persistentone3

What are some valuation approaches we could use to value a bank with negative book value and negative earnings? My feeling is that the best approach might be to determine an enterprise value based on customer deposits and back out value of preferred shares and debt. What do others think? One such bank is FMAR. They have negative book as a result of the real estate collapse. They had positive earnings but that has gone negative. I assume that this is because refinancings accounted for most of those earnings and now those have gone away. They are raising bank fees and I don't know how much closer that can get them to breakeven. They have about $15M of preferreds coming due at end of year (much of it was bought back below par in the past). This was amount due as of quite some time ago. I haven't referred to recent filings. But the bottom line was that the full par value of what is due immediately didn't look like a bank-busting event. They ought to be able to clear that hurdle. I guess something like this comes down to do you believe they can hold off on a regulatory action to seize them, then grow to positive earnings as economy heals. On a normalized earnings basis this is a $6 to $10 stock, and it sells for 80 cents. But there is a non zero risk here of them blowing up. In any case, I am very interested in understanding what an acquirer might pay for them today, with negative earnings, based on some alternative valuation approach.

Morningstar normally only sells raw data through its institutional products, and the only time I got Morningstar to quote for real raw data it was about $10K/year. In any case, I am asking for convertible bond data and pricing, and that is a product that Valueline has. The product is really dysfunctional. Finding the person who would be able to sell raw data will be challenging.

If anyone knows of a service that would sell raw data - updated daily with pricing information - for income securities in foreign markets that would also be interesting. I would certainly love to have this for Canadian debentures.

I like the idea of having the raw convertible data updated daily with pricing. The only link I saw for that was to their institutional sales department. Do you know of a contact to buy raw data for a retail customer? Thanks to other poster for the dividendyieldhunter web site. That is also useful.

I'm looking for a programmatic way to find a list of preferred / income securities that trade at 95% of par or lower, whose common stocks have been rising over the last year. Does anyone have a data service that could provide that? I'm happy to pay for it.

I realize this is a value investing forum, but there are experienced people here so maybe one of you has seen this feature. I'm looking for a stock charting service where I can enter trendlines with a slope greater or less than zero that would send an email notification when the stock trades outside that trendline. Many services let you set a support line, which is just a trigger on a single price. I'm looking for something more complex than that. I want for example to capture the long term trendline of stocks with predictable future performance, and I want to be notified in X years when some anomolous event happens and the stock trades outside the established trend. I have seen features like this on broker web sites, but a) those require you to stay logged in all the time and b) rarely would they scale to tracking hundreds - or thousands - of securities. I want a web based service where the trendline lives in the cloud even when I am not logged into the system.

YCharts gives very decent information. It's a shame they don't package a lot of this information into a single chartview, and instead they seem intent on making you manually construct all of your indicators in a single graph. It is very cumbersome and time consuming to do this, particularly for the number of issues I follow. I also wish they would stack each indicator with a separate graph above the prior indicator, with a common timeline. Trying to overload a single graph space with six indicators gets way too busy. Still, for the money it is a good find, thanks.

Capital IQ is about $20K per year? I would like to be spending under $1K for this data.

That's helpful thanks. I would still like something much more detailed if anyone knows of a source.

I have Morningstar and I don't see these. They have return on assets, return on equity, and return on invested capital for 10 years. Where are you seeing PE, PB, PTB, and EV ratios for 10 years?

Does anyone know of a data vendor who provides 10 years of price-earnings, price-to-book, price-to-tangible-book, and enterprise value ratios for stocks? Ideally I want to have the high *and* low valuations using those metrics for each of the 10 years, to see how a stock prices out over a full cycle.

California has always been a lousy market for real estate investment. You only make money on California real estate by speculation, and with the hope that the next buyer is a greater fool. Cash on cash returns for California real estate are typically 4% or lower. Why would you take on an illiquid investment - where you are losing 6% on day one to brokers - to make 4% cash on cash returns? The good US real estate investment markets are those where you can buy at or below replacement cost, with a growing economy, and cash on cash returns around 10%. That's not California.

The debt is obviously senior to the preferreds and probably yields 6.5% (I can check when I'm back in the office tomorrow), but they aren't comparable in my opinion. The debt has a much higher conversion price ($50 vs. $30 or so on the converts at the current price) so the debt trades on yield while the preferred seems to have a floor at about a 6.5% yield it trades on the close-to-the-money conversion feature. I also recollect that the convertible debt has anti-dilutive features that require you to accept cash rather than shares for the excess over par once the convertible debt is in the money. I hate when they put in those "features" into convertibles to create mandatory redemption when the stock gets to a price that would convert the debt at around 120% of the convert par value. But Preferred D and Preferred G both seem to have just such a feature. They can be mandatory converted at 130% of convertible par value. Are both D and G perpetuals? I'm just starting on the prospectus and don't see a maturity. The CHK April 2012 investor presentation includes two 5.75% cumulative convertible preferred stocks. One of these is with two CUSIPs: 165167776 U16450204 I don't locate either of those with a trading symbol or OTC on FINRA. Any luck finding these? Do they trade? Are they still 144A status maybe?

The debt is obviously senior to the preferreds and probably yields 6.5% (I can check when I'm back in the office tomorrow), but they aren't comparable in my opinion. The debt has a much higher conversion price ($50 vs. $30 or so on the converts at the current price) so the debt trades on yield while the preferred seems to have a floor at about a 6.5% yield it trades on the close-to-the-money conversion feature. I also recollect that the convertible debt has anti-dilutive features that require you to accept cash rather than shares for the excess over par once the convertible debt is in the money. Are both D and G perpetuals? I'm just starting on the prospectus and don't see a maturity.

