Rabbitisrich
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Posts posted by Rabbitisrich
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the strike comes down by the EXCESS of the dividend above $.34.
Peter Burke, what say you? Why do you think only the excess matters?
i think it's been vetted by many people. the language is confusing. but I believe it's the excess.
It is the excess above 0.34/q. if it was the total dividend the warrants would be worth $8-9 more than they are trading to account for the cumulative dividend.
What kind of argument is that? Are you assuming the market understands the prospectus better? Where in the prospectus do you see the adjusment is only on the excess. It doesn't seem that way to me, since the formula for adjusment says nothing regarding any excess. The way it seems to be adjusted, as I quoted above from the prospectus, is multiplying the strike price by the stock price after the ex date divided by the stock price before the ex date.
if a forum of value guys who read prospectuses aren't sure how the adjustment is made, it seems to me we just might have a serious edge in solving this.
To me it seems the adjustment if for the entire amount, any idea how we can resolve this?
It indeed seems quite significant - about 60-80 percent increase on today's price depends on the understanding of this thing.
Arden, I'm not sure what market opinion has to do with the prospectus, but "ordinary cash dividends" is defined as up to $0.34 and it is explicitly excluded from triggering anti-dilutive measures.
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Did Hussman ever write an editorial explaining his use of technicals? I've also heard Gundlach referring to chart patternss when discussing commodities.
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For WFC, ordinary cash dividends only include up to $0.34 after adjustments prior to the dividend, and the anti-dilutive provision excludes ordinary cash dividends. It's basically invisible so far as the dilution adjustments are concerned.
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The investing ideas section doesn't seem to be a recommendation page like Value Investors Club or SumZero. For example, the LVLT thread starts with a reference to a recent price drop and a query about board opinions. Board members have different motivations, but this board seems more useful as a source of ideas and aggregate of opinions rather than as a research reference.
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As primarily a short seller, I've never understood why the shorts fall over each other on this one either. I get the thesis, but when something costs you 30 or 40 or 50 percent each year to short, that's a pretty high hurdle to climb. Especially if the thesis isn't fraud.
Who knows why retail investors short SHLD, but it makes managers look like more of a genius if they "prove" big fish to be wrong.
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Once again BAC is proving that EMT fans are wrong. From 5$ to 9$ stock price in 3 months for a large cap company! Did BAC sign a major contract lately? Did they made a one time big gain lately? Did they improve their balance sheet in just 3 months? No! All has changed is PERCEPTION. And in this market you can make a whole lot more betting on change of perception than on harvesting earnings from the asset you invest in.
Indeed.
In my opinion, the BAC story also shoots down the theory that you must focus on the less followed names -- particularly, those stocks that operate in countries that are secular economic growth stories -- to make outstanding returns. My opinion is that this is a myth that RIAs or hedge fund managers perpetuate because that's their niche in the market.
When you get a punch card opportunity like BAC, one of the most followed stocks on the planet, you damn well better take it if you are confident in your analysis and can summon up the intestinal fortitude.
Unless you're an RIA, of course.
Less followed stocks don't typically have loud contrarians who show up on CNBC whenever the stock dips. You have to say that those contrarians are wrong exactly at the time when they are making money and you are losing it. It's easier to tell your clients that the stock is being dragged down by market + liquidity premium.
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Thanks JSArbitrage. Also, Bond Girl on self-evident.org provides some of the best coverage of that affair: https://self-evident.org/?p=935
Check out the reference to "rival firm's purportedly successful tactics..." in the first link of the second paragraph. Goldman Sachs had a standing "consulting" arrangement with a local broker-dealer named Blount Parrish.
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If he wanted to puncture the image of GS always going for the jugular, then he should have provided some examples of GS turning down money for ethical reasons. Otherwise, you have a guy who squandered a Stanford education and a Rhodes scholarship on an investment banking career asserting that Goldman's "moral fiber" had changed since 2000. Isn't this the same institution that structured a lending arrangement with Greece to disguise the country's debt status, thus allowing it entry into the EU? This is the same company that regularly bribed county officials and influential citizens according to private JPM emails released through the Jefferson County suit.
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It looks like C could pass by adjusting their capital plans.
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Ok, thanks for the clarification.
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I don't need to sell anything because I already sold some AIZ at $41, BBCN at $10, WIBC at $4, MHK at $63, all of RLI at $66, and some MTB under $82. Is there a hall of fame for horrible timing?
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Only a dividend increase of 20%--I was expected more like 30-50% for WFC and thought they were in similar boats. That's a lot of buyback though.
Looks like WFC payout ratio is 8% lower, so the dividend increase will likely be more for WFC.
Did WFC release payout information?
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DCG, how is the reading experience over 1 hour? Is it a kindle substitute, or do you still get bleary eyed over time?
