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Well, I mean creative accounting is bad. The general mood seems extremely negative, but is it too negative? Restated earnings for 2016 and 2017 will likely be -13 cents and -16 cents respectively but it seems like a lot of people are thinking it'll be 2x as bad if not worse.
Do you think the restated earnings are going to be really bad?
Thanks.
Best of luck to GE. I hope the earnings are good.
Yeah, I was thinking about jumping in for my IRA. I'm looking at the chart trying to figure out an entry and I see the descending triangle pattern forming and I'm like.. oh shi.... If the pattern confirms, 11.80's in the short term and maybe even lower if there's even worse news.
Looks like I'll have to wait for earnings first.
LOL. I take it you don't believe the chart pattern?
Yes and no. Settling claimants had their claims denied (golden parachute).
There was a group of non-settling claimants who had their claims also denied but it was largely due to a factor of their claim amount. Much of which the FDIC claimed was already paid during their employment. Off the top of my head non-settling claimants comprised of I think 80+% of remaining funds left in the DCR.
Links are in my notes somewhere. I've probably made a post about it some time ago.
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Only way I can see jerrylev's scenario play out is the non-settling claimants reduce their claims and FDIC approves of lower claims.
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It's not something I can envision happening.
Descending triangle pattern.
Only way I see that happening is they settle the claims using the disputed claims reserve + disputed equity escrow. Claimants might take the settlement now that there's a merger on the horizon.
It's possible. Not likely, but possible. Amazon's valuation is a good example. A better example of insanely high valuations is Tesla Inc (TSLA).
I don't think there's any company in the mortgage related financial sector that has Amazon or Tesla level P/E ratios or earnings multiples. Maybe pre-2008, but nowadays, it's unlikely.
I still chuckle every time I see those $100+pps valuations.
It's a 20x multiple on earnings (mortgage sector average if I remember correctly), which wouldn't give $25pps. Don't get me wrong, I wouldn't complain with $25 pps post merger but I'm not expecting it.
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This is off the top of my head, I'll have to go back to the S-4 for the numbers but I'm tired and don't feel like doing so.
For the purposes of evaluating WMIH/NSM (post merger), a multiple of 4x (derived from transactions of acquisitions by other companies in this market sector - basically they used the multiple of what other people used to acquire mortgage servicers) was used to get the implied value of $1.83 to $2.01 pps (post dilution + earnings, etc.)
side note: 10-16% discounted implied value is $1.58 to $1.83 pps
Side note: Other valuations were from as low as 1.1x to... and if I recall correctly as high as 8.5x.
Based off the non-discounted valuation at 4x of $1.83 to $2.01 (which seems about right given what we know about the conversion ratio of NSM:WMIH shares), a market valuation with a sector average mulitple of 20x will result in market valuation of $9.15 to $10.05 pps.
20/4 = 5
5x1.83 = 9.15
5x2.01 = 10.05
An example calculation would be...
take NSM P/E ratio = 59.97 and multiply by earnings per share to get the Market value per share.
59.97 x EPS = P
EPS in this case would be the NSM earnings of roughly $0.30 per share divided by ratio post dilution.
416,012,872 is the amount of shares proposed to be registered for NSM conversion + 206,168,000 for rough amount of total outstanding shares post merger dilution. Round it off to 622 mil for the purposes of this example
622/97.8 = 6.35
Take $0.30/6.35 = $0.047
Take the 59.97 x 0.047 = $2.82 pps(rounded up).
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If it was the WMIH P/E ratio
142 x 0.047 = $6.674 pps
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Of course using any of the current P/E ratios is pointless.
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Last example
Assuming $1.83 PPS (post merger valuation by KBW)/0.047 eps (post dilution) = 38.936 P/E ratio
1.93 is close enough. Analysis by KBW non-discounted would be $1.83 to $2.01 per share based on dilution and financial forecasts.
In either case, at current PPS of $1.42, the stock is very undervalued (opinion) (roughly 10+% undervalued).
What is more interesting (to me) is what P/E ratio WMIH would trade at post merger.
You take known maximum values to calculate for dilutive effects (worst case dilution). To simplify, you will find share price post merger.
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If anyone actually read they would find that WMIH Board has already hired someone to find out the value range. At current pps $1.48 (as of this post), the stock is possibly undervalued.
