Parsad

SAC's Plotkin Said To Have Been Tipped By Analyst: http://www.bloomberg.com/news/2013-03-17/sac-s-plotkin-said-to-have-been-tipped-by-analyst.html Cheers!

They made a terrible mistake. Genie is now out of the bottle regarding confiscation of assets. Something that people other than gold bugs have never thought about before or even possible is now contemplated as a real practical solution by politicians. Markets around the world are now coming down. S&P futures are down 1.1%. 1.1% happens once every week! I remember when markets were down 8% on consecutive days...now that's a shitstorm. Cyprus is the canary in a very small coalmine...investors should get concerned when Italy or Japan contemplate doing the same thing. Cheers!

Elon Musk! ;D Cheers!

Bill Miller had $200 million of Bear Sterns. He gave a short talk the morning of March 14, 2008 explaining why Bear Sterns was a good investment. As he was talking Bear Sterns was crashing. LOL! Yeah, I remember that. Alot of things were crashing, while alot of people were talking in 2008, though. He's long Groupon, so let's see if that was a canary in the coal mine in a year or two. Cheers! Groupon has no long term debt and cant even be compared to bear sterns. If you think groupon dies in a year or two this wont look good for overstock either. Did I say that Groupon dies in a year or two? It was a sarcastic comment about the Bear Stearns interview he did, just like right now he recently said he was long Groupon. Cheers!

Not in the U.S. But I can easily see a 20-25% correction in the U.S. Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet? Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital? With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%? Or if Italy's government bond rates rise 3-4%? Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world. We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value. Cheers! Yup. But I have no restrictions on the amount in any one idea in my personal account. I can go 100% BAC if I want. Whereas we have an internal cap of 25% for the fund. So generally, unless there is an abundance of ideas, cash will always be higher in the fund than my personal account. Cheers!

Bill Miller had $200 million of Bear Sterns. He gave a short talk the morning of March 14, 2008 explaining why Bear Sterns was a good investment. As he was talking Bear Sterns was crashing. LOL! Yeah, I remember that. Alot of things were crashing, while alot of people were talking in 2008, though. He's long Groupon, so let's see if that was a canary in the coal mine in a year or two. Cheers!

Yup, pretty much. Or they know that the system can be dragged out for over a decade, and there is still the possibility it will fail the prosecutors making the case with no financial settlement. Cheers!

Not in the U.S. But I can easily see a 20-25% correction in the U.S. Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet? Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital? With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%? Or if Italy's government bond rates rise 3-4%? Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world. We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value. Cheers!

Smart guy, a few bad decisions. You are only as good as your last game in this business, so he was a hero for 16 years, and then a zero for four more years. I'm not sure public perception means anything, and investors can still learn from him...both successes and failures. Cheers!

Doesn't look like SAC and Steve Cohen's problems are going to disappear anytime soon, even after the record settlement at Sigma. Cheers! http://www.bloomberg.com/news/2013-03-16/sac-criminal-probe-may-expand-on-sec-lawsuit-allegations.html

I think you'll both be quite disappointed within the next two years. After that, I suspect we will see another long multi-year bull market. We are only at the beginning stages of the deleveraging in Europe and I think the China bubble has finally popped. The best indicator will be to watch home prices through Asia, Australia and Canada. If you start to see them going down, things will slow down everywhere outside of the U.S. North America will not be immune to the Asian flu, as the recovery has been underway here, but headwinds are coming. That's my macroeconomic prognostications for now! ;D Cheers!

As cute as she is, Mila Kunis has rotated from cash to stocks...she's been studying internet-based stocks! Cheers! http://finance.yahoo.com/news/mila-kunis-rotates-cash-stocks-112538935.html

We only put 1% of the fund in it...so it was nice, but not life-changing. We don't have kehones (sic) like you Eric! Cheers!

Short, funny article on Berkshire's director fees and how Buffett repays Berkshire for any personal use expenses. And over at Sandridge you had a CEO running his personal accounting through the company for free. Cheers! http://blogs.wsj.com/deals/2013/03/15/warren-buffett-pays-bill-gates-1800/?mod=yahoo_hs

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!