meiroy

many thanks!

Parsad wrote that we are all here of the buffet-religion. I think that it's true, interestingly though, IMHO, the connection to other religions is by contrast. In Buffet-religion the idea is to be aware of your biases and emotions, do not let them control, do not just believe in it, and so on. In religion, on the other head, it seems to be the other way around; embrace your belief, biases and emotion. Now, I'm not saying the latter is bad, maybe that's the true way for happiness. Perhaps each way fits its own goals. As for virtue, this word seems to be highly connected to "morals". There are those who would said that moral in essence is a secular word. That moral behavior can only exist when it is applied to all mankind, regardless of their religion, race,sex etc. My question would be to those that claim that religion is necessary for virtuous individuals: By religion, do you mean ANY religion or your own specific religion which has to be followed in some specific way? There are religions out there that allow minors to be married, 4 wives to one man, a virtue act would be to kill those who do not believe the same religion. Or, in other words, a virtue only applies to those of the same religion, because those who do not follow it are not really "human", or worthy of our moral behavior. If it's not "any religion" but a "specific religion" than a name has to be given and used in the argument, otherwise it's somewhat meaningless.

You are not keeping up with the thread. It's a 45 year old woman and Bill Gates is not 45 years old. Conclusion: it's not Bill Gates.

Thanks for the idea MrB.

Received a reply "If the dividend were $0.40 the adjustment would be $0.40 - $0.34 = $0.06.". So that's about it.

No, that's not at all what I was thinking about. I do not think that one cash dividend beyond 0.34 would render all future dividends as you wrote. Not at all. The thing I found in the language used in the emails received and some other sources including here, is that it could seem that an excess over 0.34 TRIGGERS the formula on page s23, and not that necessarily that's exactly the reduction like someone wrote in this thread that 0.35-0.34 = 0.01 reduction. That is, the 0.35 would TRIGGER the formula and the following adjustment, but perhaps the reduction is NOT ONLY the 0.01. So, on the first email to wells I gave an example of 0.40-0.34 = 0.06 adjustment and they said no that's not correct, go read the formula on the prospectus. So I wrote an example using the formula and wrote to wells asking if this is correct or not. So far they did not reply.

Rabbitisrich, When the dividend equals 0.34 or is below that number it's very clear the adjustment is not triggered. My emails are for what happens when it passes this number.

Don't worry about it. I already read Chou's 2010 semiannual, it doesn't add anything new to the discussion. So, I asked. And the answer:"No. there’s a formula in the prospectus that details how the new strike would be calculated. That $.06 is just one piece of it. The calculation is detailed on page S-23, the second bullet point." There is indeed a formula included on s-23, and if it's used the deduction would possibly be far more than just the excess. Unless they are talking about a second formula. In all the emails I have seen they did not bother, or choose not to, to write exactly what it is. At this point, either I do not get it or it's just plain suspicious and the vague wording on the pros. is intentional. I cannot help wonder if it's in the bank's best interest that the price on these warrants will not increase so they could buy it back and avoid the dilution in 2018. I am sending another email. Apologies in advance to Uccmal :)

Don't worry about it. I already read Chou's 2010 semiannual, it doesn't add anything new to the discussion.

The language used in the question is somewhat ambiguous, I'm not saying that your understanding of the adjustment is incorrect, just that the question could be read in more than one way. Maybe it's just me. Would you be so kind to get back to them with a very specific example asking if it's correct or not. Such as, current strike price is 34.01, if at some point before 2018 a regular quarterly dividend is distributed with the amount of 0.40, according to your reply the strike will be adjusted by 0.06 cents (0.40 - 0.34) and the new strike price would be 33.95. Is that correct? I've also sent them an email about the "special dividend" of 7c and got a reply that there's no adjustment and that the "The warrants have a strike price of $34.01."

"Additionally, the exercise price of and the number of shares underlying the warrants will not be adjusted for any regular quarterly cash dividends that are in the aggregate less than or equal to $0.34 per share of common stock" So, pardon me for being picky here, that 7c on March 24 2011 falls under the category of "regular quarterly cash dividend"? http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7806841-4946-9885&type=sect&dcn=0000950123-11-026766 "SAN FRANCISCO, March 18, 2011 — Wells Fargo & Company (NYSE: WFC) today announced a special first quarter 2011 cash dividend on its common stock of $0.07 per share,..."

I wonder how their customers, who have been out of the market since this dubious recession call was made just as the stock market was bottoming last year, feel about ECRI? Maybe they're thinking to themselves "it ain't over till the fat lady sings."

