Parsad

LOL! Kind of a joke. Cheers!

No, the warrants do not adjust for the buybacks today. Neither do the LEAPS. Both benefit from more intrinsic value per underlying common share, but that's as far as it goes. I invested my approximate 60 cent "default dividend" in the stock at $12 though :D The 3% I'm saving in interest costs over two years with the LEAPS is where I come up with my "dividend". One might say the warrant holder speculated on greater than 60 cents of dividends cumulatively for this year and next -- they purchased them upfront hoping to get more? Backfired so far. Oh, I see what you are saying. I didn't understand the 13% and 10% costs for the warrants and LEAPs. I thought you were using the cost of capital over the six years respectively for each, but your actual cost to buy on margin is 13% and 10% respectively. Or am I even more confused here now? Cheers! Scenario we all find a reasonable possibility: Over the first two years, warrants and at-the-money LEAPS are pricing in their leverage like this: 1) warrants 13% cost 2) LEAPS 10% cost In two years' time (the second two years of warrant life) stock is above $20. 1) We use margin to exercise the LEAPS 2) we hedge the margin loan with $12 puts You and I both know that $12 puts cost a lot when the stock is trading at $12 (like today) but will become very cheap when the stock is trading at $20. So, under the scenario that we are all gunning for, the cost of hedging the $12 embedded leverage will plummet for the last 4 year lifetime of the warrant. So why the f**king he** do people want to lockup the cost at 13% for all six years when we are all bloody well expecting that cost to plunge over the remaining 2/3 of the warrants' life???? That's what gets me :) And that's where I see the opportunity to do way better than the warrant by my strategy. And I'm taking less risk along the way. Ok, I get what you are saying now. Yes, that is a better strategy and far cheaper. You and I should both go to sleep, because I have to get up right at 7am to sell some of those April 5th $12 calls, and you've spent your entire day teaching the board about options! ;D Have a good night Eric! Cheers!

No, the warrants do not adjust for the buybacks today. Neither do the LEAPS. Both benefit from more intrinsic value per underlying common share, but that's as far as it goes. I invested my approximate 60 cent "default dividend" in the stock at $12 though :D The 3% I'm saving in interest costs over two years with the LEAPS is where I come up with my "dividend". One might say the warrant holder speculated on greater than 60 cents of dividends cumulatively for this year and next -- they purchased them upfront hoping to get more? Backfired so far. Oh, I see what you are saying. I didn't understand the 13% and 10% costs for the warrants and LEAPs. I thought you were using the cost of capital over the six years respectively for each, but your actual cost to buy on margin is 13% and 10% respectively. Or am I even more confused here now? Cheers!

Hi Eric, I understand what you are are saying...I think. But BAC effectively paid a 3.8% dividend today. $5B in buybacks divided by $131B market cap. Obviously the purchases haven't been executed yet, but the warrants exercise price will be adjusted to the buybacks, whereas the LEAP exercise prices do not change. Correct? Cheers!

Hopefully now I'm understood. At all times I have far less money on the table (except in year 5 and 6), and less money on the table means less risk guys! Yes, same upside! As long as you said, that the stock appreciates. If it doesn't than as you also said, both the warrants and LEAPs are worthless. But the common would still retain it's valuation based on market price...more certainty, less risk, less reward. Whereas the LEAPs provide you the same return as the warrants with less capital upfront. You forgot one aspect though. The warrants are adjusted for dividends and buybacks. If BAC starts to return large amounts of capital over the next 3-4 years, and $10.5B is a pretty good start with all of the remaining legacy issues, then would the warrants not be the better investment...albeit all of the capital upfront? Cheers!

I stayed at the Bellagio last year. It's a very nice hotel, but I don't like the rooms. Actually, I like the MGM Grand Signature suites. It's off the strip a block, has private pools, full kitchens and massive marble bathrooms. And cheaper than Bellagio! Cardboard, we'll use your Amex card at Spearmint Rhino! ;D Cheers!

