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And one more:
$12.31b NI x 14 PE = $174.34b Mkt cap
$174.34b - $19.13b pfd's = $153.21b mkt cap attributable to commons
$80b recap assumption
$80b / $153.21b = 52.22% weight of recap
100% - 52.22% = 47.78% weight value of total shares
5.893b current shares out / 47.78% =12.33b total shares required
$153.21b / 12.33b = $12.43 pps valuation
Here's another version with the assumption being total shares outstanding:
$12.31b NI x 14 PE = $172.34b mkt cap
$172.34 - $19.13 pfd's = $153.21 mkt cap for commons
Total Shares Out assumption: 12b
$153.21b / 12b shares = $12.77 pps valuation
12b total shares - 5.893b current shares = 6.11b new shares
6.11b new shares / 12b total shares = 50.89% weight
50.89% of mkt value is derived from the recap, therefore
$153.21 * 50.89% = $77.96b recap requirement
That's a positive message. Hopefully we hear more of them from ICBA.
You're welcome.
$12 pps is what fair market would be under those assumptions.
No I didn't. I assumed an $82b recap scenario first then found what the value of the shares would be based on that situation. Your statement doesn't even make sense mathematically or otherwise.
Not sure what you mean specifically. I broke the math down using the assumption that the company will recap at $82b, the government intending to excercise warrants, and valuing the earnings at a 14 multiple.
Incidentally, proposals have been offered that places the recap as high as $155b which would produce a valuation less than $1 per share for the commons. I believe they're overly aggressive, but they exist, and one proposal comes from a Trump cabinet member.
The government doesn't recognize them as being the same, so I don't know where you've came up with that notion.
No. There are people here that know who I am. This screen name is old. I'm a paid member. I'll be on any board I choose, thanks. Learn how to calculate math, btw.
Warrants, options, swaps. The shares were issued but not excercised. Unless one has a crystal glass that will tell them whether the investor will excercise his right to them or not, the intelligent thing to do is to assume hell excercise what was issued to him.
Think of it like layaway. Most people that put something on layaway and pay a fee for doing so, have the full intention of paying the remainder and completing the transaction. To assume the person would pay money to hold the item then not finish the transaction is an illogical assumption because the intent has already been established.
$12 pps @ $82.49b recap, assuming warrants will be excercised and a 14 PE is the valuation multiple.
Here's the math:
$12.31b Earnings * 14PE = $172.34b Market Cap
$12 pps * 5.893b sh. out. = $70.716b
($172.34b - $70.71b) - $19.13b = $82.49 Recap
$82.49b / $12 pps = 6.874b additional shares required
6.874b additional shares + 5.893b current shares = 12.767b total shares required
$172.43b - $19.13b Jr. Pfd = $153.30b Market Cap attributable to commons
$153.30b / 12.767b total shares = $12 pps attributable to commons.
Add back $19.13b for Jr. Pfd's and you arrive at total Market Cap of $172.34 for the entire business.
They don't have to be excercised. The fact that they've been issued is enough. The amount is recorded in the income statement.
I agree, but they have to do it that way.
Diluted shares outstanding accounts for warrants & swaps. That is the correct number to use. 5.89b per the 10-K.
Do you believe a politician is slimy simply because he's a politician?
You didn't include a recap. Try it with an $80b recap.
I'll tell you in an hour. Going grocery shopping.
There's 5.89b shares outstanding, not 1.158b, and your assumption don't include a recap. A recap will happen.
No it's not. $12 pps assuming an $80b recap and 5.89b shares currently outstanding produces a PE of 14 on $12.31b of earnings.
Not conservative at all. $8-$12 is the high side. Ackman's valuation is from 2014. Much had changed since then. My valuation from 2014 was $25. Not the same company today that it was then. The government has forced them to shed a lot of their assets since then.
$8-$12 on the top end assuming an $80b recap and warrants excercised.
You can't do an IPO on a company that has existing shareholders. Research what an IPO is and you'll understand better.
You're right. See how easy it is for people to misinterpret what was said? It's the biggest human flaw I observe on a daily basis. Once you tune into this observation, you can quickly become a really good investor.
Do you believe that based on his character as a human being or because he may be a stumbling block to your prosperity?
Again, you assume way too much. You're speaking to me as though my position is that recievership is the only way this can pan out. I can only imagine how badly you've misinterpreted Mnuchins comments when I'm sitting here watching you assume nearly everything about what you think my beliefs are. Amazing. You really need it spelled out for you, don't you?
That's good news, because Mnuchin has had meetings with Hensarling and I don't believe Hensarling would say such a thing unless it had been discussed. Government is going to create a system that guarantees safe and sound home ownership. Shareholders are the last people the government is concerned about, and they shouldn't be concerned with them. That's what courts are for.
No, it really isn't going the "other" direction. A bill that has nothing to do with the assets and liabilities of the companies isn't creating a different direction.
It's my impression that you're understanding very little of what I'm saying. The 2011 bill being killed is neither a good thing or a bad thing. The bill was created to prevent a new Fannie and Freddie being created upon recievership. The end result would be the same. Recievership with new entities being created = shareholder wipe out. Recievership without new entities being created and liquidation = shareholder wipe out.
I've provided you links, I suggest you study them.
No, it really isn't going the "other" direction. A bill that has nothing to do with the assets and liabilities of the companies isn't creating a different direction.