NTD 1.28% 39.5¢ national tyre & wheel limited

Hi All,I think the selloff is overcooked and will initiate a...

  1. 751 Posts.
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    Hi All,

    I think the selloff is overcooked and will initiate a small position on Monday. The only thing I don't like about NTD is that they've been issuing shares like mad and taking on debt to make acquisitions. Having said this, I suspect they may hold steady for a while now, given they've done about 7 acquisitions in the last 2 years, thus I am willing to give less weighting to this. Also, they have plenty of cash on hand and operate a very healthy business - yes you can go to Amazon to order your tires, but you can't change your own tires without special equipment, hence the market has way overreacted. Furthermore, it doesn't matter what economic condition (downturn/upturn), people still need to drive their cars and get tires.

    After initiating a small position, I will have reserve dry powder to average down 2x, once per 30% drop.

    Based on my VERY conservative calculation of fair value, I've arrived at ~88cents, but suspect their true fair value is ~$1 - $1.05.

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39.5¢ 39.5¢ 39.0¢ $12.95K 32.93K

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