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.
![Source: Jefferies, Gartner.](https://ussnsimg.moomoo.com/77777077/editor_image/724aaac6486436729419bf79b4b2910d.png/bigmoo)
Along with the market consolidation, the EBIT margin of HDD leaders went up from -5% to 15%.
![Source: Jefferies, Gartner, FactSet, company data.](https://ussnsimg.moomoo.com/77777077/editor_image/646e18debe7738db91002bd6db86956c.png/bigmoo)
As a result, the stock price of one of the market leaders has gone up 6 times in 10 years.
![Guess the stock S18|The magic of oligopoly](https://ussnsimg.moomoo.com/77777077/editor_image/d76ae70c297c33b7b6adecc03ad0b96f.jpg/bigmoo)
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.
![Guess the stock S18|The magic of oligopoly](https://ussnsimg.moomoo.com/77777077/editor_image/ee53513277113396abcbf37f271c66f7.jpg/bigmoo)
Case 3:
Like many other industries, the railroad industry became a money machine for shareholders during the process of oligopoly.
![Source: Association of American Railroads](https://ussnsimg.moomoo.com/77777077/editor_image/6b024cf5ecb43e62a6a39151f273fad5.png/bigmoo)
There are 2 main players who control the US railroad industry. Berkshire acquired BNSF in 2010 for $44 billion. The other left is still trading on the market, as shown in the chart below:
![Guess the stock S18|The magic of oligopoly](https://ussnsimg.moomoo.com/77777077/editor_image/b1b60f6887363a87a1640676f6e4b09a.jpg/bigmoo)
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Leave the stock tickers of the charts above.
Event Duration: Jan 19-22
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steady Pom pipi : The portfolio returns described earlier seem pretty good![undefined [undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36)
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Moo Options Explorer OP steady Pom pipi : Thanks for your support @steady Pom pipi! We build a Guess the Stock portfolio for each episode. Stay tuned!
steady Pom pipi Moo Options Explorer OP :![](https://emoticon.futunn.com/moomoo_winter_day/mw_17.png)
EYSY : @Alpha Moo, is chart 2 correct? I can't seem to match the right chart with the big 4 tobacco companies
Moo Options Explorer OP EYSY : Hi EYSY, thank you for pointing it out. The tobacco company's US business and international business have different stock tickers. We've made the change accordingly.
puddy1 : Case 1:$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) $Union Pacific (UNP.US)$
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