silly. If you want dividends, there are dozens of other conglomerates. I haven't seen yet that it doesn't make sense to retain earnings although its very difficult to earn attractive returns from common stocks with the 14.175% tax
if world war is what you believe is going to happen, you'd want to be in TIPS not cash.
This company may someday be worth 1.7x book as it continues its move to operating businesses. That's not the reality today though. I think we're pretty close to fair value here. Maybe 1.5x is reasonable.
Well thats the conversion value at the current price of the preferreds. 21.50/.3655 shares=58.82, about a 10% premium.
I think it is probably unfair, I just have no idea how to value those companies such as biotechs. I think the entire market is very richly priced, small caps especially so. As far as nominal GDP growth it will be below 6% as long as this low-inflation paradigm exists. Investors however, care much less about nominal returns than they do about real returns, so they wont likely demand 10% returns in a world of sub-2% inflation. Of course investors will make the mistake they always do, taking current conditions and modeling them to infinity.
Yeah that will be the adjustment this year at the current dividend. For 2013 though the dividend was .79 a quarter throughout the year. The math should have been about a 0.8% adjustment instead of the 1.8% adjustment. Of course theres provisions such as changes below a 1% threshold dont have to be recorded. Perhaps thats all it was.
As far as the breakeven. at the current price of the preferreds, the price of the common is only 10% below conversion price. With fairly similar yield and ongoing adjustments, this seems like a much better place to be.
It does seem high, particularly for the companies with negative earnings. Of those with positive earnings pe is roughly 21
Well brk is still a very large chunk of my portfolio and im comfortable with that considering its diversity. I started the position in may of 2012 just under $85. At that time the PE with look through earnings with some provision for taxes was under 12. That numbers now sitting right about 15, certainly not unreasonable but not nearly as cheap.
yeah its pretty fascinating that we still have a negative real yield on the 5 year TIPS. In 2007, the real yield was over 2.5%. There really is nowhere to hide.
If he didn't give all that money away. Pretty impressive, easily would have put him at #1 although bill gates has donated a chunk of money also. Oh well. Guess he'll have to settle for #4
Unfeel comfortable in cash though if theres a world war? In WWI inflation got to 20% in WWII, inflation got to 12%. If you insist its happening, TIPS are the way to go.
Thats certainly a possibility. Personally i think he'd rather have the additional shares as the 5.1% after tax perpetual preferred seems rather unattractive.
We have to pay $5 billion to exercise the warrants but we have the option to exchange the preferred stock to satisfy that cost ( as per bac 10k). I think we'll choose to give up the $255 million income stream instead of paying $5 billion
Yeah its a little tough to value the warrants by themselves because we will be exchanging the preferred stock to get them. Preferred stock earns about $250 million after taxes so I think the true cost of that exchange is a little less than $5 billion
Bank of America Warrants/preferred now worth over $12 billion. Dow will likely be forced to convert if it rises another 7% but that would give us $4 billion in stock.