Freeport-McMoRan (FCX)

[eddy2]

We are going to wrap it up today. So with that we will lay it out the best that we can.

We talked about enterprise value as the value of the outstanding shares minus any debt associated with that value.

The treasury stock is debt as we discussed. The share holder deficit is the portion of the debt that belongs to the shareholders that hold registered shares. This is not all the equity held in the company but only a portion that is traded. The other equity is under a different class called convertible debt.

So if you take the ratio of the shareholders deficit relative to the treasury be it twenty percent as an example and apply that ratio to the enterprise value minus its tax debt and that my friends is what the market cap figure should represent.

Now if you take your equity position at the present time and establish a ratio and apply that ratio to the enterprise value that is publicly traded then that’s your down or upside relative to the book value of the stock.

Somewill argue that there should be a premium based on future expectations. Well I call that speculation and it’s usually priced into the stock by the holding back of the tax’s.

Now ask your selfs if this issue is overpriced or underpriced and then how much your willing to pay.