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FirstEnergy Corp. Message Board

  • InvestmentGuru2001 InvestmentGuru2001 Jul 28, 2006 1:34 PM Flag


    When reported next week.

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    • I thougth earnings will not be announced until 10/24/06. Did I get it wrong?

    • What you are saying is true. However, risk increases if you borrow to buy equity. The risk that when they need to swap back to raise money, they will not be able to cover their debt by selling equity, and that's called liquidity crisis. When company borrows to boost shareholder value, their default risk increases. The debt is not used to expand, so it's an ouright bet on the stock. I'm sure that since you trade you are looking to limit losses, not maximize gains. Whoever is looking to maximize gains, just increases the risk, and it never ends well. The companies buy back stock when they have money and feel the stock is undervalued. That strategy is equivalent to investing in business, and risk is actually decreased. When you borrow money to buy back stock, you increase risk. When risk increases, cashflows are discounted back with higher spread. Just because they created liquidity crunch, it doesn't mean their fundamental pricing changed. Net net effect of repurchase they did is lowering of fair value on risk alone.

    • I think its the other way around. If you borrow money to buy your stock, you pay interest for reducing shares outstanding, and it does increase earnings per share, but it adds more risk to the entity, and thus increasing the spread to the base rate. What it translates into is higher rate for discounting future cashflows. This is a cosmetic measure that raises pps short term due to liquidity and lowers fair price, to which price will converge in the longer term. The fair price of FE is mid $40's. They bought back shares above fair value. This year is great because they had growth vs last year, but long term growth rate is 3-4%. Utility or no utility it's a financial asset that is priced by discounting future cashflows, and the spread to treasuries got a bit higher.

    • I did not see any substantial buys. THose buys are options awards. There are some block sells, though. To see a real buyback, look at UBS. They have a buyback where they buy stock if it falls below certain level. They company that buys back with borrowed money at all time high is trying to prop up their stock price. For the selling look at SEC website. If you see a 145 shares buys it's an option grant. Look at the size of their "automatic sales" and compare them to buys. I know now insider buying and selling is said to be over rates, but it involves hoses that hold those stock to deal with those pesky insiders and they have a new theory which is supported by their own propping those stocks. Year 2000 is far away and they do exactly the things that got them into trouble in the first place.

    • Rblastoff, git back on your meds, AND don,t lump me in with them there malfactors, we ain,t kin, ey iz dah 1 an only name ey dun up an youez, got, frogface?

    • The discussion is not getting mean, it's getting's just the same guy (ur2u2, mack a rooney, inmate, etc.) posing as multiple posters. We have been round and round about this nut bag, and still he suckers someone in to his fantasy world.

      The best way to deal with a virus is to exterminate it. The best way to deal with an annoyance is to ignore it.

    • Jealous?

    • I don;t give the first hoot about your,"in the mind vital stats", lardass, before I started my present career, I could hook a 70 in 15 seconds flat, I hung cross arms, loaded with glass, with my 65 ft handline, placeing crossarms on poles before they are set is for wimps, like yourself, I always drilled the holes with a hand auger, now shut your yap, get lost.

    • paul1204 Aug 3, 2006 10:22 PM Flag

      I see this discussion as getting mean.

      All I know is that there are a lot of people a lot smarter than me running that company and a hell of a lot of people willing to invest in it at higher prices - so I have no grip. They are making me decent money. so no grip.

      Didn't a famous guy say "what goes up must come down"?

      I think that this stock is currently the haven for institution's to park money thiss the market provides better places- and then there will be a big sell off. Or maybe there will be a 2/1 split-buy that is remote with the buyback program.

    • Indeed they were.

33.62+0.28(+0.84%)Oct 25 4:02 PMEDT