When Mr. Market goes psycho, low risk option premium must be pocketed!
Two fallen angel megacaps in a rich market now that July CPI proved a non-event, I see a beautiful opportunity to scale up my long Palo Alto Networks (PANW) and Eli Lilly (ELY) to former darlings of Mr. Market who have been sandbagged by adverse events in the last two weeks. My rationale?
Palo Alto Networks (PANW) was slammed down to 165 after its $25 billion acquisition deal was dissed by Mr. Market. This is an insane overreaction. I just sold high delta PANW options up the wazoo since my math tells me that a $30 hit is only rational if an asteroid hits Santa Clara in the next month and prevents my one month puts from expiring worthless. Thank you Mr. Market for another no-brainer ahlan wa sahalan trade. I love you, you love me, we are a happy family as Barney loved to croon to my baby twins.
ADVERTISEMENT
True, Nikesh Arora is financing the CyberArk deal with only 2.5% cash and thus a Himalayan stock dilution. EPS now takes a 13% hit on a 100 million new shares to finance the deal and hence the meltdown to 165. As usual, Mr. Market ignores the EPS growth steroid shot that CyberArk provides the moment the deal closes next year since woke central demons have been exorcised by Trump at the SEC/Justice.
Mr. Arora did not CyberArk on a whim. The cost and revenue synergies have been totally ignored by the stock market, not to mention product cross selling growth in the post merger platform. The oracles of Delphi in the Embarcadero Center in San Fran are sure that PANW operating margins will rise from 28%-32%, thanks to this deal.
My cyber security guru Arjun and I both believe that the House of Arora is now all set to roar above 200 as these factors seep into the playing fields of Old Greenwich and Mayfair. The twin hedge fund capitals of the universe. I concede this puppy is not cheap at 45 times forward earnings but Cybersecurity is one of the fastest growth niches of software and a natural beneficiary of the AI revolution.
Growth is not a problem with the val metrics as Nikesh has traded at 75X in the past and is now trading at the low end of his valuation range since he became CEO even though EPS growth now gets a Noah's Ark. Of course, the proof of the pudding is on August 18th when the earnings thunderbolt descends from cybersecurity Mount Olympus in Santa Clara. My call, Zeus will not disappoint us and the val multiple will rerate back to my 200 target, which is well below fair value for one of global technologies true class acts.
Eli Lilly was also slammed by 15% because the oral Ozempic pill generated only 12% body weight loss and not the 15% Wall Street wanted. Get real guys. FDA approval is now certain and we just got a 15% discount on the only Big Pharma other than AbbVie worth owning in the age of RFK Junior. I do not know enough about the science and regulatory politics of anti-obesity drugs but there will be a robust global market for the LLY pill and thus I have no problem buying this puppy (actually, a mutated giant St. Bernard) at 625 as I know it can give me at least $30 in low risk option premium.
Also published on Medium.
Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
6 hours ago
- The National
Manus on Markets: Putin and Trump have eyes on swift Ukraine peace settlement
From tariff turmoil and stock shocks to market meltdowns, the global financial system has never been in such flux. Manus Cranny, The National's geo-economics editor, cuts through the noise and presents insights from the stories making headlines around the world.
