aws

Well this worked out spectacularly. No change in the underlying share price, but the warrants have repriced up toward what would be reasonable. I actually was able to buy some of these for as little as 8 cents each, and two days later they at $13.25.

I don't think the loan values are that high, but that the margin call figure is calculated specifically for this loan and not overall. I skimmed the linked document and I think it triggers additional collateral to be posted at 15% LTV, so I'm guessing that's what they are calling a margin call at 570, when it crosses that LTV. He likely pledged the shares for the other loans when they were much lower in value, so they probably have a LTV of 1% or something. I imagine he has a lot of room to draw additional against those share, or could refinance. I do generally agree that the margin loan to avoid paying tax is a loophole that could be closed, but that's the kind of thing that is often difficult to trace. Personally I go from margin credit to margin debt many times each year, maybe sometimes for just a couple of days, and determining what stock I was avoiding a gain on by doing so is basically impossible. In Elon's case it's pretty clear what shares he is pledging, but for me, not so much. I would imagine there would have to be some type of floor on when you would be subject to reporting rules if they did start to tax margin loans as otherwise it would be a massive burden for small accounts.

Since the loans are at such low LTVs he is unlikely to be in serious trouble even if the shares drop below that $570 threshold. He's got something like 200 million Tesla shares, and even at 500 that's 100b vs. 12.5b in loans for Twitter + whatever else he's borrowed. He could presumably just borrow more against other pledged shares and post the shortfall collateral in cash. I think you would need to see something like an 80% fall before he gets in real trouble. That's unlikely, but still an unnecessary risk. At best the purchase is a distraction from his core business. At worst it opens up some more ways for things to go catastrophically wrong. And after all the spats he has had with the 'tax the rich' caucus, to go ahead and fund the purchase with a margin loan is just going to provoke them further. How long until someone proposes a new law treating any shares pledged for margin loans above $1 billion as deemed sales? They probably couldn't push through a true wealth tax or one on all unrealized gains, but there would probably be more support for the most egregious types of tax dodges like this.

I think you're overestimating IV contraction after earnings. Those calls have 6 more quarterly earnings reports after this one before they expire, so it is unlikely that all IV goes away after one. It might be a fine play as the short calls will basically double your dividend over the life of the option, but I wouldn't expect to get called away anytime soon.

Why do you think the call holders would exercise early? It looks like the dividend is only 0.20, which is much less than the implied value of the call option. Options are only exercised early when the time value of the option is less than the dividend being paid.

UNTCW - $63.74 strike warrants expiring in 5 years on a stock trading at $58. Black-Scholes should price this in the $20s I would think, but they are trading for $6 on the high side down to a penny on the low side. I think they just became tradable today after a two year long bankruptcy and people are just taking what they can get for them.

I don't see myself holding any bonds to maturity, but if rates swing enough I could definitely be talked into some longer term bonds with high single digit yields, with the hope of selling them for nice capital gains if rates go back down.

I've never been 100% clear on how the rule works for interest rate resets. I know that when you buy you are guaranteed to get the current rate for 6 months, so it's beneficial to buy right before the rate is going to tick down as you lock in the old rate. But is the reverse true where when the rate is going up (like now) you should avoid buying until the reset? Basically my confusion is when you buy in the middle of a cycle, say 5 months in, are you always five months behind on the rate resets? So you get the full six months of interest for every cycle, just a bit later than those that bought earlier on the year? So buy now and get 6 months of 7%, then in October you get 6 months of 9%, then next April get 6 months of whatever the next reset is? Or does it give you six months of the current rate, but then cut the next cycle off so you only get one month of the next one, and then it syncs you back up with the actual reset periods? It's not really relevant for me but I have some family members asking which way is better. If you were guaranteed the full amount of each cycle I think you definitely want to buy before the reset, and then just cash in early to cut off a future period where the rates are near zero again.

How full are Russian oil and gas storage facilities? Do we have any way of really knowing? We saw what happened in the US when there was fear that storage would fill up - oil prices went sharply negative and there were fears gas could do the same. Russia was already taking $40+ per barrel discounts on cargos without any effective bans in place. It seems like if Europe could put a real ban on energy imports in place with immediate effect it would have a devastating impact on Russia's economy and force them to abandon the war. Their cash cow would become a massive burden overnight.

I didn't think you were allowed to buy ibonds in an LLC.

Minimum cash threshold has been raised to $30 billion. Not sure if that was mentioned elsewhere previously but it was news to me at least. Still obviously way below the actual cash levels though.

Letters out. For some reason the first thing I do is jump and check the buyback info: Q4: Total repurchases were 15,668 A share equivalents for a total purchase price of 6.72 billion. The average price of repurchases worked out to 428,900 per A share or 286 per B share. That's a little over 1% of the shares outstanding. There were 1,477,429 A share equivalents outstanding at the end of the year. January 1 - Feb 14 2022: There were 1,476,141 A share equivalents on Feb. 14, indicating a repurchase of approximately 1288 shares for this half of the quarter. We don't know anything about the cost, but probably around $600 million. By any measure it's a big decrease from the rates of the past year, but given the share price was substantially higher that is to be expected. Edit: The letter indicates 1.2 billion in repurchases as of Feb. 23. Not sure if I made a mistake somewhere else, or if Warren is implying about 600 million of additional purchases for Feb. 15-Feb. 23 which are after the amounts reported on the 10-K.

