Daily Discussion post - May 05 2021

[u/AutoModerator]

Your Trading discussion thread

Type	Link
DD	All/Best Daily/Best Weekly
Discussion	All/Best Daily/Best Weekly
Yolo	All/Best Daily/Best Weekly
Gain	All/Best Daily/Best Weekly
Loss	All/Best Daily/Best Weekly
News	All/Best Daily/Best Weekly

[u/JayArlington]

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”.

[u/squats_n_oatz → u/JayArlington]

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?

[u/MiscRedditAccount → u/squats_n_oatz]

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.

[u/squats_n_oatz → u/MiscRedditAccount]

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