I too am leaning sooner but the deadline is listed. Had there not been a deadline, lets say hypothetically in August (considered in 2nd half of the year) there has not been any news about the progress of the merger, I can guarantee you there will be massive amounts of...
Well, let me put it this way. If you've read posts from the past couple of years, you'll know exactly what's going to happen on this board.
Quick glance - there is a deadline for merger completion. Refer to the S4 stickied on the top.
Lots of good info with exact numbers on what the dilution will look like. I suggest people read it carefully.
If I recall correctly it was $8
NSM holders will get the exact date in their proxies or at the shareholder meeting.
You will receive a proxy statement regarding this prior to the shareholder meeting. Expect this statement around mid April. Most companies send proxies about a month before their shareholder meetings.
NSM shareholder meetings are usually around the 2nd week of the month of May.
Theoretically yes but I'm not sure how it would apply in KKR's case. Assuming additional shares need to be issued to current shareholders to prevent an ownership change, we're looking at an even more dilution and a PPS post dilution of under $1 (guaranteed).
However:
IRS Section 382 specifies a 3 year test period to prevent acquisitions for the purpose of immediate NOL usage. If my understanding is correct, after 3 years, any limitation on KKR assuming majority ownership disappears.
If the 3 year test period has been satisfied, considering that KKR initially got involved with WMIH in 2015 - WMIH/KKR never would've completed an acquisition prior to 2018 due to the 3 year test limit. Subsection (1).
Considering the prior attempt at acquisition in the late summer/fall of 2015, I'm not sure that the 3 year test limit applied to KKR but applied to WMIH itself, which has long since satisfied 3 years since it's (re)emergence in 2012 which would be subsection (3).
To my recollection there were no events that met the subsection (2) criteria.
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Excerpt below from 26 U.S. Code § 382 - Limitation on net operating loss carryforwards and certain built-in losses following ownership change
You need to factor in dilution from the increase in outstanding shares.
Refer to post 508414, 508409, 508391
444M + 21 + 11. All approximates - At roughly 477 + 1.2B + 206M = 1.883 O/S which would be a $1.117 EPS valuation post conversion/dilution.
All are estimates until we get closer to transaction close. Not enough hard numbers out. Series B conversion will dilute us estimated -$0.20 pps
That 1.12 doesn't include current O/S for WMIH or Series B mandatory conversion. If you add those two, it will be roughy 1.7-1.8B
The problem with trying to figure out the final O/S will be the amount of NSM (both Fortress and non-Fortress holders) electing to receive shares.
Assumes 87.4 million shares converted to WMIH at a ratio of 1:12.7793 = 1.117B shares (rounded up to 1.12B)
+ 206M shares currently o/s (WMIH)
+ approximately 450M Series B converted
This is assuming 50% Fortress Cash + 50% Fortress shares + 100% Non-Fortress shares
Final: roughly 1.7-1.8B outstanding.
Should the NSM side elect less shares and more cash, the 1.117B will be lower.
Rough numbers after dilution using NSM shareholder equity + deferred tax asset WMIH NOL at 21% + transaction debt - we're looking at roughly $1.188 PPS with an annual EPS (based off 2016 financials) of +$0.12 EPS
This is based off Fortress getting 50/50 shares/cash and non-Fortress NSM shareholders electing to receive 100% shares in addition to Series B dilution + current outstanding shares.
(1.771 Billion outstanding shares post dilution and share issuance)
Someone should double check my numbers.
At those numbers 1 share of NSM is worth roughly $15.18 post WMIH merger + dilution.
Note: Doesn't factor in growth, expansion, other mergers/acquisitions, etc.
Also note - based off 2016 financials. NSM 2017 annual financial results not released yet.
Note: Preliminary Rough numbers
The biggest hurdle to any estimate is the amoount of non-Fortress NationStar shareholders electing to receive cash in lieu of WMIH shares. Assuming 100% of non-Fortress shareholders want shares and Fotress holders 50/50 cash/shares - then there will be an issuance of 1.117 billion shares to NationStar holders.
There are estimates on page 10 of the PowerPoint.
Approximately 447 million shares from Series B. So we're looking at roughly 1.565 billion shares not including current outstanding shares at 206 mil.
1.771 Billion outstanding shares.
Powerpoint of Merger
NationStar 2016 Financial Results
http://investors.nationstarholdings.com/News
I'm working on the math of potential share price factoring in dilution, etc.