Zawya
9 hours ago
- Zawya
Qatar's 2024 Q2 unemployment rate of 0.1% lowest in GCC
DOHA: Qatar has emerged as the Gulf Cooperation Council's (GCC) leader in labour market efficiency, recording the lowest unemployment rate in the region at 0.1 percent during the second quarter of 2024, according to a report issued by the GCC Statistical Center (GCC-STAT). The report also noted that Qatar has one of the highest proportions of expatriate workers in the GCC, with non-Qatari employees comprising 84.5 percent of the total labour force. In comparison with other GCC states, Qatar's unemployment rate reflects nearly full employment, while other member countries reported higher figures, particularly among women. Oman recorded the highest unemployment rate in the bloc at 3.6 percent, followed by Saudi Arabia at 3.5 percent. Across the GCC, the female unemployment rate averaged 10.8 percent, compared to 1.6 percent for males. Qatar reported the lowest rates for both genders, 0.4 percent for women and 0.1 percent for men, maintaining this level consistently for over a year. The report highlighted that among expatriate workers in Qatar, men account for 84.5 percent and women 15.5 percent. This aligns closely with the broader GCC, where 85.1 percent of all workers are non-nationals. Saudi Arabia's workforce is 87.1 percent non-Saudi, Oman's is 86 percent, and Kuwait's 74.4 percent. In terms of the Qatari citizen workforce, men represent 58.9 percent while women account for 41.1 percent, placing Qatar second only to Saudi Arabia, where women make up 40.5 percent of national workers. The report also noted that Qatar has one of the lowest male-to-female ratios among national workers in the GCC, with 143 working Qatari men for every 100 Qatari women, compared to Oman's 248 and Saudi Arabia's 147. The GCC-STAT data further revealed that the overall number of expatriate workers in Qatar during Q2 2024 reached 2.2 million, representing 8.9 percent of the total expatriate labour force in the region. This positions Qatar fourth behind Saudi Arabia, which employs 16.9 million foreign workers, as well as Kuwait and Oman. Despite its heavy reliance on foreign labour, Qatar's national workforce has remained stable, with only a negligible change in citizen employment figures over the previous quarter and a 0.4 percent quarterly increase. The report compiled its findings using data from official statistics agencies across GCC countries, including the Federal Competitiveness and Statistics Centre (UAE), Information & eGovernment Authority (Bahrain), General Authority for Statistics (Saudi Arabia), National Centre for Statistics and Information (Oman), National Planning Council (Qatar), and Central Statistical Bureau (Kuwait). It also drew upon international comparisons from the ILO World Employment and Social Outlook – Trends 2024. Notably, the report indicated that some datasets may be incomplete or unavailable for all GCC countries, depending on each country's data provision and release schedule. With a near-zero unemployment rate and a growing expatriate-dependent economy, Qatar continues to demonstrate a dynamic and resilient labour market, ranking among the GCC's leaders in workforce stability and inclusivity. The report underlined the country's sustained efforts in creating job opportunities, empowering women in the workplace, and maintaining labour market efficiency, all of which contribute to its economic resilience in a highly competitive regional environment. © Dar Al Sharq Press, Printing and Distribution. All Rights Reserved. Provided by SyndiGate Media Inc. (
Khaleej Times
10 hours ago
- Khaleej Times
DMDC announces Abu Dhabi expansion with luxury project at Four Seasons Residences
DMDC, a leading name in construction and interior design, recently announced its official expansion into Abu Dhabi, a move that signifies both strategic growth and a commitment to innovation across the Emirates. This new chapter begins with an exclusive luxury renovation project at Four Seasons Residences, a property that reflects the firm's design ethos and attention to detail. Having operated exclusively in Dubai for over four years, DMDC has built a robust reputation for delivering visually striking and highly functional spaces that redefine modern living. The expansion to Abu Dhabi comes at a moment when the city's real estate market is flourishing, driven by an increasing appetite for bespoke luxury and intelligent design solutions. DMDC sees this market growth as the perfect opportunity to bring its expertise to a broader client base and elevate the standard of living spaces in the capital. The inaugural Abu Dhabi project, set in the coveted Four Seasons Residences, will showcase DMDC's signature blend of sophistication and smart spatial planning. This marks the first in a strong pipeline of projects in the emirate, reflecting the company's confidence and long-term commitment to the region. 'This expansion is the right next step for us at DMDC, especially as the company has quadrupled in size since its inception,' said Raji Daou, CEO of DMDC. 'We look forward to bringing our expertise to the capital of the UAE – one that exemplifies vision, innovation, and opportunity.' DMDC's move to Abu Dhabi comes on the back of the recent launch of DMDC Estates, the company's property investment arm. Already active across Dubai's most desirable communities, DMDC Estates is set to play a pivotal role in the company's expansion, offering a diversified portfolio of premium developments and reinforcing DMDC's commitment to excellence. From concept to completion, DMDC continues to set the benchmark for luxury construction and interior design.
