cheapguy

Let us update the List of preferred still good to buy (capital preservation is first rule, so no potential bankruptcies) Please post your favorite preferred. My pick is PSA's preferreds, with basically zero debt and about $10Billion Equity, they look good. The yield is about 10% on most series and going about 70c on a dollar (par value)

Would buying WFC-L at about $500 is still good. With 15% yield currently, and possibly getting the appreciation when the share goes towards the par value of $1000, it still looks good for me. Other than opportunity costs, is there something I am missing. I am assuming these preferred would not be wiped out (either bankruptcy, suspension of dividend for a long time...) I am hoping other than volatility, there is no capital risk over say 3-4 years. Want to hear what can go wrong. Cheapguy

Woodstove and Ericd1--- thank you and there are excellent nuggets from your writings. Especially taking out the house from the investments category. It was especially hard for me to do, living in a high home price area in Silicon valley, CA. I realized the truth only 6 months back, and your writings re-inforce that for me. I am trying to pay off the mortgage and hold the house free and clear.

I stand corrected by ericopoly Warren has leverage, but not margin.

Want to hear from fellow posters about this. How do you manage risk in your personal portfolio. Please include all assets, like real estate, buying tips, ... Please post any information on how you are minimizing the risk, even general principles. What techniques are good in general. Also post any mistakes made. For me, it is 1. Do not have leverage with margin accounts. As Warren says, they have no leverage and absolutely no short term debt. Appreciate everyone's time and effort on this.

I would like to ask 1. What was the intrinsic value of Coke, when he first started buying ? What was the purchase price (either starting, or average). 2. Ask for other stocks, like Washington Post, American Express, Wells Fargo These are the historic purchase prices and the intrinsic values at that time.

Is there a way for a small investor to make money by lending their shares for shorts ? At the end of this article, it says the borrow rates for Citi were at 120%/annum. ================================================================== http://online.wsj.com/article/SB123739700104873325.html?mod=loomia&loomia_si=t0:a16:g2:r4:c0.0707206:b23116072 By JOHN JANNARONE First, shareholders were burned by Citigroup Inc.'s offer to swap $27.5 billion of preferred securities for common stock. Columnist John Jannarone explains how the government's increased stake in beleaguered bank Citigroup is very bad news for short sellers. Now, it is short sellers in the hot seat. Thanks to sweet conversion terms in the February offer, investors holding the preferreds could short the common stock to lock in a likely profit. That lured in a flood of arbitragers and pummeled the shares. But Citi's stock has tripled since March 5. Even with short sellers now willing to pay through the nose to borrow stock, the supply has virtually dried up. The result: a short squeeze exacerbated by a series of bullish comments from banking executives. Some arbitragers, with memories of last year's Volkswagen pileup and fears that brokers might force them to return borrowed stock, have rushed to close positions. [citigroup daily share price] That has made the trade appear juicier for new investors. Last Friday, one Citi 8.125% Series AA preferred security could be bought for $12, but was exchangeable for a fixed 7.3 shares of common stock valued at $13. Now, the preferreds are valued at $13, but 7.3 shares of common are $22. The spread implies an absolute return of about 70% in a matter of weeks if Citigroup sticks to its plan. Risks include a change in the terms if, say, the government decides to take a larger equity stake. A few arbitragers still are playing. A large prime broker said Tuesday that a client borrowed five million Citi shares at an annualized interest rate of 120% to go short. At those rates, Citi shareholders might decide lending out their stock isn't such a bad idea after all.

With Warren saying that AXP is a hell of a buy at $10, it is the strongest endorsement I ever heard about a stock pick. He also said, it is going to be there for ever. What would be the intrinsic value of AXP ? Up to what price, it would be a good buy ?

I liked similar thread on TMF. We can learn a lot from our own mistakes and sometimes others mistakes. Let us learn from each other's mistakes and collectively become better investors. So here I go: 1. Buy the company stock where I am working, and making it a huge portion of the portfolio and not diversifying. (of course not understanding the moat of the company). Familiarity or working at the place, makes you beleive you know what is going on. Falling in love with the company's culture, or work environment and extra polating that to a good investment. 2. Not selling when some stocks are ridiculously valued, because of the tax angle. The unwillingness to pay Uncle sam, was so great that i went to the extent of keeping riduculously valued stocks by doing some stupid mind games. After the bust, i did not need to worry about paying taxes as there are no gains anyway. (now i got tax losses on paper, so it helps my taxes..perverse logic for my mind to justify my stupidity)

Posted this on FFH section also. =============================== This is a basic question on preferred shares. Can the companies start buying their own preferred shares from open market, without any announcement ? Do they need any approval from common stock holders or regulatory bodies ? With so much discount from the par value and such high yields, what could be stopping them from buying and retiring the debt ?

