I Just Bought More Airline Stock And Here Is Why?

I just bought more Airline Stock, specifically delta. ( and everyone online is saying to sell or not buy, but right now might be a perfect time)

1. But you know what they say ( every favor comes with strings attached) Focus on delta not too broad
- Pay it back in 10 years 30% of it ( since 70% is going to employees) Delta got 5.4 billion including a 1.6 billion loan )
- Cannot engage in stock buybacks until 12 months after the loan has been repaid
- Cannot pay dividends until the loan has been paid back 12 months after
- Cannot reduce employment at all until Sep 30th and after not by more 10% ( 80k employees and can cul 8k )
- The Treasury will also receive stock warrants worth 10 percent of the loan amount that exceeds $100 million. ( 1% of delta stock at $24.39 of 5 years)

Example: take a lot at JP morgan during 200k, it dipped from 40 to 20 buck and now it's at 92.

1. warren choice :
- Warren bought 45.3 million dollars worth of delta stock (11% stake) on February, for a total 976k shares at $46 per share
- Delta is currently trading for 22-24$ per share ( that almost a 50% loss)
- And they’ll have to borrow 10 billion dollars in debt from the fed to stay afloat, and they’ll have to pay it back
- ( I think this screams high risk, the business has to change the way it operates, people might not fly the same for a while, the business will have extra debt expenses)
- Plus not to be morbid, but warren is 89 years old, by the time airlines discover it might be a long time from now
( history shows, stock market closing for 4 months, it shows 20 years of pure losses in the past, and warren experienced all of that, so I think his perspective is different )
- And I think the intrinsic value for these companies has changed a lot since warren buffet initial calculations.

Tip: Then I’m going to make the profits that warren lose out on. ( it would take a 100% gain for warren to get his money back

2. why I bought more:
- I’m the guy warren sold for half the price of what he bought
- So if I’m holding on to a solid company, that can run efficiently and will recover in time

what I see happening
- The company won't be able to buy back their stocks ( artificially will keep prices low for a few months )
- They cant give any dividends until September ( a lot of buyers want quick cash)
- I also see a lot of people maybe being laid off, if management decided to sell or liquidate some of its aircraft)
( remember if only 50-80% of the people are flying but you have the same amount of plains that is also a liability.

Details:
- The company bring in annual 45 billion and spend 36 billion to make it back and its net profit is 3.5 billion

Bet: they’ll recover in less than 10 years

3. My portfolio set up
- Although this is a perfect set up for a come up ( or quick money)
- It's also a risky one
- So that’s why my position on delta will not likely past more than 20% of my portfolio

My next investments

- My next investment is more delta stock
- Because when the storm has passed I predict a lot of stock buybacks, which then gas up the prices
- Will I sell ( very unlikely, I’m willing to hold my position for the next 10 years)

- Unless new information makes it way

Articles:
Care Act: https://www.foley.com/en/insights/publications/2020/04/cares-act-aviation-industry-loan-and-grants
More Info: https://www.fool.com/investing/2020/05/02/warren-buffett-said-he-was-wrong-about-airlines-wa.aspx

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

Видео I Just Bought More Airline Stock And Here Is Why? канала TommyBryson