Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Bingo! You hit the nail on the head!
Yes, thank you, that is correct.
I regularly look at the balance sheet section as well as the income statement. As there currently is no business going on, the income statement has minimal interest income, and investment gains. Yes, there are some receivables and intercompany notes, these don't really have much baring on the overall value right now. Currently the item of interest is the cash on hand, and the amount they are paying to wage their legal battle. Or the footnotes about opening a new account at Wells Fargo!
If you are going to point out the other items on the balance sheet, maybe you should make mention to the Owner's Equity section so you like to disregard, with all your talk of cancelled commons. (NOT GOING TO HAPPEN!!)
Preferred Stock: 3,392,341,954
Common Stock: 12,988,753,556
Other Comp Income: (754,344,362)
Retained Earnings (pre-petition) (16,741,804,781)
Retained Earnings (post-petition) (244,084,871)
Total Shareholders Equity (1,359,138,504)
Shareholders equity is negative do to losses caused from seizure of assets without fair compensation. Ever wonder where some get the $8 per share value. How about the book value of the commons at 7.64 a share! That's a good start to understanding one possible valuation.
My real point is, right now we don't know what assets WMI is holding, and what assets will be awarded. Cash is what we do know, and receiving the $4B, is a huge start. Then they we can pursue the other damages.
WAMU will receive a tremendous victory, and it will be sooner rather than later. I'm hoping for it before the end of the year, but first of the year is not that far away, and there are some valid reasons to believe that is another realistic time from.
Hold the faith all!
The MOR shows only the cash and bank accounts of WMI and WMI Investments. Right now they are waging a legal battle, and of course the cash balances are being spent down. They still hold plenty of cash for the intermediate term, and are lining up assets to emerge from bankruptcy.
Part of the statement in the MOR, is that it shouldn't be relied on for investment purposes. It is not a complete financial statement, only what is required of bankruptcy law while they are in chapter 11 filing.
Have patience, the whole picture will come clear in the near future. I have hope by the end of the year, or early next year.
No, I do not believe that WMI will sell to JPM via a share swap. WMI is lining up to gather assets and cash. I believe they will emerge from Bankruptcy with much cash and assets as a viable entity, with their common shares in tact. They want damages and fair market value for what was taken. They want the unlawfully seized items returned, i.e. assets of the holding company.
Justice will prevail, either through a long drawn out court battle, or settlement with JPM and/or FDIC. All of us longs, believe and/or hope it will be the settlement for many reasons, see prior posts for this discussion. Either way, when they have assets, there will still be plenty of opportunity to buy distressed assets, i.e. other banks in trouble.
One of the reasons I believe this to be the case is TPG, has already bought a distressed bank (and is not in the banking business). Also, TPG is an investment organization, and has the most voting interest in WMI. I believe they will contribute the bank to WMI for an even larger share, and then leverage the holdings for future additional substantial gains. Also of note, WMI changed their legal name (added a comma) and have lined up a new trading symbol wm, for post settlement purposes.
Timing is a huge unknown, but I strongly believe this is how it will play out.
We have a great legal team working for us! Pay day is coming!
GO WAMU!!!!!!
Love the pic! Every time I see it, I first read How JPM helped to bankrupt an entire Country. (oops, County not Country) - Just the way my mind works.
Let's take them down.
Thanks!
Can you post the text from the article for those of us who don't have a subscription?
This is an easy game to get caught in if you don't understand the big picture and how the market and specifically the Market Makers work.
I'm with you holding for payday, and along the way, I also try to add perspective to help out other investors.
GLTY.
Actually, some good DD will only turn it into a pay day for him. He's collecting cheap shares right now, just patiently waiting for the good news, or information to be produced that drive the share price back up a couple of notches. Then he'll sell them back to whomever is interested, and then drive the price back down and repeat!
Patience is the name of our game. Both for short term gains and long term big pay day results. Both are available!
Hang tight.
Fish,
Great post. I've always had a lot of confidence as investor because TPG owns a huge block of stock, and with that a lot of power in this play. That hasn't changed through out all of this.
I've never been quite able to put my finger on exactly why TPG made this move out of preferreds into commons. I certainly understand the basic premise to facilitate a sale of WMB, but that only makes minimal sense on the surface. I've thought it might have had something to do with the Texas case, and I think it is a factor, but TPG could have still been involved even if they owned preferreds in my opinion.
Looking at the big picture of what happens after they removed the big liability of WMB and the potential losses from mortages and all they could have had a huge pile of cash to invest via WMBfsb and WMI. TPG afterall is in the investment business.
This is also why I believe at the end, WMI common stock will still be around and is looking to get back as much cash and other assets, including WMBfsb as possible. There will be a huge return and future gains possible once they are back in the money.
I believe the next couple of weeks could be very interest! Keep up the good work Fish!
I also liked the comments about why all the accounting and law firms. This is a pretty impressive team, and they are working well past getting the $4B back. There are many other assets and legal moves yet to be made, or in the process of being made and coming to fruition very soon. I hope!