This is a basic question on preferred shares. Can the companies start buying their own preferred shares from open market, without any announcement ? Do they need any approval from common stock holders or regulatory bodies ? With so much discount from the par value and such high yields, what could be stopping them from buying and retiring the debt ?

do you guys symbolically mean blond is ffh and brunette is orh. or i am reading too much, where none exist

How to chose between ORH-A and ORH-B series Other than the interest rate (8.125% for ORH-A and 3moLibor +3.5% for ORH-B), they look the same. They are essentially could be convertible in 10/20/2010 at $25/share. so if i have to chose between them, what should i pick ? (if there is going to be inflation, they may convert the B's if the interest rate shoots up more than 8.125) Any other factors ?

What does this mean. Does Berkshire has to post collateral/deposit money for any of the derivatives or puts it has written ?

With the preferred deals like right now, 10% is good assumption. For the HOG it is 15% So even if the indexes, go down, if WEB can lend money at 10% that would be great. Don't know in a deflationary or a prolonged recession with very low interest rates what can be earned (like in japan, with close to zero rates).

How about some calculations ? Let us assume the 4.8B will earn 10%/pa. In roughly 7.2 years it will be 9.6B Another 7.2 yrs it will be 19.2B the puts are expiring in 15-20 yrs So not knowing any more details, let us assume another 3.2 yrs of full growth (total of about 17.6 yrs) So in 3.2 yrs it will be about $26B (i did'nt put tax considerations). So as per WEB, if the indexes are 15% down, he has to pay 4.8B As per some article, the total liability is 37B if indexes all go to zero. So based on a "linear" or a straight line assumption, WEB will break even until the indexes falling 81% (assuming 10% tax free growth ofcourse). So as per my rough calculations 81% drop of indexes should be fine. So if all the indexes go to zero, Berkshire is on hook for about $11B. That is the probable full loss, which Berkshire can fully pay without getting hit big time (please refine this simple calculations, maybe assume deflation, assume 2-3% interest rates...??).

Can you give me details on the last years markel meeting. Hope I can attend this year.

Can we make a list of questions to ask at the annual meeting. We can either ask ourselves or send them to the people selected by Buffett. Let us work on the list. Can we select them, either by voting or some other way ?

Albertmeipp, Can we put a number on the impact of losing the coveted AAA rating. How much debt has to be refinanced, or additional collateral to be deposited ? When is that debt due ? Basically, can someone point me to the press statements or in which portion of the Quarterly reports we can find this information ? How about writing the Puts for strike price of $5 which expire in Jan 2010. they are going for $1.20. So we will break even until $3.80 If ge goes below that, then we lose money.

Albertmeipp, Can we put a number on the impact of losing the coveted AAA rating. How much debt has to be refinanced, or additional collateral to be deposited ? When is that debt due ? Basically, can someone point me to the press statements or in which portion of the Quarterly reports we can find this information ? How about writing the Puts for strike price of $5 which expire in Jan 2010. they are going for $1.20. So we will break even until $3.80 If ge goes below that, then we lose money.

Does Sears have stock investments ? Hope Sears will be like Berkshire, an investment vehicle with a textile mill behind. How can I look for Sears stock portfolio ?

Eric, Based on today's closing price for PGF the yield is about 13.59% (as per yahoo). Would you buy at this prices ? Between PFF and PGF, would you prefer to buy both, allocate some mix to both, only one, ?? Greatly value your opinions and appreciate if you post your thoughts. Thankyou

Please point me to the ins and outs about WFC's preferred. What are the terms and conditions and under what conditions their dividends can be suspended. if they are suspended, when they resume again, should they catch up before giving common stock dividends ? how does this work. can they get converted to common, in the future ? what can go wrong as per the terms and conditions of issue ?

Hello Everyone : I was wondering if anyone is interested in sharing the hotel room during the annual meeting. If anyone who likes to share the hotel room, please contact me. i only need for saturday night, and will hardly be in the room except for a short sleep. Being a cheapguy, it helps me if some one can share and split the costs. I can certainly provide references from some board member (so dont need to worry about me). Thanks

arbitragr, thank you very much for taking time. best regards. cheapguy