Where did your friend ever find that gem? The naming convention of the delisted preferred falls into no pattern, so it is nearly impossible to detect. His article on these points to a CHK document that lists two convertible bonds as well. I am not able to find those on FINRA's site, listed either by the issuer or by the CUSIPs. Weird! Is anyone able to find a CUSIP for those bonds that works? There is an unrestricted CUSIP as well as a 144A CUSIP listed. The column in that document for the 5% convertible preferred indicates a mandatory conversion date of 11/15/2010, but is this only for the case where the 20 day trading test is met? The same CHK document indicates a conversion floor price. Does that mean that once the convertible falls below about $76 (did a rough calculation) that you can no longer convert at the 2.5766 ratio? The Cusip is 165167826 . . . it trades like an equity on the pink sheets and is pretty liquid (although the bid/ask is usually a dollar wide) The company can (and likely would) force conversion at any time if the stock trades at 130% of the conversion price for 20 days . . . (130% of $38.81 or $50.45 per share). If this were to take place within one year, you would get $5 in dividends plus receive stock worth $130 . . . not a bad return (and you can of course keep the stock). If it takes longer than a year, you keep on recieving dividends while you wait The conversion price is adjusted down by the amount of cash dividends paid on the common stock above a threshold of $0.065 per quarter. It has been adjusted down by $0.27 so far (in reality the amount of shares you recieve is adjusted up, but I prefer to think of it in terms of the coversion price). There is a floor to how far down it can be adjusted . . . this is a floor on how much lower the effective conversion price can be adjusted down by dividends paid (i.e. the price at which the number of shares you convert to is equal to $100). This floor is set at $30.05 . . . so it can't be adjusted down more than another $8.75 by dividends - a high class problem and not one I anticipate having. Tbone, I was asking for CUSIPs on the convertible BONDS. These are columns 4 and 5 labeled "5.75% Cumulative Convertible" and "5.75% Cumulative Convert (Series A)" in the PDF on the Chesapeake web site, linked from the blog article referenced above. My intent was to compare how similar debt was trading against the preferreds. One assumes the debt might have better covenants and would trade higher. But there might be a surprise there.

Ross, of course I know about Quantum. They don't show the Preferred G?

Where did your friend ever find that gem? The naming convention of the delisted preferred falls into no pattern, so it is nearly impossible to detect. His article on these points to a CHK document that lists two convertible bonds as well. I am not able to find those on FINRA's site, listed either by the issuer or by the CUSIPs. Weird! Is anyone able to find a CUSIP for those bonds that works? There is an unrestricted CUSIP as well as a 144A CUSIP listed. The column in that document for the 5% convertible preferred indicates a mandatory conversion date of 11/15/2010, but is this only for the case where the 20 day trading test is met? The same CHK document indicates a conversion floor price. Does that mean that once the convertible falls below about $76 (did a rough calculation) that you can no longer convert at the 2.5766 ratio?

I have been looking at FTP.db as well but I have no idea how I can value the convertibles correctly. Anyone got an idea? What is not clear to me is what is the claim in a reorganization for the debenture holders? Is the claim exclusively against this new subsidiary that they are trying to jump start with the financing from the debenture? That's a risky collateral for the investment. Can ftp.db holders make subordinated debt claims to the parent in a reorg?

PaperAge discusses the Fortress Paper venture and the convertible that partly finances it. They mention that "The cost structure of the LSQ Mill will be materially impacted by the ability of Fortress Global to upgrade the cogeneration facility and to service the facility through a long-term power supply agreement with Hydro Quebec on satisfactory terms." That's an awfully important variable, and it's a non trivial thing to implement. Shouldn't an investor here want to wait until that upgrade is finished and the agreement with Hydro Quebec is signed, on financial terms that meet the business plan's objectives?

Normally Reuters is one of the few sites that will provide a time graph of a Canadian debenture. I wasn't able to locate Fortress Paper debentures there however. Is there a retail web site that will provide a time graph for a few years of trading on the debenture?

Does anyone publish a comprehensive list of all TARP warrants that trade on public markets? Would any of you hedgies out there know how many TARP warrants for smaller banks trade in secondary markets for accredited investors like secondmarket?

One of the best articles I have read on Seeking Alpha is the article by a hedge fund guy on ATPGP. He did a statistically sophisticated analysis of equity, preferred, and bonds, and the preferred came out by far the best investment, using a monte carlo analysis to simulate many possible outcomes. The author of that article is extremely bright and I wish he would write more often. I also like the ATPG bonds at 60% of par or thereabouts. Preferred start to look good to me again around $40.

Is there a Canadian disclosure document that would tell us all of the TSX debentures now held by Fairfax?

Don't you feel some risk holding COR before a devaluation takes place? I read your blog post and I think we are on the same page. But I would go further and say you should LOVE heavily indebted companies if the debt is Euro denominated and you believe that the government will somehow succeed in mandating a conversion into a new and less valuable currency. Somehow Argentina pulled that one off with its companies. This is an area I don't understand well and maybe someone can illuminate it. If a company located in Portugal finances with a bond denominated in Euros, what are the circumstances in which a country like Portugal would have an ability to Force Majeure convert those bonds into a different base currency? The country would certainly do that with its own sovereign debt, and with the cash balances in bank accounts. I am less clear on how Argentina managed to pull this off with corporate debt. In the case of corporate debt you would think this involves a cross border transaction with a European bank, and in theory the law that controls the debt and its trust would be laws outside of the defaulting country. Can you send me an email to persistentone AT spamarrest.com?

The Cork company is interesting and puts up decent numbers. I added them to watchlists. On a devaluation they would collapse and would be an interesting candidate to buy. The textile company I don't like. That'a a brutal business and hard to differentiate. Their net income numbers are around 2%.