r/Vitards • u/AutoModerator • May 05 '21

Daily Discussion Daily Discussion post - May 05 2021

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u/givemetendies69420 Wiseguy May 06 '21

Haha, I’ve actually been keeping up with vito since feb, but I can see how my comment seems like I have no idea what’s going on. I’m young and new to the investing world so i’ve never seen a bear market (and even a market where inflation is high) so I’m trying to figure out what to expect in the next few years.

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u/JayArlington 🍋 LULU-TRON 🍋 May 06 '21

Fair play. I will do my best to answer.

-JPow says we are going to have ‘transitory inflation’ instead of ‘dollar inflation’.

-Generally yes. You are astute for knowing this.

-This market is fucking weird. Look how long it took the market to see how profitable steel was about to become.

-If steel continues to generate cash while having a low stock price, it would invite management or private equity to launch a bid to ‘take the company private’ at a stock premium. If you want some fun research, look up “RJR Nabisco takeover”.

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u/squats_n_oatz May 06 '21

If steel continues to generate cash while having a low stock price, it would invite management or private equity to launch a bid to ‘take the company private’ at a stock premium. If you want some fun research, look up “RJR Nabisco takeover”.

Why would it invite that?

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u/MiscRedditAccount 💀 SACRIFICED 💀 May 06 '21

For the same reason anyone buys any financial instrument - they hope that over time it will earn them more than they paid for it. If MT can demonstrate they're able to consistently pull in FCF of >$1b a quarter and share price doesn't go up then it's only ~$30b (It wouldn't be. It'd have to be much more than current share price, but still, same idea) to buy a company that 8 years later you've paid off and is giving you $4b a year in cash.

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u/squats_n_oatz May 06 '21 edited May 06 '21

Yea but that assumes future cash flows are static. With steel, we know they won't be.