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American Overseas Group Limited Message Board

  • longtimefollower longtimefollower Oct 4, 2011 1:05 AM Flag

    $8.78 adjusted book value. Selling at $1.10.

    Why??

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    • iow, bs but plz dont call you out on it. so, you is hereby called out on it. bs, bs, bs.

    • I provided a link about two months ago.

    • since it's a well-established fact, 'twon't be no trouble atall for you to pervide a link to some sorter evidence supportin your well-established factment.

      (exactly what position is it you're taking ram to be in; what separates the putative 10% from the ninety, et cetera. this would be vastly more useful than some sort of 40% of all statistics are made up on the spot substitute for the simpler 'stick a fork in 'er, jim-bob, she done.'))

    • The company can not (forget "will not") issue stock at current levels. Someone has to want to step in and buy the issued shares...but the resulting dilution from the issuance would make the stock less attractive to would be buyers.

      You need to think through this stuff a little. Book value o RAM is about $100 million or $36 a share now. With the stock trading so low, the company could issue 5 million new shares and raise, what? $40 million? $8/sh. So the new book value would be $140 million ($100 + $40) but the Book Value Per Share drops to under $12 from $36. Makes no sense to do this. The dilution is too great.

      Steel ain't running this show. Tynan is running the show. And he owns almost half of the stock already. The only way he would agree to this is if he was able to buy most of the newly issued stock...and I frankly don't think the benefit of him doing that is worth the extra risk involved.

    • Of course the preferred rank higher in the capital structure than the common, but that benefit is predominantly limited to a liquidation scenario given RAM's current situation.

      RAM is in no way, shape or form obligated to raise capital to begin paying dividends to the preferred holders.

      The only viable reason for them to raise new capital via a secondary would be if they were to move forward with aggressively writing new business and abandon "run off" mode, in which case they would need a stronger capital base to do so.

    • By the way, my $5 projection was neither reckless nor pure nonsense. Ninety percent of companies that are in the same situation as RAM which go through this process end up losing most of their common stock value. It's a well established fact.

    • The objective is to resume paying dividends, even if doing so destroys some of the value of the common stock. RAM has a higher priority obligation to the preferred than to the common....that's why it's called preferred.

    • What value is gained by offering additional common shares? Wouldn't the additional capital force them to start paying dividends on the preferred?

      Pretty tough to raise significant amounts of capital in the secondary markets when the company is listed on the pink sheets...

    • issued shares are reverse-splitting, non-issued shares are not.

    • Risk and the sensitivity of equity residual value to changes in insured collateral performance assumptions. I think the cushion is big enough though.

      • 1 Reply to seanfar5
      • The company seems to be shrinking its balance sheet nicely. There are interesting catalysts for increased share price:

        1) Reverse split means stock will trade at $10 with $80 per share in adjusted book value

        2) Higher stock price will probably lead to re-listing on a real exchange

        3) Name change will remove taint and new business line focus will allow company to start talking to analysts and present at conferences

 
AORE
15.40+0.20(+1.32%)Jul 28 12:33 PMEDT

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