- Arconic (ARNC +6.1%) marches higher after multiple insiders bought shares this week.
- On May 20, CEO Tim Myers bought ~13K shares at an average $10.37/share, CFO Erick Asmussen purchased 20K shares at an average $9.94, Chief Legal Officer Diana Toman acquired ~10K shares at an average $10.49, and two board members also bought shares during the week.
- Shares spurted higher after Credit Suisse began research coverage with an Outperform rating and $22 price target, saying the company faces a "major inflection point" in Q3 as Ford and GM accelerate production.
That's more reliable as GM and F are certainly moving to more electrics and need lighter cars. They made $60M last Q and $144M in Q4 and should be good for about $160M in earnings and you can buy the whole thing for $1.3Bn at $12 so I'd say it's really undervalued as people haven't seen enough after the AA spin-off to value it properly and the virus disrupted their story getting out.
So, ARNC is a great addition for our Future is Now Portfolio and we can start with:
- Sell 10 ARNC Jan $10 puts for $1.55 ($1,550)
- Buy 20 ARNC Jan $8 calls for $5 ($10,000)
- Sell 20 ARNC Jan $12 calls for $2.60 ($5,200)
That's net $3,250 on the $8,000 spread that's currently 100% in the money with a $4,750 (146%) potential gain in 8 months if ARNC simply stays above $12. Downside risk is owning 1,000 shares at net $13.25 (if the bull call spread is wiped out), so it's a little aggressive but the net margin on the puts is only $617 - so we can easily double down if we get in trouble.
FL/Jeff - We know this Q would suck - hard to sell when you are closed.
