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  • Writer's pictureIshfaaq Peerally


The first stock I'm buying in September 2020 is a stock I've been buying since last year, GameStop $GME . GameStop is a failing business since it failed to capitalize on the digital video game market and has been unable to compete with Amazon $AMZN or Best Buy but GameStop is far from going bankrupt since the business has currently more cash than debt with very little debt expected to be paid soon.

The thesis for investing in GameStop is that it is a pure value play, the stock is massively undervalued with more cash than current market cap and can possibly generate more cash flow next year than current market cap. GameStop is a cyclical stock and the new consoles from Sony (PlayStation 5) and Microsoft (xbox) are coming out this November. Moreover, GameStop bought back 35% of shares and right now 240% of float is being shorted. This can lead to a short squeeze.

GameStop is still risky as it is down 15% YTD with the S&P 500 $SPX500 up 8% but at current valuations, it is a real cigar butt stock, a pure value play.

The second stock which I'm buying in September 2020 is Tiffany & Co. $TIF . This is an arbitrage play. Tiffany's is going to be acquired by LVMH $$MC.PA in all cash transaction for $135/share. The current spread is about 9% and it is highly likely that the deal will go through in the coming months.

There were rumors that the deal may not go through in June as some board members of LVMH were unhappy about the riots in New York but these rumors are unfounded as LVMH CEO, Bernard Arnault, who holds a majority of the voting rights in the company is a long-term investor and I don't think he cares much about noises. The deal makes sense for both companies and is now just awaiting EU regulators.

The third stock I'm buying is still unknown but I know in which industry it is going to be. With more and more people working from home, many of these people will leave cities where rents are quite high. Therefore, there's going to be a housing boom in the suburbs and rural areas, and consequently more mortgages will be needed. Those people working from home will more likely require mortgage insurance and not likely to qualify for VA or FHA insurance. Therefore, they will need an insurance from a Private Mortgage Insurance (PMI) company. There are only 6 companies in this industry are they all look very cheap (example $GNW ) I've looked at the industry as a whole and the margins are quite good with low mortgage rates. I have, however, not looked at the individual companies in detail yet but once I do that, I'm pretty sure, I'll invest in one of them.

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