Dan Yongping has too much cash on hand and has set his sights on Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US). This time, it's not just for fun.

After selling the put options of Tencent and Nvidia one after another, because the buyers did not exercise their rights, Duan Yongping had "a lot of cash" in his hands, so he thought about going all in, and was preparing to target TSMC. In his opinion, TSMC is a good company, but he hesitated because he considered it to be a heavy asset company and did not make a move earlier. Fortunately, the premium for selling the put options of this good company is quite good now. From the discussion content, it seems that Duan Yongping may still be selling put options when targeting TSMC. Here is his exchange record on Snowball yesterday: Duan Yongping: After many put options expired in January, a lot of cash was freed up. With U.S. stocks being so expensive, some people are still tinkering around, and T-bill interest rates have also come down a bit, which is a bit tricky. I'm starting to think about TSMC. I knew 35 years ago that TSMC is a very formidable company. But I have never made a move after starting to invest, because I thought it was a very heavy asset company. Now I am starting to pay attention. Being able to go all in is a very pleasant thing, being empty-handed is a bit uncomfortable. The highest annual return rate is also up to 23%, which is acceptable. Comment: If Maotai can be put, would that make people happy, but unfortunately there are too few investment tools in China. Duan Yongping: Selling put options at this price for Maotai may not be a good choice. The premium for companies like Maotai is generally lower. I didn't expect TSMC's premium to be quite good now. However, it probably won't stay that good for long. Comment: "35 years ago I knew that TSM is a very formidable company. But I have never made a move after starting to invest, because I thought it is a very heavy asset company." May I ask, what are your main considerations for making a move now? Or is it just for fun? Duan Yongping: TSMC's business model and corporate culture are very strong. It's not just for fun. Comment: It seems that Mr. Duan is preparing to make a big purchase. Duan Yongping: Well, not necessarily, but at least I'm starting to take a serious look. Comment: In TSM's culture, loyalty and honesty are very important, being loyal to customers means not competing with them. In the 1970s, many Japanese calculator companies bought American chips, brought them back, assembled them in a plastic case, and sold them at a high price of several hundred dollars. Americans thought about it, there was no technical content in this, we can do it ourselves, and the calculator industry quickly collapsed. In Shakespeare's Hamlet, Polonius advises his son before sending him to England: Be honest to others, just as there is day and night, being honest to others prevents self-deception. I think that Samsung and Intel's failures in technological development in recent years may also be due to not being honest with themselves, unable to face the huge capital investment made earlier, and hoping for luck. Duan Yongping: 30 years ago, I told people at UMC that in the future, TSMC will be much more formidable than UMC and Samsung, because TSMC is very focused, and only focused on foundry services. UMC had its own design house at that time, and Samsung was the same. Comment: Could I ask the wise one, you buy more to C companies compared to Buffett, is there any difference in recognizing the business models and moats of to B companies, especially for big B companies like Nvidia and TSM? Duan Yongping: Business with to C companies is easier to understand because you can directly see the products, to B is a bit difficult unless you happen to be a user. I am not very sure how strong Nvidia's moat is, but I know that it is still very strong at the moment. TSM and Microsoft are very formidable to B companies, I was a bit slow in realizing this. Comment: Tencent was in a similar situation before, with relatively low premiums. Duan Yongping: The short-term premium for Tencent is actually not low in annual terms, it can be almost 3% in a month. I put in quite a few Tencent options some time ago and felt very lucky. This article is reproduced from "Xiaoya Interview", GMTEight editor: Liu Jiayin.