racemize

Honestly, I thought their future returns expectations were still too high. At least for the next 10 years. Maybe 8% over 50 years or something like that. I'm expecting more like 6%.

Any opinion on what's going on in the auto finance world? Not sure if your experience lends itself to that or not, but thought I'd throw it out there in case it did.

Maybe I'm being dense, but I got lost at that sentence. Can you elaborate further on what was wrong? Or maybe just elaboration on this paragraph in general as it sounds interesting.

Tim's answer is best answer.

Well, remember that it is 100% ROE, not $1 extra per year. Presumably, after they earned the incremental $1, and the book value is $2, then the next year it will earn $4, not $3, which could justify the $200 price. Or said another way, P/B is just a short-hand way of doing DCF. Really, you are looking at a company that doubles earnings every year. If it can always double earnings every year, then it deserves a high multiple throughout. You also seem to be questioning whether multiples matter if they hold constant. It is true that they don't if they are always the same; however, as I mentioned above, the multiples are just a short-hand DCF, and no company maintains high growth rates forever. Accordingly, high multiples must contract over time. Hopefully this is actually addressing your questions?

The fact that book value is in U.S. has a huge impact on previous comments. At Q1, book value is $361, which I have a P/B of somewhere between 1.1 and 1.2 depending on how many shares they issue for the buy out. That doesn't included the recent gains or the unrecognized gains of ~ $1.4 billion dollars. If you want to make a bearish case, then you can write off all the good will.

Guys, we've tried to talk some sense into Emily, but nothing is going through. Personally, I think this is a troll. I've already mentioned it to Sanjeev, but these interjections just don't help anyone, and replying doesn't appear to be helping "her" either.

I need at least $230,000 for school and have 10,000 shares @4.05. When should I exit or keep them till they hit $20.00? What would be safer as you say 'all the things that could go wrong' . You all are very smart and deserve every penny you can make here. My hats off to those who have held this since 2008. This has already been answered. This is an incredibly bad idea and you should not be in this investment for college.

Thank you. Your analysis is only for first phase of conversion. What would be the ratio for common and preferreds once all is done by 2020 i.e. after second conversion and everything else? Preferreds get converted to commons, so they enjoy the same upside. I also read tha G fee would go up higher with time and benefit accrues to common (and thus to converted preferreds). My goal is to decide if I should hold for the continued upside. They both get exactly the same upside afterwards. Only difference is initial conversion.

With regard to dilution, original shareholders have: 8,997-7,200=1,797 Final share count is 21,489 in the first outcome 1,797/21,489 = 8.4% Second outcome is 10% So a lot of dilution, but not down to 2-3%

Under the proposed solution, preferreds and common have a similar upside. For example, first exemplary outcome is (and only paying attention to the first conversion, since afterwards the upside is the same): common goes from 2.63->7.95, which is 3x preferred gets par, so using current prices, you get $25 for $6.73, which is 3.7x In the second exemplary outcome, using the same methodology: common is 10.87/2.63->4.1x preferred is the same outcome as above (common price doesn't actually matter, you just get par). So, if raises go well, common does better, and if not, preferreds do better. Makes some sense given the situation. I'm sure the designers knew that they were representing both preferreds and common shareholders, so they proposed a fairly equal solution. I personally think the preferreds outcome should be higher than the common (which is why I bought the preferreds), given the whole scenario. IMO, it makes no sense for common to get more upside than preferreds.

I thought dividends could be paid by 2020, which would only be two years--is there a section indicating it wouldn't be until 2022 that I missed?

Actually, merkhet just pointed out that 0.8 billion shares are issued to the treasury at IPO per the footnote, so that makes up the difference. No incongruity in the new version, JPs get par.

What error? if you look at p.36, moelis changed "equitized JPS" from 27% in 2018 to 12% edit: @racemize, you think moelis is reading this thread? they should thank you.... Well if they are, it still needs to get fixed. The shares issued don't match the percentages. I think the percentages are probably right, given that it gives you 1 of par.

What error? It still isn't right as I showed above (two different values depending on method of calculating converted JP value), but pages 36 and 37 originally had the converting JPs at 27% for both scenarios, which was very high. For example, 16 billion of JPs then had a 27%*7.95*16,915=36 billion in value= 2.3 of par. In the updated one, the JPs have equity value of 12% and 10% respectively. Math is: 0.12*7.95*16,915=16 billion = 1 of par; or 0.10*10.87*14,788=16 billion = 1 of par. So the math used to have a big multiple of par (hence my previous comment), and now we are back to par, which is more reasonable.

They fixed an error on the conversion of the JPs: http://gsesafetyandsoundness.com/wp-content/uploads/2017/06/Safety-and-Soundness-Blueprint-2.pdf Shares issued to JPs in 2018: 16,915-8,997-5,031=2,887 2,887*7.95=22.95 billion Originally 33 billion of Jr. Preferred, assumes 17 billion does not get converted, which leaves 33-17=$16 billion getting converted 22.95/16 = 1.43 of par. However, if you go at it from this point of view: Value of converted JPs = 12%*16,915*7.95 = 16 billion = 1 of par

The presentation only assumes half of the preferreds convert, so it is more like 2x par on the conversion.

+1 on that one. EZPW kind of, but half-way recovered.

The AIG deal has losses up to 20 billion for a $10 billion price tag, so I could see a pretty large reserve happening.

Maybe I missed the source, but what is/was the HW Asia Fund?

Also, I really think there is some end point measuring issues here. All value funds I track look bad right now, with the exception of Turtle Creek and Arlington Value. I expect most of the value hedge funds will start looking a little better in a few years. I do think mutual funds are just tough to do well in.

I have this quote attributed to Bogle: According to Bogle’s Common Sense on Mutual Funds, generally 85% of fund managers lag the S&P 500 over any extended period. Additionally, only 0.5% of managers beat the indices by 3% or more. I think mutual funds have a lot of problems structurally. Long-only hedge funds should do better as a group I would imagine, except that the fees are stupid high, which probably offsets all the structural help.

2.4% I believe.

Worth noting that the last three years reported performance is gross of fees, so they need to be subtracted down a bit (seems like the 2.4% is the one to use). Regardless, best performance I'm aware of. Anyone have any letters prior to 2006?

I wrote up AIG to get in, but then someone else happened to post on it at the same time, so it didn't count for my idea. I never posted another one after that, but I still look at write-ups from time to time with the delay they have. So I think it's not too bad on that front, but I haven't spent the time to stay current.