Pair Trade Idea: META & DLVHF
I added a new trade to my Market Letter: https://defensiveinvestingmarketletter.substack.com/p/new-pair-trade-meta-and-dlvhf
Long META and Short DLVHF
META is a high quality company. It has generated high stable growth in recent years, a comparatively high return on equity, ROIC, and a high net profit margin and healthy debt. The PEG ratio is below two, which is a favorable valuation for the Internet software industry and such a large company. I also think that the sell-off was too exaggerated. My target price based on a performance-based enterprise valuation (DCF) is $250
As a pair trade hedge for META, I added the value destroyer Delivery Hero (WACC > ROIC), which has a high correlation to META (86%).
Submitted August 02, 2022 at 11:55AM by MichelAgora
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