Monday, August 10, 2009

Bookkeeping: Exiting Most Discover Financial Services (DFS)

These days almost all the rules you learned over the previous 5, 10+ years are thrown out the window. Discover Financial Services (DFS) placed a share offering [Jul 7, 2009: Discover Financial to Offer $500M in Stock] , the stock fell ... for a whole 2 days... and has since ramped in mighty fashion due to the fact its a financial, and financials are the new potash. Back when I had to place telephone orders in 1/8th increments (uphill, both ways, in the snow, barefoot) when a company diluted you, it hung over the stock for months if not longer. You cursed to yourself, dumped it, and didn't need to look at it again for half a year. Heck, that was even the case 2 years ago. But it's not your daddy's stock market anymore and bulls have incredible margin for error when all news is good news.

I am going to sell almost all of my position around $12.50 and get this back to a 0.1% stake. One day in a galaxy far, far away ... when the stock market falls, we'll try to get some exposure back. The stock is up 25%+ in a few weeks but compared to some other financials, early cycle machinery, REITs - this is nothing. Heck AIG (AIG) rises 25% a day now.

I won't bother you with a valuation discussion because all 3 major pure play credit card companies now trade at valuations that are from... well speaking of another galaxy. As if and all its peers has invaded our Earth again a decade later.

[Jul 2, 2009: Beginning Discover Financial Stake]

Long Discover Financial in fund; no personal position

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