Category Archive for: ‘Essays & Commentaries’
The Illusion of Record Profits
When managers talk about record profits, they often leave out one crucial detail that would allow shareholders and owners to view their performance in a more honest light: the change in capital at work in the enterprise. This seemingly small detail is actually one of the most important numbers any analyst, executive, owner, or lender needs to know. Assume you …
Buying Call Options
Buying call options is the opposite of selling covered calls and is an extremely aggressive strategy. You can generate big losses, but if you’re right, huge (and I mean huge) gains. The only reason we are willing to do it with a very small percentage of our assets is because we have the liquidity, net worth, and profitability to support …
Selling Covered Calls
The volatility in the markets has caused pricing for certain derivatives to shoot through the roof, allowing investors to earn huge returns by selling covered calls (also known as writing covered calls). Here’s an example of a real transaction involving selling covered calls that one of our businesses recently contemplated. Right now, we could purchase 6,000 shares of U.S. Bancorp …
Writing Put Options on Abercrombie & Fitch
This blog entry is meant as an explanation of writing put options or selling put options and not meant to convey any opinion as to the suitability or prudence of investing, trading, holding, buying, or selling shares or put options in Abercrombie & Fitch or any other firm. It is purely for illustrative purposes as to the type of transaction …
How We Approach Value Investing
Posted Aug 12 2010 by Joshua Kennon in Investing Strategies with 1 Comment
At Kennon Green Enterprises, we approach value investing using an opportunity cost approach. That means we don’t get hung up on the idea of owning stocks or bonds, real estate or gold. Instead, we look around at all available opportunities that fall within our “circle of competence” – the things we understand, are passionate about, and can analyze better than …
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