I laughed because it's so true. These omnibus hearings get rescheduled so often, it's not even worth mentioning.
http://www.kccllc.net/wamu/document/0812229171204000000000003
I finally had time to listen to the conference call. Did anyone else get a deja vu moment with all the Board of Directors' "non-answers?" It's kind of infuriating to hear what is essentially the same statement as the last two shareholder's meetings.
Seems like some very significant Series B holders got screwed over in favor of KKR as well.
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I haven't seen anyone post a summary yet although I might've missed it. If I did, does anyone have a post number so I can sticky it along with the webcast archive?
2/12/2017 Conference Call Webinar Archive
http://event.on24.com/wcc/r/1565983-1/A0C64E368421300BF44A2598CDAE213E
Edited: es1 - for whatever reason, an alert just popped up as though you just posted today.
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It depends on who you ask. I'm a bass fisherman. I have a crap ton of tackle and the knowledge and drive to catch fish. So if I wanted to catch bass, I will. It might be a 5 fish limit at 2lb per fish but it's better than going for a double digit and getting skunked and losing the tournament.
WMIH Corp is like a bass fisherman with knowledge, limited selection of tackle, and very narrow drive (in my opinion) fishing in a Florida drainage ditch. I see them as the fisherman trying to using a single glide bait/hard body swimbait in waters with nothing but dinks (don't know if you know bass tackle but swimbait/glide baits were all the hype for two seasons and they are very large lures for targeting double digit bass).
Instead of realistically going into the tackle box (or tackle store) and using crankbaits, jigs, spinnerbaits, they're dead set on the one lure. Can they catch a hawg in a ditch with the swimbait, sure I've seen it done on video. Is it likely? Nope. I've seen more 1-3lbers caught though.
When the series B deal was made a long time ago, I brought up the possibility of them having to need to do another round of funding (I can try to dig up the post where I mentioned this). I was right. According to the recent 8K Power Point presentation (https://www.sec.gov/Archives/edgar/data/933136/000119312517365615/g504414ex99_2s4g1.jpg) WMIH is essentially stuck looking for acquisition opportunities around the $2B mark. $2.8B resulted in a statement "WMIH lacked financial capacity" and one statement "passed based on price" on something that was $625mm
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Qualified Acquisitions state a series of smaller acquisitions or one large one.
Definitely not a judge or EC member (wish I was), but I've been here for a very long time. Used to post sporadically post POR7 confirmation then gradually spent more time here as things were looking positive (claims were being settled or disallowed, etc).
My posts were about the remaining claim amounts because at the time no one was calculating what the value of the remaining claims were. Then as the delays became more and more frequent, I stopped. Although I've on I think one occasion participated in one of the merger theories.
It was a combination of failed pro-escrow theories trying to link the wind down of WMILT (via claims reductions, etc.), the schizophrenic volume and trading patterns, the delay after delay regarding everything from claims reductions, court cases, etc. that I just pretty much stopped posting.
Nowadays I just post important updates (shareholder meetings, conference calls, unless someone else does it (latest one is the conference call stickied) and delete a crap ton of off topic/personal attack posts. If you can only see the amount of crap that gets posted, you'd wonder how any mod would want to do this without getting paid.
Oh and the occasional grounding statement such as the volume/trading stuff. You can browse my post history regarding those such activities. I chuckle a little then sigh every time I see the "omg, significant volume with no news, something is going to happen, we're going to be rich."
It means absolutely nothing.
Slight addition to post 495058 -
Gallagher and Fairfield has been here since May 2015. One year after WMIH received initial funding from KKR through Series A (Jan 2014).
They joined half a year after WMIH received funding from KKR Series B (Jan 2015 - which resulted in $600 mil roughly of restricted cash - the majority of the capital).
True but that probability number needs to be revised to honestly reflect the chances. It was estimated at 50% earlier this year.
If an estimated 90% probability resulted in failure
Then the probability for the August 10Q would've been closer to 25% success (estimated).
With the rather lackluster 10Q out, I wonder what the price will be tomorrow.
Standing by for the usual deja vu/broken record stuff.
If the board estimated the failed acquisition was at 90% success rate and still failed. 50% estimation at this point seems more like 0%. I think they need to switch from "may" to absolutely review.