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TORM A/S Message Board

j0n_48195 76 posts  |  Last Activity: 10 hours ago Member since: Apr 2, 2001
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  • Reply to

    Can't wait for Aug 3rd

    by momentum_play Jun 27, 2015 12:25 PM
    j0n_48195 j0n_48195 10 hours ago Flag

    Never heard of Elan. The fact remains that management has a lot of discretion about when and how they book revenues and expenses- reserves, debt restructuring, there was even a recent write off to move employees to lower cost locations as part of a restructuring. The timing of those is never completely arbitrary. Since there is often no single correct way to recognize those events, let alone in what quarter, management is not helpless when it comes to smoothing earnings that would otherwise appear more erratic. That does not change a company's profitability over the long haul. You just get better mileage if you keep your car at a steady speed on the highway. You are right. that I am no expert. But I've been investing for 35 years. Invest in a few companies that do cross the line. Read a few books about accounting and "quality of earnings" and you start to appreciate just how amorphous those numbers really are. As for insurance, I definitely have my betters here. But investing is more about good arithmetic than good math. I believe AIG is a deceptively healthy company, in a great market position. I've more than doubled my money in the warrants since 2011 (up 150%- not much to brag about in this bull market though) and I believe the best is yet to come.

    Sentiment: Buy

  • Reply to

    Can't wait for Aug 3rd

    by momentum_play Jun 27, 2015 12:25 PM
    j0n_48195 j0n_48195 Jun 29, 2015 12:37 PM Flag

    Thanks again for indulging me and keeping me honest. That's all out there, but I get lazy about rechecking the details. The bottom line appears to be somewhere near $600M for write downs this quarter. I'm curious to see if your prediction plays out. With reported earnings at least 50 cents higher than adjusted earnings, which will drive the price? Or maybe your supply/demand thesis is more valid. We'll see in about 5 weeks. I'm encouraged to see Paulson getting in, but he's such a short term trader I take that with a grain of salt.

    Sentiment: Buy

  • Reply to

    Can't wait for Aug 3rd

    by momentum_play Jun 27, 2015 12:25 PM
    j0n_48195 j0n_48195 Jun 29, 2015 10:39 AM Flag

    Thanks. They didn't sell all 96 million though. Am I wrong again? I thought they sold something like 87M. Would they write the others down at the same time? Sorry bout the poor math on the per share loss though. Also, I get roughly the same range on bond hit making cruder assumptions I'm sure.

    Sentiment: Buy

  • Reply to

    Can't wait for Aug 3rd

    by momentum_play Jun 27, 2015 12:25 PM
    j0n_48195 j0n_48195 Jun 29, 2015 9:38 AM Flag

    Agreed. Especially hoping for extended buybacks. But just to clarify: You think there will be an $700M write off for AER? (Roughly 900M shars times $8/ share loss, if I understand your $52.50 correctly?) Any guesses on the write down for called bonds? Good luck with those calls BTW.

    Sentiment: Buy

  • Reply to

    Can't wait for Aug 3rd

    by momentum_play Jun 27, 2015 12:25 PM
    j0n_48195 j0n_48195 Jun 29, 2015 6:01 AM Flag

    I'm not sure there's anything wrong with that, as long as the ethics and business rationale are sound. Your assumption is that there is such a thing as "real" numbers. There isn't- at least not when you start sweating the decimals. That;s why a lot of fund managers look at the tax reporting. It gives them that "second opinion" on the health of the company. It is also why the analysts bother with conference calls at all. Numbers alone have no meaning without context. So they "adjust" the numbers in any variety of ways they consider helpful. As investors, it's our job to do the same. We get earnings and "adjusted" earnings. We have 3 different "book" values (with and without DTAs or AOCI) and at least as many different ways of counting shares. I know. I'm an "honest money" guy myself. But I had to learn that, while numbers don't lie, they never tell the whole truth either. AIG isn't "hiding" anything. They just understand that steady growth is more healthy for the company over the long haul than a roller coaster.

    Sentiment: Buy

  • Reply to

    Can't wait for Aug 3rd

    by momentum_play Jun 27, 2015 12:25 PM
    j0n_48195 j0n_48195 Jun 28, 2015 10:04 AM Flag

    I've been criticized by posters for suggesting AIG is "managing" their earnings. (Whitney Tilson used that word a few years back.) I get that. I'm as annoyed by conspiracy theories as anybody here. But the fact remains that management has a lot of legal discretion and strategic options to give them the "wiggle" room they need to send their intended message. That message? Slow and steady progress. An earnings spike does them little good. They'd lose their buyback discount at a time when they are generating a ton of free cash. And as soon as they have an "off" quarter, the stock would get pounded.