Go WAMU and Team!
I agree, not listed on A/L, but is still good to have the pending claim removed!
The UQ's have been driven down hard for the past week. They are way over sold. While there is moderately good volume, it's not like there is way more volume today than the past week. This is more like the MM have decided its time to bring it back up. Maybe they have gathered as many shares as they can at the current level and are looking for more on the way up.
While I'm certainly hopeful of a settlement right away, and even a ruling on the $4B maybe even this week yet, I think in general this is just going to take time. We don't know what and why the judge hasn't ruled yet. I tend to believe the theory that taking time to make a ruling is a positive sign, and if she was going to deny it she would likely have already ruled.
While the PQ's have come down much slower over the last week, they haven't had nearly the rise in volume while slowly easing the price. I feel the UQ's are still highly undervalued relative to current PQ pricing. This is just my analysis of the historical correlation between the two stock classes.
We all like our portfollo's to look great with a rising share price, at lest I know I do. And we all want to see this settled in our favor sooner rather than later. My word for the day is patience, I feel we have a ways to go yet.
Go WAMU!
Vegas Baby!
I'm rooting for sooner rather than later!
Fish,
Great commentary. While I'm with you and eagerly looking forward to a ruling from the judge, we are definately looking good overall in our pursuit. We also don't need a rushed ruling that will later be overturn.
As a side note, it was great meeting you this last weekend with DrR & Biz.
I think celebration isn't too far away. I personally think the overall settlement is likely to be first of the year.
Go WAMU!!!
The IRA is a beautiful place to hold a core position of these babies. I have most of my holdings divided between my Roth and traditional IRA's!
Great pick-up.
I use Scottrade, which some are not a fan of, but I also visit my local office, and they know who I am.
Last time I was trying to buy block of stock I noticed that my bid wasn't showing up on the bid block so I called my broker to get the scoop. His first statement was there probably weren't really any shares at the listed price. But then he said he would call and see if he could find a broker with some shares for sale. It took a few minutes but came back and said he found some with a couple hundred, order went through a minute or two later, and about 10 minutes later the whole order was filled.
I'm a fan of using the broker when I need to.
I've found it most helpful when I have an order in, and it's not registering on L2 to call my broker, they have really helped me out in purchasing these particular shares of stock, especially since it is so thinly traded.
I've twice been able to buy some pretty big blocks of shares, 500+ at pretty good prices.
WMI party in Seattle, I can't think of anything better. I look forward to meeting a few more of you awesome folks!
First, I'm no expert and I didn't read the whole thing. The main thing is it was previously sealed, and details the motion regarding the inclusion of assets in the Sept 2008 sale to Barclays Capital. There was some poor dealings with out-going employees of Lehman's, looking to pad their pocket on their move to Barclays and they did some altering of the sale agreement after court approval, and told the board and the court is was an immaterial change with a net wash with assets and liabilities. Thus it was approved without anyone looking at it.
Essentially Lehmans is saying they changed the deal by ~$8B and wants it re-negotiated for fair sale treatment.
So, on the face, this had already been filed with the court, it is just now being made public. I think there is somethings in the document that certainly show unfavorably to Barclays and that was why it was previously sealed. It doesn't change anything, just public now.
Click on docket 5514, it's a much shorter read, only 97 pages.
Shareholders are always the owners. The only grain of truth in your statement JW is that right now (on the books anyway) L>A and yes, the 4B is already listed on the books. So, right now they are worth ~.20 on the market.
However, Shareholders are still the owners, and TPG still has the largest vote and a controlling vote. The board and officers are calling the shots, via Weil and Co.
All of us who hold shares are also owners, albiet minority shareholders, who don't hold any real or direct power. In the accounting world, we do minority discounts when valuing a privately held company, since the controling owners get to make the decisions. On publically traded stocks, the market place gets to value the price based on supply and demand. However, each shareholder still gets a vote.
I'm not an expert in bankrupt stock and companies, but it is my understanding the court is making the decisions regarding officers and such, but it still being done with input from those in control, aka TPG. TPG is not only influential in the larger investment community, but is working hand-in-hand with the decision makers at WMI. I believe they previously had a representative on the board, who resigned prior to TPG's involvment in the Texas law suite, because that move actually gives them more power, and you know that they still have the ears of those making decisions for WMI.
Of course it is always a possibility that as part of the re-org the shares can get cancelled, but unless and until this happens, we are owners, who will receive the benefit (because we took the risk) of any future income (read settlement or award) that WMI earns.
I'm Long and Strong - and an owner of WAMUQ (also WAMPQ)
Judgement day is approaching.
Go WAMU!!!
No, but if I thought it was a serious bid, I'd try and buy some though. Since I'm not trying, I hope someone sells to you at the bid! :)
I guess you can tell which one I haven't bothered to buy! :)
WAMPQ and WAMKQ are both preferred, and both will be paid before WAMUQ. PQ and KQ are equal in preference, so once WAMHQ is paid, the 500K, then the preferreds get paid.
