Since I last proposed Callon Petroleum bonds, and following my success with the Bon-Ton junk bonds, I’ve been considering focusing more attention on this part of the market. Junk bonds, of course, offer massive yields, higher than nearly all dividend-paying stocks and certainly higher than normal bonds; however, defaults are a constant worry and the […]
Windstream has announced their fourth acquisition since they started, this time for Iowa Telecommunications Services for 1.1 billion, consisting of 26.5 million shares of stock, $260 million in cash, and assuming $600 million of debt. The target firm has 256,000 access lines, 95,000 high speed Internet customers, and 26,000 digital TV customers, which the article […]
If you have been following this blog for some time, you may recall the first move I recommended was the bonds of Bon-Ton Department Stores, which I suggested could be hedged by shorting an equivalent dollar value of the stock. At the time the bonds were at 46 and the stock was at $4. Now, […]
The Greek word for marketplace is “agora,” so the word “agoraphobia” literally means “fear of the marketplace,” and Congress seems to be suffering terribly from it lately. Given what has happened over the last couple of years their reaction is unsurprising. Indexing, long touted as the safe long-term option for the passive investor, has shown […]
As I stated yesterday, American Lorain has announced that they have sold stock and warrants totaling 5 million shares for $2.40, 1.75 million shares worth of warrants at a price of $3.70 that become exercisable six months after the transaction closes and have a term of 5 years thereafter, and 500 thousand shares worth of […]
Warren Buffett once wrote that in financial analysis, having an IQ above 125 is wasted and that success in investing is largely a matter of temperament. This tells us two things, one, that the world’s greatest investor thinks that dispassionate adherence to investing principles is more important than fancy quantitative models, and two, that Warren […]
Damodaran on Valuation claims that unnecessary financial assets, such as stocks or bonds or other securities of other corporations, have no effect on a company’s valuation, since the risk-adjusted discounted cash flow they produce is equal to their present value, so there is no incremental benefit to owning them or decremental drawback from getting rid […]
Some of you may recognize our old friend the yield hog from the Windstream article, but we should ask ourselves what a dividend signifies. For bonds, yields are typically all we get, but for stocks? True, a big dividend yield will amortize our margin balance if we choose to buy on margin, but as Seth […]
Benjamin Graham wrote in Security Analysis that a great deal of financial analysis involves recasting financial reports to get a full sense of a firm’s baseline ability to produce earnings. A lot of the process involves removing nonrecurring or irrelevant events from a single year’s results, as we did with LINE’s profits on its derivatives. […]