krazeenyc
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Posts posted by krazeenyc
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looks like Coverdell accounts aka Education IRAs have a MAGI limit of $110K:
Coverdell Education Savings Accounts (formerly called Education IRAs)
allow you to set aside money each year toward a child's education. The
contribution limit is $2,000. Withdrawals for qualified education
expenses are federal (and possibly state) income tax free, and account
balances can be transferred to siblings without any tax consequences
so long as it is done prior to the previous beneficiary's 30th
birthday and the new beneficiary is under the age of 30. While tax
benefits make these accounts attractive, the low contribution limit
may not provide enough money to pay for college. Unlike
state-sponsored plans, income limits apply for eligibility. Only
single filers with modified adjusted gross income ("MAGI") of less
than $110,000 and joint filers with MAGI of less than $220,000 are
eligible to contribute.
http://www.merrilledge.com/article/section529plansinvestingforcollege
This is the easiest rule to get around. Completely legally.
We set up UGMA accounts for our children. ANYONE making under 110k can contribute to a coverdell but max is $2k a year. So our kids technically contribute to their own coverdells. My eldest has been contributing to his coverdell for 3 years and my 4 month old just started this year :D .
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Ultimately if IB did not withhold it... it's not their fault. You can bring it up directly with the CRA. I'm an American in the US -- but have had to deal with them before regarding some Canadian positions. They are quite helpful. I forgot the names of the people I talked to up there but they were quite knowledgeable and helped me out quite a bit regarding some Canadian dividend withholdings. Visit their website I think that's how I was able to find my way around to find the right people.
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Can you do a private transaction with another individual? IE. Sell the puts to that person (for negative $$ even lol) in a private transaction and transfer it to them?
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3) For some old guy who bought KO in 1950 or whatever he'd be crushed on cap gains taxes, whereas he can pay 0-15% in dividend taxes.
In the USA, the qualified dividend rate is the same as the long term cap gains rate. All of my comments pertain to the USA if there was any confusion. Any place where your cap gains rate is higher than your dividend rate (like Warren Buffett at Berkshire) you can take the other side.
So that guy is no worse off if he chooses to sell tiny amounts in lieu of a dividend. And he's better off if he wants it reinvested (tax free reinvestment). And being an old guy, his heirs probably want that as well given that it will all be stepped-up in cost basis upon his death. They can either sell his shares (getting all those reinvested buybacks tax-free), or they can choose to keep the shares and start selling pieces to offset buybacks -- with the cap gains paid at the new stepped-up cost basis.
I guess that's right, but there is no cost to get the dividends whereas he has to pay commissions to sell bit by bit. I think ultimately the biggest reason to pay the dividends is to broaden the investor base.
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The shareholder merely needs to make 28 cents worth of sales, each and every quarter.
I don't follow here.
Well, the shareholder is no longer getting a 28 cent per quarter cash dividend any longer (it was cut to zero). Let's say the shareholder has 100,000 shares. In the old days, he would get $28,000 of cash dividend each quarter. Under my regime, the company will be using that very same $28,000 (28 cent per share per quarter) to repurchase shares.
Now (under my regime), he just sells shares each quarter amounting to $28,000 cash proceeds. He might not even owe any tax on this (depends on his cost basis). Potentially he sold for a capital loss and can actually take the $28,000 distribution completely tax free, as well as reducing his capital gains tax bill from other sales.
Compared to the world where he's automatically paying tax on $28,000 of dividend, that's a huge leap forward for mankind.
And what about the little shareholder who only owns 1 share? Well, tell me this -- how in the hell is he going to reinvest a 28 cent cash dividend when the brokerage charges him $8 per transaction? He's better off just having it reinvested back into the shares because an investor that small suffers too much expense drag from commissions.
And when the share count gets too low from years of constant share repurchases? Just split the stock.
Eric, in theory what you say makes a lot of sense. However, the real life application of your theory doesn't work for quite a few reasons.
1) There are individuals and funds that want dividends. By offering a nice steady growing dividend you broaden your investor base (that's good for your share price).
2) Companies often disproportionately buyback shares from insiders in negotiated transactions.
3) For some old guy who bought KO in 1950 or whatever he'd be crushed on cap gains taxes, whereas he can pay 0-15% in dividend taxes.
4) If an older gentleman/lady/couple etc owns $1,000,000 in stocks that yield 5% on avg, they can get $50k a year in yearly income (at low taxes) and no transactional costs (I think this is part of why point 1 exists).
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Why oh why didn't I hold onto my SBUX?
Tell me about it. Bought it at a little over $7 during the credit crisis for my own portfolio. Sold out at $20 a couple of years later! :'( Cheers!
We all have similar stores -- I bought WFMI $10 pre split - sold at $45 (pre-split) it's at like $120 or whatever right now?
It is amazing the bargains available when everyone thinks the world is ending.
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Not waiting until today to unload SHLD.