The 1.9B is in a Trust account with the FDIC, to be released once everything is finalized back to WMI is my understanding.
I don't think JPM or Chase plans to fundamentally change their business model or culture.
I was reading in Puget Sound Business Journal an article talking about JPM setting up a center to go after business accounts in Seattle, that this was a core reason for them to have acquired WAMU bank, to give them a presence, so they could go after this market. They felt this market was under-served in this sector compared to other signficant markets they already have a presense in.
I'd include a link, but I only have complete content access to the paper copy of the newspaper.
Jest,
Thanks for the response. You got me, I'm guilty of deducing, one of my personal short comings, jumping to conclusions. All I really know is what the prospectus tells us, they are non-cumulative preferred shares.
In this case, I'm investing for the return of capital and not banking on dividends. I would love to hold for the long-term, if WAMU re-emerges from BK as this would be a great dividend to hold. One of the reasons I've invested more in the PQ's than in the KQ's.
Good Luck to You Jestiron! Go Wamu!
Thanks for the information. It sounds like back dividends being repaid is affected by the bankruptcy rules, and unrelated to the non-cumulative dividend.
I know that typically when a company fails to pay a dividend for any reason and they are non-cumulative there will contractually be no restitution. That is part of the reason this has a higher dividend.
Thanks for the insight. I'm down with receiving back dividends!
Read the prospectus, preferreds can get converted to commons, however I believe that can't happen until 2012.
There is only speculation and desire that lead people to think there will be back dividends paid. While you or I may like JPM to pay back dividends (because we think they should), it's not realistically going to happen. Weil is working to get the company back into an operating entity, and that will in the long-term return the value to the preferred shares where we can start receiving dividends going forward again.
At that time, pricing of the preferreds will be like pricing of bonds. The great dividend rate of 7.75% will make them very attractive. Average bond rates are around 4-5% give or take, so these will sell on the market at a premium, once WMI is recapitalized and making scheduled dividend payments.
I'm with you in this regard. I've been hoping that WMI receives cash and get's back to business. Just today in the Seattle Times it talked about Frontier a local troubled bank that lost its previous deal, and is looking for another investor to sell to.
Let's hope this 4B comes our way, and the rest of the settlement soon to follow. I think even a reasonable settlement amount could make us even more in the long term!
GO WAMU
This seems a pretty bold statement.
However, I've had similar thoughts after hearing about the ruling scheduled for October 23 on the turnover of the 4B. The re-org proposal is due on Oct 21. They can easily say, we need another delay in releasing our plan until after the ruling on the 4B. Just my opinion.
You are talking about two different things.
One - is what some are calling the next big thing, securitization of life insurance policies. Someone needs cash from their policy and wants more than the cash surrender value, and sell their policy to an investor which holds it (and makes the premium payments) until the insured dies, then collects the life insurance proceeds. This is very new, and hasn't been securitized as of yet, so no WAMU wasn't involved in this. I have mixed feelings about this, as banks are searching for something after derivites failed them, to make a big buck. I can tell you life insurance companies don't like the prospect, it will cause them to pay out on more policies, and either cut into their profits or raise premiums for all, but I digress.
Two - mortgage companies have required or offered life insurance to barrowers as a way to protect their loans. These have been marketed as a way to protect the lender and are usually high cost term life contracts that pay off the loan in the event barrower dies. This obviously protects the banks loan, and also protects the banks investment at the barrows cost. These used to be pushed more than they have been in recent years. I'm sure WAMU had some, but wouldn't expect that to have much impact on their portfolio of loans, now in JPM hands.
Jest,
I think this is not an unlikely scenario during settlement, however, I don't really see any portion of the major players that are looking after the preferreds. Sr. Debt has their own committee involved in settlement discussions and TPG and company executives are of course interested in seeing the commons re-emerge, but there isn't a big player that I'm aware of that has the interests of the preferred holders in mind. Also, I've seen a lot of posters practically assuming they would get back dividends and since they are non-cumulative, that is a long shot at best.
With that said, I hope you are right and they do pay back dividends. I like you hold PQ's and UQ's. I'm heavier on the U's since I think they have the best overall value.
Best to you as well Jestiron!
Go WAMU!
I just put in an order to sell a couple hundred at $10 tomorrow. Figured you guys were buyin'! I'm happy to help the cause. That will still leave me with a nice pile, and maybe push that base higher!
Happy to help.
Go WAMU! I'll be happy with any real settlement!
That is the rule on "cumulative" preferred shares. These are both non-cumulative.
Yes, this has been discussed. The important point, both P's and K's are non-cumulative. Which means the company won't have to pay back dividends. Now, there may be some accrued but not paid, so at most I'd think one missed payment may be paid. Unless someone is looking out for preferred's on settlement day and they throw in a bunch of back dividends, but not likely. I'm holding preferreds, but it is because they are safer, and have a great return just in getting to face value. I have a larger position in commons as that is where the larger upside exists!
Optimism is good!