    So what are they doing? They have discretion about reserving for losses, which they upped in the last quarter. I'd expect more of that this quarter, since spring storms and fires have been more about headlines than real damages. (Texas rain damage might be the wild card there.) Also, these bonds that are being called (and refinanced) help a few years out, but cause write offs in the current quarters. My prediction? A solid earnings beat, but no home run. Progress on combined ratios and ROE will be significant, but modest enough to underwhelm the analysts. AIG will rise a few dollars, then give half of it back within a few weeks. Traders with short attention spans will get bored and leave. Investors will have their patience tried, but will be able to remind themselves that this boring stock continues to yield in the mid to upper teens, with no end in sight.

    Sentiment: Buy

  • Reply to

    АИГ-ВТ Message Board

    by ventureshadow Jun 15, 2015 2:58 PM
    j0n_48195 j0n_48195 Jun 26, 2015 12:40 PM Flag

    It's funnier that Yahoo has had a week and a half to fix it and seems in no hurry. Does the hack count if nobody cares?

    Sentiment: Buy

  • Reply to

    The warrants strike back....

    by j0n_48195 Jun 8, 2015 4:08 PM
    j0n_48195 j0n_48195 Jun 24, 2015 2:58 PM Flag

    If I may, a couple of points: Now that the warrants are "in the money" they can't help but track with the common, minus a penny a day ($2 per year) in lost time value . That $2/yr in time value varies somewhat though. It grows as fear and interest rates rise (making the warrants more valuable relative to the common), and shrinks as complacency sets in. The current $1.50 discount I see in the warrants suggests stable interest rates and complacency. Since over time that spread should shrink regardless, warrant holders should be rooting for the common. Our warrant values cannot be far behind.

    Sentiment: Buy

  • Reply to

    Judge showed the wisdom of Solomon

    by fbertital Jun 15, 2015 6:28 PM
    j0n_48195 j0n_48195 Jun 23, 2015 3:26 PM Flag

    Wow! You haven't lost it yet. I have to laugh every time you suggest there's more than one of me, or that I'm actually getting paid! A couple of points. First: I've never tried to get anybody to act on my "sentiment"- consistently "buy". ( I consider it cowardly to post a comment without a sentiment ranking.) There's nothing in it for me. Why should I? By the way, comparing today's results to the last multiyear high, is a bit disingenuous, don't you think? I never buy during those runs and don't advise others to either. I buy on the dips. Secondly: I'm putting my own money where my mouth is. I've had two flat years in the warrants. I'm well over 90% invested in those alone. If I'm wrong, there isn't a person on this board who will suffer more. But the essence of good investing is knowing what your stuff is worth, sometimes ignoring the current market price. By my calculus, which I've explained in several previous posts, the warrants are about a buck and a half underpriced relative to the common- and the common is underpriced relative to it's performance and potential. My advice to you is to short all I have to say. Get rich by proving me wrong and I'll toast you for that.

    Sentiment: Buy

  • Reply to

    Judge showed the wisdom of Solomon

    by fbertital Jun 15, 2015 6:28 PM
    j0n_48195 j0n_48195 Jun 22, 2015 10:42 PM Flag

    Despite your conspiracy theories, I'm at least encouraged you now know there are more than one of me/us. You still seem to need to wear that self-righteous robe though. Fine, as you wish. The irony always was, and still is, that I can't figure how we disagree. When you're not channeling Charles Manson, you seem to make sense. I agree about the court case and Peter's mission. So why the hostility? Do my posts really sound that "boiler plate"? I suspect I detest spammers even more than you do. I've been honest throughout. Most posters acknowledge that. We have ZERO affect on the stock's price. But most of us posters are here to clarify our thinking. It takes a lot to hang in there when other stocks are soaring. Give the world a break. I'm sorry if you lost money in AIG.

    Sentiment: Buy

  • Reply to

    Judge showed the wisdom of Solomon

    by fbertital Jun 15, 2015 6:28 PM
    j0n_48195 j0n_48195 Jun 19, 2015 6:02 PM Flag

    Nicely put. I'll leave it to you two to sweat that legal issue. The debt retirement is more intriguing now. I read it about the way you do. I see them saving roughly $100M per year in interest if they float new bonds for the same $3B, which translates to something on the order of $200 - $300M write off next quarter, assuming 2-3 year payout- about 20 cents a share, give or take a nickel. You are right about the good news- sustained low stock prices for buy-backs. The bad news is AIG has relatively more debt than it's peers, so they might withhold some of that AER cash from future buybacks. I'd like to see them issue new debt and reauthorize another $3.\.5B for the next quarter. Just my opinion though.

