Today, I am deploying cash from recently expired positions.

music selection: “Cherry Bomb” — The Runaways

weigh-in:  216.8 (1.2) [back on track]

CH Robinson Worldwide is a third party logistics company.  There are fully intermodal these days and increasingly global.  There are two things that make CHRW attractive.  The first is its scale allows for a strong network effect.  They have so many customers and so many contracts to do deliveries that they can exert pricing pressure.  They are often able to find backhaul loads for their contractors increasing their profits while saving the customers a lot of money.  The second thing that makes this an attractive business is its capital efficiency.  I’ve talked about capital efficiency here at the raptor before.  This company plays in the shipping space without spending millions on fixed assets such as trucks.  That is all outsourced.  This allows revenue to scale up rapidly without needing new capital outlaws.  A very profitable arrangement.

The company is also very safe.  It operates in a primary industry and has over 20 times interest coverage on its debt.  This well managed company produces more free cash flow than net income and is committed to a long term plan of returning 90% of profits to shareholders via dividends and buybacks.  The current yield is 2.23% and growing.  Distribution has grown from a nickle a quarter in 2000 to 38 cents a quarter today.  This one should eventually make the dividend aristocrats list.

I was able to sell today CHRW151218P00067500 for 1.15 a contract.  This trade will be open 26 days and yields 23.92% annualized.  It comes with 3.8% downside protection.  And let’s not forget a “loss” on this trade means owning a global elite business at a favorable price.  That is win-win.

There is a new feature at the raptor.  I have an Open Positions page where I’ll be listing the positions that I open going forward.  CHRW is the first entry there.  I’ll be posting five times this week instead of the usual three as I have lots of trades to detail.  Sometime soon, maybe early December, there will be a new feature introduced where I trade a completely new asset class that I think offers low risk and high return.  No hints!  And the first of the year starts a monthly transparency post to show my liquid networth and withdrawal rate.

Devour your prey raptors!


Write put CH Robinson Worldwide Inc. (CHRW)

Never miss another opportunity to devour prey!

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