LOL ERIC :D
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Ok. The government is always at fault when there is a poor policy in place. But it's interesting that everyone's take here is that the government is attempting to essentially steal from these home owners. It seems to me the big issue here is not regulating the fees/interest charged by the private investors of these tax liens. Sure nobody wants to see someone's home be taken -- especially for a few hundred dollars -- it really does seem absurd. But I assume tax liens exist so that deadbeats pay their property taxes (not just the elderly). What is the solution? What is the limit? Should tax liens + interest and penalties be allowed to accrue such that the mortgage note owner takes a hit? How do you separate the deadbeat with guys like mr coleman.
I live in NYC, I believe they specifically do not allow this to happen to the elderly.
(By the way -- this article I assume is saying that the man's equity in the home is under $5k right?? If he owned the home outright, and had a tax lien for $5000 including fees, they'd sell the house and he'd get the proceeds from the sale minus $5k right??)
The other question here is if the house is sold, does person who owns the tax lien have an responsibility to get the best price? If not, isn't this area potentially going to be littered with sketchy/fraudulent transactions? IE. a house worth $300k, with $5k in liens penalties gets sold for $220k and somehow gets a kickback of some kind?
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I'm not opposed to making small(ish) <1% investments at times if they are highish risk, but super high reward. I've rarely invested in companies though that don't trade a single share for days/weeks. So while I've invested in many companies with sub $100 million market caps - under $5 million market cap -- I've never gone there. (Nate I know this in your wheelhouse! -- I enjoy your blog.)
I don't think you will make 7-8x on this investment, but not really sure what the right buyout price would be for a potential acquirer. I would figure it was less than it was last year
I think the risk here is high -- Net Debt to current Ebitda is like 12-13:1. I'll post more on this later if there is anyone else who is interseted.. and i'll get back to you nate.
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I've been looking at a company for quite a while now -- it is very near bankruptcy. Given the fact that the volume is so anemic and the market cap is so small (<5 million) I don't think I can really make any real money on it. (the ask is also about 2x the bid lol) . You are lucky if the $$ volume on a given day is larger than $1000. But I'm following it because I believe this industry will have other companies suffer the same fate.
They are ebitda postive, loaded with debt, and obviously very cash flow negative. They have 1 large customer -- which likely does not want to see them bankrupt.
In late june/early july this company announced that they restructured their debt that was to be paid in June to december (and a possible further 3 month extension). The company has no hope to pay this off.
Additionally last Summer, the company had agreed to be bought out at 7-8x their current price by one of their competitors (in addition to taking on their debt) Unfortunately the deal was not closed and their competitor walked away after being themselves acquired.
Another interesting thing is that recently a 10% owner of the company has purchased appx 8% of the company at prices all significantly above the current price . (presumably knowing full well that they have 6 months or so to find a buyer).
Another interesting thing is a few years ago a similar company in a similar boat was bought out by their largest customer at a significant premium.
These companies are often valued on a per subscriber metric.
If people know the company and want to simply disclose it for a better discussion cool. Also if people think it would be better to simply disclose the company/exact industry -- that'd be fine too. And if people think this is silly, mods, just delete.
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What I found amazing about reading about hedge funds such as SAC and the former Galleon Fund (I read The Billionaire's Apprentice about Rajat Gupta, and The Buy Side:A Wall Street Trader's Tale of Spectacular Excess, written by a trader who worked at Galleon) g-was the amount of day-trading going on. Didn't these guys ever invest long-term, or even medium-term? From these books it seemed to be constantly in-and-out trading - sort of the opposite of value investing. Yet the managers became billionaires (at least partially by cheating :) Don't any of these hedge funds buy and hold? Do they even read Buffett or Graham (they seem to profess to publically, at least)?
If we forget for a second that it is illegal and unethical -- if 10% of the time I knew with 100% certainty what was going to happen next week with earnings/drug trial results/etc. I wouldn't be employing a value investing strategy either.
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I read an interesting article a couple weeks back about how states are considering levying special taxes on electric cars. The argument is that as more hybrids and electric cars are on the road, the less taxes they get from gas sales. And well -- since these electric cars don't need gas -- they essentially get to drive on highways and roads without paying their fair share... I thought we wanted people to drive cars that were good for the environment .....
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I've been studying up on CHK BP and ORIG -- all three companies seem very interesting to me -- I own all 3 but all < 1% positions because E&P companies are just not in my wheelhouse. Does anyone have any recommendations on good books for investing in E&P. THANKS.
Valuation Thought Experiment
in General Discussion
Posted
I won't comment on their valuation. But the container store is AWESOME. It is the perfect store for any major city where space is at a premium. The reason it has such a valuation is b/c it has so few stores -- I think growth potential is enormous. Whether they make it happen -- that's another story. I am not long the stock. The Container Store can become a "story" stock -- I would say be careful when it comes to shorting "story" stocks.