    Sentiment: Buy

  • Reply to

    Judge showed the wisdom of Solomon

    by fbertital Jun 15, 2015 6:28 PM
    j0n_48195 j0n_48195 Jun 18, 2015 1:06 PM Flag

    Wow. Thanks for the "heads-up". I'm not sure I would have read the agreement in that detail, even if I knew where to find it. Seems the stock should have enjoyed more of a lift then. Oh well.

    Sentiment: Buy

  • Reply to

    Judge showed the wisdom of Solomon

    by fbertital Jun 15, 2015 6:28 PM
    j0n_48195 j0n_48195 Jun 17, 2015 9:01 AM Flag

    Your comment seems to contradict your sentiment rating, (it's the bashers who usually chicken out of posting one) since only legacy shareholders would benefit and there's a remote (but real) chance current shareholders would foot the bill.

    Sentiment: Buy

  • j0n_48195 j0n_48195 Jun 16, 2015 5:51 AM Flag

    You don't "get" bubbles. Everyone was at the party, dude. The same congressmen, who were expressing outrage over the collapse, were the ones I vividly remember complaining that the banks were being too stingy about loaning to minorities and the poor. Those were, in the end, the people who suffered most. The public was drunk too. They "knew, or should have known" they were pumping air into the bubble. Even Isaac Newton lost a fortune in a bubble. (lil' help? Was it Mississippi or the East India Company?) He was supposedly the smartest man alive and greatest scientist of all time? The corrupt "system" you're denouncing is called human nature. It's almost as powerful as the urge to be self-righteous and complain. Grow up.

    Sentiment: Buy

  • Reply to

    Warrants the way to go here!

    by geepersman3 Jun 10, 2015 4:50 PM
    j0n_48195 j0n_48195 Jun 15, 2015 9:25 AM Flag

    You have to throw the options equations out. Those are for short term traders, who nevertheless determine the market price. I still think the common is conservatively at $145 by Jan 2021. That puts the warrants at $100. That's almost 2 doubles in 5 & 1/2 years. The stock will only double a bit more than once, and pay about $3 more in (warrant unadjusted) dividends. Barring a major economic event, the warrants have more upside- though conversion and/or sale is potentially messier.

    Sentiment: Buy

  • Reply to

    AIG WARRANT VALUE KILLER

    by investor7777 May 21, 2015 11:23 AM
    j0n_48195 j0n_48195 Jun 15, 2015 8:48 AM Flag

    Thanks again, both. I'm not worried about tax issues. Most of my holding are in IRAs. I am worried about a process (like a machine) with too many moving parts. Something could go wrong. I hold warrants in 4 accounts with 2 brokers. Any miscommunication or failure to execute properly could cause months of headache.
    Which brings up another question: Do you recommend converting on the expiration date? Or do you think it's wise to convert in the weeks ahead to give time to make sure it's done properly? Maybe even December 2020?

    Thanks in advance. I'm starting a thread post with this so you don't have to dig to respond.

    Sentiment: Buy

  • Reply to

    AIG WARRANT VALUE KILLER

    by investor7777 May 21, 2015 11:23 AM
    j0n_48195 j0n_48195 Jun 11, 2015 2:11 PM Flag

    I did Google it, thanks. Never occurred to me that brokerages would let us do that. I will inquire. Very helpful. I consider myself a plain vanilla long stock investor. These derivatives gymnastics are new to me. Thanks again.

    Sentiment: Buy

  • Reply to

    Warrants should be at 30!

    by geepersman3 May 21, 2015 11:12 AM
    j0n_48195 j0n_48195 Jun 11, 2015 2:05 PM Flag

    Agreed, when I bought in, the warrants were selling for the strike difference, plus $2.50 per year to expiration. But because there was no dividend then, that now translates to in-the-money ($17) plus only $2 per share per year to expiration($11), or $28. The warrants should track evenly with the common now, less a penny a day for lost time value. It hasn't been, That can't last.

    Sentiment: Buy

  • I like financials and I like Bove, but I'm no accountant. How do you get from the Yahoo stats page to Bove's claim that JPM is worth $10 more per share in liquidation than it's current market value? Thanks in advance. (Full disclosure: Don't own JPM, but have BAC and C in the past, I'm more comfortable with the evolving model of insurance. I don't know what banks are anymore, or will be in 5 years. I own AIG)

  • My model, "in-the-money over 45 plus $2/year" is reasserting itself. Warrants are up slightly on high volume, while the common is down strongly (today). As long as the common stays down, the discounted buybacks make the warrants even sweeter. Finally, a bit more sanity to the warrant pricing.

    Sentiment: Buy