TROX/Rn - Everything old is new again. I only have to look back on our old LTPs to find stocks we love when they are cheap. We used to have RH, CROX, etc. in our portfolios so it's easy to buy them again. I thought TROX was being sold or something? $16.60 down from $26 is $2.5Bn and it's silly because they made $1Bn in 2020 (their first year of profit) and $286M last year and expect $512M this year and $578M next year so there's the whole company paid for in 4 years! They just RAISED guidance and it's not like people have a lot of alternatives for titanium dioxide, is there (and most of them are in Russia)?
Net $2.3Bn in debt means $60M (10%) chopped off earnings going forward but they'll pass that through to end costs. TDiox is one of those things that's essential to many things but not a major ingredient so a bump in cost is not likely to get a lot of pushback.
I think, for the LTP, let's just sell 20 of the TROX 2024 $18 puts for $4.50 ($9,000). That nets us in for $13.50, which is a 20% discount and it will remind us to keep an eye on them.
The $15 puts are $3 so net $12 but I'm confident this is a good price for them and I'd rather make $4.50 than $3 on a move up. What's really crazy is you can sell the $10 puts for $1 and that's net $9 - almost half the current price. The Jan $20s are $4.50 so if we can roll them down $2, then we can roll to the 2025 $16s and the 2024 $14s, etc. Since we REALLY don't mind owning TROX for the long haul - there's no reason to be cheap about our initial put position.