I found another potentially interesting REIT I started a tracker position in until I have time to dig into it. Maybe some of the real estate experts would be interested. MDV originally issued shares through a crowdfunding platform and just recently did a tiny IPO, which was essentially a direct listing since they only floated 40k shares of about 7.5 million outstanding. They reported their most recent NAV at a little over 27 and did the IPO at 25, but the shares went wild for a couple days and almost reached 100. I assume that was just because of the tiny IPO and day traders were just trading that small float back and forth until crowdfunders who transferred shares to the brokerages were finally able to sell. Now the price has been dropping by about 10% a day and hit 15 today. The company pays a monthly dividend that amounts to 1.15 annualized, and announced a buyback of $20 million, which would be about 16% of the shares outstanding at the current price. Those numbers and a $27 NAV look enticing with the stock at 15, but the whole process seems a little fishy. I don't know how they can really operate economically at the scale they are at, and they are basically just returning crowdfunder's capital instead of rental income. But it could be interesting for a flip if it's just a supply and demand based drop. This is the first liquidity the shareholders may have had, and they are rushing for the exit and selling for half of NAV right before a big buyback starts.

The purchase effectively rolls an old gain into the OZ investment, so it becomes tax deferred, much like contributing to a traditional IRA/401k. It's actually better than 1031 exchanges popular in real estate transactions, because here you only roll the gain over instead of needing to rollover the principal as well. There's no prescribed holding period to get that aspect of the tax benefit. As far as I know you could buy the stock, claim the deduction and sell the stock the next day. Once you sell you lose the deferral so it would be taxed in 2022 instead of 2021. Although of course if you were so blatant about that I'm sure you would lose the deduction if audited by the IRS. There used to be additional benefits for 5 and 7 year holding periods, but those expired 12/31/21. Effectively there you got a discount on your deferred tax and paid only 85% or 90% of the original tax. But unless that gets extended retroactively you don't get that anymore. Instead when the deferral period ends you will pay the regular tax that you deferred when you bought it. I guess that's something I didn't previously make clear: the OZ investment is a deferral of your tax until 12/31/26, not a complete elimination of the tax. That would be way too good to be true. So in summary: Buy today, get a tax deduction Sell anytime between tomorrow and 12/31/26 and you pay back the tax when you sell If you still hold on 12/31/26 then the tax will be due on the original gain even if you still own the stock If you hold until 2032 then all you gains since date of purchase, including tax writeoffs from depreciation pass-throughs, are tax free.

Their selling point includes fees that are 0.75% AUM/5% carried interest, where most OZ funds are 2/20 type fee structures. For the quality of the buildings/areas that mostly remains to be seen as to how they deploy the funds from the recent offerings. You can see what they have done so far on their website: https://belpointeoz.com/wp-content/uploads/2022/02/Belpointe-PREP-LLC-OZ-Asset-Deck-January-2022.pdf I will note that the census tract designations for OZ funds are probably about as conflict of interest free as when the electoral maps are redrawn, meaning some tracts get the designation that probably don't need it at all. The most expensive area of my city, the downtown waterfront area, was designated an OZ. So there are definitely quality assets out there.

There's not a whole lot of fundamentals to look at yet. They have done a couple of small projects when they were managing funds in the <$100mm range, but they are trying to raise closer to $1b which will mean future development will dwarf anything then have done so far. They do have to follow OZ rules which basically mean they can only own property in certain census tracts. And they have to deal in buildings that either are brand new and have never been placed in service before, or ones where they spend as least as much renovating as the original building cost. So the pool of assets they can invest in is much smaller than most REITs, but you also get amazing tax benefits as an owner so you could choose a lower yielding asset and still come out way ahead. In addition to the write off on purchase, if you hold for ten years you don't pay any taxes when you sell the stock either. And that goes for both capital gains taxes as well as depreciation deductions they pass through to you on a k-1. I'm not sure yet if I'm sold on sticking it out with them for ten years, but the tax benefits from buying were too good for me to ignore, so I already had a pretty good size position, and that was before thinking about a 25-35% discount to NAV like we have now.

Yeah, as far as I know it's the only publicly traded Opportunity Zone fund, which in and of itself as an interesting opportunity. You actually get a tax writeoff dollar for dollar when you invest so long as you have capital gains to offset. And it's retroactive for 180 days so you can buy today and avoid paying tax on a gain from September of last year. Separately from the company itself, the stock has moved in very inefficient ways over the past year. They have an ongoing offering where they will basically sell unlimited shares at $100 per share, and for quite a while it didn't fluctuate more than a few pennies from that price. Then last summer the stock (when it was still trading OTC as BELP) floated to up to $180 at the high during a period when the offering was suspended, and now it's going the other way and traded as low as $65 today. I'd think if nothing weird is going on, then it probably drifts back up to the $100 NAV range as more and more people either buy in for the discount alone or new money rolls in at the last minutes to save on 2021 capital gains.