That summarizes my position nicely. I want the stock to go up fast, or I wouldn't have bought Leaps. I like to see a company succeed but I have bought all the stock I will ever buy and now I want that share price up. Raising the dividend to 0.50 instead of the buybacks would have pushed the stock above $15.00 quickly, possibly even up to $20.00. Now we wait another year which means another cycle of leaps, and the frictional costs involved. That's the risk with LEAPs...there is always a time arbitrage involved and hell of a lot shorter than the warrants. Do you still hold any common or warrants? Or did you switch it all to LEAPs? Cheers! Sanjeev, Do you concur with Eric's assessment that tarp warrants in longer run (yr 3 to 6) are losers game? And, what are your view on bac warrants going forward ? Thanks. No, I don't think they are a loser's game. Also, I don't think that's what Eric meant. I think he's saying that the normal degradation of the warrants when you get to years 4 and on, mean that they won't provide any sort of advantage over LEAPs. At the moment, I think LEAPs are the loser's game, since you are relying on a 2-year time arbitrage. Why do you think Al and Eric wanted dividends! ;D We bought the April 5th $12 Calls on March 4th for 17.5 cents each. They will be anywhere from 75-90 cents tomorrow! You aren't going to get that type of return with the warrants, but the warrants at present are proxies for equity...at least the A warrants. I think the B warrants may be tough to make alot of money on. Cheers!

Cardboard, get me one of those cards too. I want to be a baller in Vegas! ;D Is that the right terminology?! Cheers!

That's pretty cool! Hopefully it doesn't do that when you are face-timing people in a phone call. Can you imagine it getting it stuck everytime you looked away during a call? ;D Cheers!

That summarizes my position nicely. I want the stock to go up fast, or I wouldn't have bought Leaps. I like to see a company succeed but I have bought all the stock I will ever buy and now I want that share price up. Raising the dividend to 0.50 instead of the buybacks would have pushed the stock above $15.00 quickly, possibly even up to $20.00. Now we wait another year which means another cycle of leaps, and the frictional costs involved. That's the risk with LEAPs...there is always a time arbitrage involved and hell of a lot shorter than the warrants. Do you still hold any common or warrants? Or did you switch it all to LEAPs? Cheers!

Where is our old rational Cardboard? Who is this guy talking about Mr. Market and trading! ;D Don't worry it is going over tangible book soon...dividend or not! Cheers!

The buybacks are going to be far more effective than the dividends as far as increasing shareholder value. They actually did the right thing here...buy back shares under book, even tangible book maybe...and retire high interest preferreds. If they just wanted to keep the stock afloat, dividends may have been better. But if they want to permanently increase the value of the shares, then this was the way to go. Also, dividends tie you down to the large institutional shareholders...doesn't matter if loan losses are up, capital levels down...you pay the damn dividend and it's double taxation. You buy back shares and it's permanent...done...more tax efficient and accretive to book and earnings when done right. The Fed cannot cancel your share buyback after it's complete, but they can stop you from paying a dividend. Cheers! Yes, "when done right" is the key here. The only buyback I have seen done right in the last number of years is Seaspan. The list of badly done buy backs far outweighs those done well. SHLD, JPM, Potash corp, are three that immediately come to mind. And Moynihan said there would be more money toward dividends. In one of the interviews, he said that capital would be returned to shareholders...of earnings above required capital...1/3rd to dividends, 1/3rd to buybacks...but he said that would be dependent on the share price and if it made more sense to do buybacks. At this price, I think he believes that buybacks make more sense, as well as retiring the preferreds. Cheers!

Not so fast my good sir. The bet was $7 bil returned to the COMMON. I was very clear about it and asked that you confirm. I can't find it right now but go back to where we bet. I am still winning here. I will happily pay when it's $7 bil to the common. There is still 9.5 months to go. I went back and checked...you sneaky bugger! Yes, you stipulated in brackets "(common only), no other security". I'm going to have to get Txlaw to read any agreement between you and me on a bet going forward! ;D Remind me to give you your "100 Grand Bar" in Toronto. Now I've got to cross the border to get one. Can any of you Americans coming to Toronto, pick one up! Cheers! Perhaps you can have Kraven buy it for you on credit and he can hold the collateral until you pay up. Good idea! Kraven, do you mind just buying a "100 Grand Bar", and I'll give you the dollar (CDN) in Toronto. Although it will be a loonie coin and your bank won't accept it in the U.S. Cheers!

The buybacks are going to be far more effective than the dividends as far as increasing shareholder value. They actually did the right thing here...buy back shares under book, even tangible book maybe...and retire high interest preferreds. If they just wanted to keep the stock afloat, dividends may have been better. But if they want to permanently increase the value of the shares, then this was the way to go. Also, dividends tie you down to the large institutional shareholders...doesn't matter if loan losses are up, capital levels down...you pay the damn dividend and it's double taxation. You buy back shares and it's permanent...done...more tax efficient and accretive to book and earnings when done right. The Fed cannot cancel your share buyback after it's complete, but they can stop you from paying a dividend. Cheers!