Wasn't clear to me from your previous post that that is what you wanted to say about buybacks, you are correct in principal. I might be wrong, but the way I see it is that these warrants are not a group of 30 nets nets, they are options. A leveraged buy with a built in aspect of market timing and the possibility of permanent loss of capital. It's a speculation. So, yeah, I do consider what you call completely psychological and technical, together with who might be on the other side of the trade now and later and what might happen between now and 2018. The horse can learn to talk by then, but it can also die of natural causes if nothing else. Of course, I have no intention on holding on to it until 2018 anyhow. Good luck.

If I may ask, how would you decide if the warrant itself is "over valued" and reached a point where it should be sold?

Dammnnn :P I totally misunderstood that. If so, then I should have prayed that the dividend will be as low as possible, because if they are above the threshold of 0.34, I'm losing 1.32$ of equity every year, and it's better for me that they just don't pay out. BTW, Eric and pals, Do the buybacks at least reach the warrant holders intact? Uh. I do not understand this argument. In this specific situation, the fact that they pay higher dividend (an increase over 80%) says something about the company and makes it far more attractive to certain investors. This means an increase in the common price, followed by the warrant price going up. You should be happy. In addition, assuming they will continuously increase the dividend, as it gets closer to 0.34 it raises the attractiveness of the warrant. And then there's the buybacks... To add a silly argument of myself, it's enough for the common to remain about where it is now for the warrant to increase by at least 10% in the very near future, perhaps even a few days.

Personally for me, a great screen could be a game changer. A color screen which you could stare at for hours with minimal eye fatigue is a big deal. At this point it's actually not that clear if the back-lit new screen is as good, or close enough, to e-ink, however if it is, it's good enough reason for me to buy it.

Same here, for the same reason. I have never owned an Apple product or even considered purchasing one before this came out. Won't be surprised if their sales will be way beyond estimates, again.

On the other hand they might be more difficult to conquer. Take Israel and spread its governing bodies all over its land. How many conventional missiles are required to destroy it? Do the same exercise for Iran. This is of course a very simplistic example. In previous wars Israel hasn't really faced this situation. Anyhow, this discussion can easily turn political so this is my last post about it. Make peace not war and all that.

No they won't, at least not by themselves. Not only is it probably beyond their scope of capability but even if they could they could not handle the aftermath, Iran does not need nuclear weapons to squash Israel the latter being really tiny compared to Iran. I think it's all a push in order to cause internal change in Iran, which might be coming in the following year.

So? Did he also include a detailed and comprehensive calculation to support this statement, for all to see? To my understanding Berkshire's management also stated that they will delay sharing profits with its investors for as long as possible, company investors should also expect a slow down of future growth because the company is becoming too big and that current CEO has already chosen a successor but it's a secret. And this mystery successor -- who cannot really replace he who cannot be replaced -- will have to take care of this mammoth of a company. I'm not a long term investor in this company, but if I were I'd be pushing for a change.

In this case the upside is 200 times the yearly interest he must pay, which is .5%. So after 5 years he would pay a cumulative 2.5% of the notional value of the CDS and then would recieve the entire principle if it defaulted after year five. One might devote 1% of your portfolio each year to this trade, and therefore every year there is no default it's a 1% drag on performance, but if a total default happens, your entire portfolio would make 200%. The interest rate is locked by contract, so that cannot change, but at any time he can sell it back to some other buyer in the market for more (less) if the rates of the CDS have risen (fallen), so the opportunity cost of holding the contract rises and falls with the market. Regarding what you write about the RE bubble, IMHO you are spot on 100% and the RE bubble is just the tip of the ice-burg. As for the CDS, what you're saying is that they just have to pay the insurance premium of 0.5% a year to get a full 100% of the insured principle? That is completely insane.

"If I'm a Japanese bank and I lend money to a new business, I get 1% on 10-year paper. Then the bank gets a call from me, and I'm willing to pay 50 basis points for five-year protection on this same company." If the business defaults within five years, what would he get by owning the CDS? what is his upside? For cost, my understanding is that he is paying 0.5% per year on the paper's amount. Does he actually have to pay it yearly? Can the interest rate change? Thanks.

"So Whos makin money?" The U.S. Bureau of Engraving and Printing. That's who.

If I'm not mistaken Graham himself has advised that an investor should be careful when purchasing what appears to be cheap companies at market highs. Ericopoly, Malarky, you will not die. (sorry, I just really wanted to use that word.)