Yikes, I was way too early on OZ. Down almost 30% now. I sure hope this is just a big liquidation and not some actual news I am missing.

Deploying some of the proceeds from APTS. Added some SWMAY, TCEHY, and BABA. Edit: Wow, also some OZ. Someone must be getting liquidated on that stock today. It's basically just a pile of cash right now with most shares sold at 100, and it's down 15% today and trading around 80.

Bought some more OZ. To my knowledge it's the only stock in the world that gives you an immediate tax deduction when you buy it. It's a dollar for dollar tax deduction where you write off 100% of your purchase price, retroactive to last year so you get to claim the deduction on your 2021 tax return, and to boot it's selling below NAV.

One drawback I didn't see mentioned is that if it's a dividend paying stock, then you technically no longer get the dividend. Instead you get paid cash in lieu of a dividend by the person who borrowed the stock from you. It's the same amount of cash, but you don't get the preferential dividend tax rate.

When I click on the thread because of 20 new posts, and they all end up being about crypto

My regular taxable accounts had basically market matching returns of low 30% range. My Roth IRA return ended up on the moon thanks to crazy gambles on meme stocks and options. It was somewhat of a gambling vehicle for me in the past, but now I'll have to take it seriously since it's now the largest component of my net worth. I'm almost embarrassed to post the number so I'll just post the screenshot, which you can also see some of the horrific results in prior years to dispell any notions that I'm secretly a genius trader. I don't deserve the return and probably shouldn't have done what it took to get there, but now I'll just have to avoid squandering the money.

Edit: The hope was that the options would be adjusted such that they had as the new deliverable cash and notes consideration instead of stock. If that were the case then all of the options would be significantly overvalued as they would be tied to a fixed value instead of to a volatile stock. From the SEC filing of the actual merger agreement, it looks like the default election will be to receive stock consideration. From similar deals I found, it looks like the options are adjusted to whatever the shareholders who do not make an election receive, which in this case will be stock, so the arbitrage deal I had hoped for would not work. This morning there was a reverse merger announced this morning by SEAC to bring Triller public at a $5 billion valuation. SEAC is a tiny company with about 50 million shares outstanding and was valued as little as .65 before this deal and a little under $3 now. It's looking like there are some nice arbitrage opportunities with the options on the company if I am reading the terms of the deal correctly. With a bigger deal I'd assume I'm missing something, but I can easily see this just not being on people's radar and there could be a very good opportunity here. As a SEAC shareholder you could either get (roughly) $0.50 in cash and $1.50 principal in convertible notes, or all stock at a 20% discount to the conversion price of the convertible notes. If all stockholders elected to receive stock, they would own 2.3% of the $5 billion company, or about $115 million implied value total which is about $2.30 per share. The two interesting ways I see to play it are: 1. Shorting call options way above the merger price, so say July $5 calls are selling for about 0.70 each. Obviously anything could happen in the short-term with the price so being naked short the calls is risky, but if you can hold through a big move it should work out well. 2. Shorting put options at or below the merger consideration. The July $2 puts can be sold for about .80 so you would risk 1.20 if the combined deal went to zero. Either way the merger consideration should be $2.00 or higher, so that's a very high premium to receive for an option that should go to zero. I'm inclined to want to short the puts as I can do it in bigger size without taking any infinite risk. However, one thing I am not clear about are how would short options that are still outstanding be adjusted when the deal closes? I've never been involved in a merger quite like this. I've had ones where there is cash consideration only and then the option is adjusted to be equal to the amount of cash that would be received and the options are accelerated so they go away shortly after the merger closes. I've also had ones that are all stock or cash and stock, in which case the options are adjusted to reference the new stock in the quantity you would have received as a shareholder in the company. Here the shareholder have to choose one of two options for consideration, and an outstanding stock option couldn't reference both at the same time. Would the long option holder get to choose on the merger date which way the option would go? If so, I'm assuming they would choose the stock alternative you would rather have a put on stock that can go down over a basket of cash and notes which is likely to stay at face value. Here are the actual the terms of the deal:

Well if we're all doing things we sold too early, I guess I can also add that I set up a bitcoin mining farm back in 2011 and sold over 1000 bitcoin at about $10 each. I never actually believed in bitcoin, I just saw I could make like 30% a week for a little setup work by mining the coins and selling immediately. I dismantled and sold off my equipment when they crashed down to about $2 a few months later. I guess I easily could have been a billionaire if I were a true believer based on how early I was in and the resources I had available, but I don't feel too bad about what they are worth now, as I know there is no chance I ever would have held them through all the runs and crashes over the years.