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If you believe that society should be arranged so that the greatest beneficiaries pay more, then why would you subsidize the non-payers, thereby increasing their relative influence?
Christie's position requires that Buffett prove his commitment through impairment.
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Maybe DTV. Good capital management, operating results, modest valuation, and advantages in certain markets absent unexpected major infrastructure investments.
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Parsad, I'm looking at the risk factor on S-16 of the BAC A prospectus:
The number of shares of our common stock underlying the warrants and the exercise price of the warrants are subject to adjustment in certain circumstances. To the extent any such adjustment or failure to adjust results in an increase in your proportionate interest in our assets or our earnings and profits, you will be deemed to have received for U.S. federal income tax purposes a taxable dividend to the extent deemed paid out of our earnings and profits without the receipt of any cash.
The paragraph appears again on S-36/37. The A Warrants (I've only checked this prospectus) increases warrant holder share in the event of a dividend. It reduces the strike price, then adjusts the warrant shares by the ratio of the old strike to the new strike.
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How many have actually read the prospectus fine print of these warrants? Has anyone noticed that some of these warrants, but not all, have adjustments of not only the exercise price but also of the number of warrants? AIG's for example does not include this provision and might explain why they are priced "cheaper" when tested with a Black and Scholes..
This is a feature that I have always liked but never confirmed. Actually I did not even want to ask about it ... when you find something like this you do not want it to spread like wildfire. Berkowitz hinted at this feature in a recent letter so maybe it is time to have a more detailed discussion of the anti-dilution provisions.
Are there other non-standard features in the warrants worth noticing?
I haven't seen that provision. What language refers to a warrant adjustment?
Hmm, I must be reading this wrong, but the BAC A warrant seems to adjust not only the strike price down, following a dividend, but also the warrant shares up in proportion to the ratio of the pre-div strike to the post-div. This is in contrast to PlanMaestro's AIG hint, which not only does not protect against share issuance and divs below a 12 month hurdle, but also adjust warrant shares down.
My eyes are wonked out. It looks excessively favorable to warrant holders.
EDIT: The AIG warrant seems to also have an upward adjustment to shares issuable.
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Has anyone confirmed with their accountant that common stock adjustment of the warrants results in a taxable gain on the year of adjustment?
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I think people are missing my point--I never said anything about performance or education--clearly, people that are better off are able to provide more opportunities for their children. It would be silly to not provide the best education and opportunity that you can. There is a huge difference between that and giving your children anything they want and instilling poor values.
How would you measure values? For example, you might survey heirs with "Is [intelligence; perseverance] a virtue and receive positive answers. However, those are opinions from a naive group that hasn't tasted the hopelessness of paying 90%+ of manual labor income into living expenses. It's also easy to follow "good values" when all your peers have high expectations, and your parents have advanced degrees, and your role models are intellectual (perhaps this supports your point).
Actually, I don't disagree anecdotally, but would add the conditional that many wealthy kids have good values GIVEN their circumstances. Who knows how those values would hold up if their wealth evaporated in jr. high.
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Ha, no worries. I have my political pet peeves and my posting history surely has examples of writing off the cuff.
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Well if he started 12 years ago, then he compounded at roughly 12% net of fees which isn't bad at all!
Cheers!
In this case, he produced 400% of gain, or over 14% after fees. Another 12 years and he will be a 2400%!
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Liberty, no. Ben Graham wrote that page.
I like the book but it's more useful to a new investor. An experienced investor in need of a refresher would probably benefit from The Checklist Manifesto by Atul Gawande.
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You're tossing off a lot of red herrings SouthernYankee. This thread isn't about partisan attacks so there is no need to impose a false parity between repub and dem largess. Nor is this thread really about largess or sources of income. It's about moral hazard, and the lessons you endow on future generations.
I'm not in agreement with much of this thread because I've seen a variety of stories amongst wealthy to ultra-wealthy children. In my high school, the most vulgar kids were a brother and sister whose father owned a luxury auto dealership. They were not ultra-wealthy, but they certainly valued materialism and relative wealth. A large, unearned endowment may hint at lax parenting, but it doesn't prove anything.
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Very interesting story, thanks for sharing.
He must have pretty solid sources of capital to survive the 1/3 drop in 2005. How many ~5 year old firms get through that period?
WFC Stress Test Results
in General Discussion
Posted
The prospectus addresses your question in the section devoted to cash dividend adjustments. It says that "per share fair market value", or the amount deducted from the strike in the numerator of the adjustment, is reduced by the value of the ordinary cash dividend. When you calculate the numerator for a dividend that shares the record date with a "regular" dividend, the "per share fair market value" is reduced by the ordinary cash dividend.