic of oligopoly
Oligopoly is a market controlled by a few companies, and each player's decisions are likely to affect the others. Mohnish Pabrai, a famous investment guru, once talked with Charlie Munger about oligopoly, concluding that oligopoly is a good way for companies to keep decent profit margins and stay competitive together.
Case 1:
Take the HDD (hard disk drive) industry as an example. In the past 25 years, it was a terrible business with over-competition and bankruptcy until 3 main players were left.
Along with the market consolidation, the EBIT margin of HDD leaders went up from -5% to 15%.
As a result, the stock price of one of the market leaders has gone up 6 times in 10 years.
Case 2:
The company is one of the big four controlling the global tobacco industry. With an ROIC of more than 30% and a dividend yield of more than 5%, the company keeps entrenching from the effect of oligopoly.
Case 3:
Like many other industries, the railroad industry became a money machine for shareholders during the process of oligopoly.
There are 2 main players who control the US railroad industry. Berkshire acquired BNSF in 2010 for $44 billion. The other left is still trading on the market, as shown in the chart below:
How to attend?
Leave the stock tickers of the charts above.
Event Duration: Jan 19-22
Rewards
4,000 points giveaways: Leave the correct answer to receive an equal share of 4,000 points. (i.e. if 100 users give correct answers, each user will receive 40 points.)
Cash Coupons: 5 users who give the best-quality reviews (of the topic or any company) will get US$1 / SG$1.4 cash coupons.
*Support own ideas: Users who plagiarize will not be rewarded in the next 3 months.
This presentation is for information and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. See this link for more information.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
steady Pom pipi : The portfolio returns described earlier seem pretty good
Moo Options Explorer OP steady Pom pipi : Thanks for your support @steady Pom pipi! We build a Guess the Stock portfolio for each episode. Stay tuned!
steady Pom pipi Moo Options Explorer OP :
EYSY : @Alpha Moo, is chart 2 correct? I can't seem to match the right chart with the big 4 tobacco companies
Moo Options Explorer OP EYSY : Hi EYSY, thank you for pointing it out. The tobacco company's US business and international business have different stock tickers. We've made the change accordingly.
puddy1 : Case 1:$Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3:$Union Pacific (UNP.US)$
Tobacco industry based on charts looks to growing but not sure of the future of it with stricter regulations n health awareness/education.
sociable Dingo_8604 : Case 1:$Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3:$Union Pacific (UNP.US)$
Union Pacific is one of US most recognized companies. It provides a major contribution in the supply chain sector globally. For the past 10 over years, Union Pacific has invested about $35 billion to support its transportation infrastructure. With 7,476 locomotives, Union Pacific serves over 10,000 customers reliably and efficiently, delivering products in a safe and environmentally responsible manner.
Spritz : Case 1: $Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3: $Union Pacific (UNP.US)$
102782399 : Case 1: $Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3: $Union Pacific (UNP.US)$
BH_6730 : 1) $Seagate Technology (STX.US)$
2) $Philip Morris International (PM.US)$
3) $Union Pacific (UNP.US)$
View more comments...