Guess the stock S18｜The magic of oligopoly
Oligopoly is a market controlled by a few companies, and each player's decisions are likely to affect the others. Mohnish Pabrai, a famous investment guru, once talked with Charlie Munger about oligopoly, concluding that oligopoly is a good way for companies to keep decent profit margins and stay competitive together.
Case 1:
Take the HDD (hard disk drive) industry as an example. In the past 25 years, it was a terrible business with over-competition and bankruptcy until 3 main players were left.
Along with the market consolidation, the EBIT margin of HDD leaders went up from -5% to 15%.
As a result, the stock price of one of the market leaders has gone up 6 times in 10 years.
Case 2:
The company is one of the big four controlling the global tobacco industry. With an ROIC of more than 30% and a dividend yield of more than 5%, the company keeps entrenching from the effect of oligopoly.
Case 3:
Like many other industries, the railroad industry became a money machine for shareholders during the process of oligopoly.
There are 2 main players who control the US railroad industry. Berkshire acquired BNSF in 2010 for $44 billion. The other left is still trading on the market, as shown in the chart below：
How to attend?
Leave the stock tickers of the charts above.
Event Duration: Jan 19-22
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steady Pom pipi : The portfolio returns described earlier seem pretty good
Moo Options ExplorerOP steady Pom pipi: Thanks for your support @steady Pom pipi! We build a Guess the Stock portfolio for each episode. Stay tuned!
steady Pom pipi Moo Options ExplorerOP:
EYSY : @Alpha Moo, is chart 2 correct? I can't seem to match the right chart with the big 4 tobacco companies
Moo Options ExplorerOP EYSY: Hi EYSY, thank you for pointing it out. The tobacco company's US business and international business have different stock tickers. We've made the change accordingly.
puddy1 : Case 1:$Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3:$Union Pacific (UNP.US)$
Tobacco industry based on charts looks to growing but not sure of the future of it with stricter regulations n health awareness/education.
sociable Dingo_8604 : Case 1:$Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3:$Union Pacific (UNP.US)$
Union Pacific is one of US most recognized companies. It provides a major contribution in the supply chain sector globally. For the past 10 over years, Union Pacific has invested about $35 billion to support its transportation infrastructure. With 7,476 locomotives, Union Pacific serves over 10,000 customers reliably and efficiently, delivering products in a safe and environmentally responsible manner.
Spritz : Case 1: $Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3: $Union Pacific (UNP.US)$
102782399 : Case 1: $Seagate Technology (STX.US)$
Case 2: $Philip Morris International (PM.US)$
Case 3: $Union Pacific (UNP.US)$
BH_6730 : 1) $Seagate Technology (STX.US)$
2) $Philip Morris International (PM.US)$
3) $Union Pacific (UNP.US)$
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