Not so fast my good sir. The bet was $7 bil returned to the COMMON. I was very clear about it and asked that you confirm. I can't find it right now but go back to where we bet. I am still winning here. I will happily pay when it's $7 bil to the common. There is still 9.5 months to go. I went back and checked...you sneaky bugger! Yes, you stipulated in brackets "(common only), no other security". I'm going to have to get Txlaw to read any agreement between you and me on a bet going forward! ;D Remind me to give you your "100 Grand Bar" in Toronto. Now I've got to cross the border to get one. Can any of you Americans coming to Toronto, pick one up! Cheers!

Not debt...preferreds. No immediate obligation to retire them like debt. Buying back the preferreds is capital return, as they could have simply chosen to pay the interest on them. No, I plan on spending it. I'm going to buy Kraven a chocolate bar...a "100 Grand" bar...I promised him a good return on capital! ;D Cheers!

I think Ericopoly should buy the whole board a beer when BAC goes over $20 early next year! Then we can take turns getting a ride in his Netjets plane...he can just get them to taxi us around the runway. ;D Cheers!

I win the bet Kraven...$10.5B! Where's my dollar...it's worth $1.02 Canadian...I can get alot for that extra 2 cents. ;D Cheers!

Cheers! http://www.cnbc.com/id/100554413

Chinese Firms Look to Tap Booming U.S. Natural Gas Market: http://www.cnbc.com/id/100553863 Cheers!

Reminder Folks! Get your tickets purchased for the "Ben Graham 2013 Value Investing Conference" and "Fairfax Financial 8th Annual Shareholder's Dinner". Details are below and tickets are going! Cheers! Wednesday April 10, 2013 Ben Graham Centre's 2013 Value Investing Conference Fairmont Royal York Ballroom Tentatively: 8am-5pm Host: Dr. George Athanassakos, Ben Graham Chair at the Richard Ivey School of Business The value investor panel will include Francis Chou, Tim McElvaine, Robert Robotti and Tom Russo. The morning speaker will be Gary Shilling and the luncheon speaker will be Jeremy Grantham. Complete details for George's event, including conference ticket and registration information, can be found at: http://www.bengrahaminvesting.ca/Outreach/2013_Conference.htm Fairfax Financial 8th Annual Shareholder's Dinner Fairmont Royal York Ballroom 6:30pm-11:00pm Host: Sanjeev Parsad, Founder of "Corner of Berkshire & Fairfax" website 6:30pm - Meet & Greet 7:00pm - Speakers & Dinner 8:30pm - Presentation Guests (from you know where!) We will of course have our usual raffle and silent auction. A wonderful dinner is on the menu, and a cash bar will be open again. Tickets are $150 (including dinner), or $75 (no dinner, water & beverages will be available). Get your tickets soon, as we are going to be running low. Just go to the "Corner of Berkshire & Fairfax" homepage (www.cornerofberkshireandfairfax.ca), and click on the ticket purchase box on the right hand side. All profits from ticket sales, auctions, and raffle will be donated to the "Crohn's & Colitis Foundation of Canada", in memory of Prem Watsa's executive assistant, JoAnn Butler.

The only difference is that the Government of Ireland actually took measures to fix the country's problems, while the Greeks seem to be more interested in denying/delaying. Buying into temporary disorder is potentially interesting, but buying into perpetual chaos? Not sure this is the best idea! SJ They'll fix things eventually. People generally do when push comes to shove. After all of the outrage, politics and protest, things eventually go back to some sort of normality. Cheers!

Just seems to an outsider, that Greece has a much more of a systemic problem and Ireland more of a bubble problem. Definitely. But Greeks will continue to run businesses, borrow, save and everything else that people do day to day at financial institutions. There is downside risk, but the upside is that they may end up owning a chunk of the largest and best capitalized bank in Greece, just like they own the only non-government owned bank in Ireland. Invest when things are most pessimistic...Fairfax is great at that! Cheers!

No different than their investment in Bank of Ireland. Cheers!

That is a helluva way to get a date for the festivities. LOL! I think he's just trying to save some money. Cheers!