Triad Guaranty Inc (TGIC)

[irishintelligence]

I am going to take a shot at valuation. I hope we can start a meaningful discussion. Thank you all.




1) 16,270,000 common shares

2) Diluted by Triad DIP Investors, LLC (10% or 1,627,000 shares)

3) Diluted by Wolfgang Holdings, LLC aka Chris Manderson (900,000 shares)


This leaves us with 18,797,000 common shares.


4) We round up and say that with the DIP financing and other bills we start with -$1,000,000 (negative one million) of shareholders cash.

5) We round down and say that we start with $1,000,000,000 (one billion) of NOLs which have a value over 15 years of ($1,000,000,000*21%)/15= $14,000,000/yr.

6) To utilize the NOLs let's assume we can generate an ROI of 7% per year net net.

7) We would need $200,000,000 in capital to earn $14,000,000/yr. (note that Wolfgang Holdings, LLC aka Chris Manderson receives 5% of the savings or $700,000 per year in this scenario)

8) We assume the $200,000,000 is generated with an equity sale and not debt the commons are worth maybe $0.50/share?

9) We issue 400,000,000 shares at $0.50/share and we round up to 420,000,000 sharing $14,000,000 in earnings.

10) $14,000,000 / 400,000,000 shares = $0.033 EPS

11) If the forward P/E for a finance company is 20X

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html

we have a company which should trade at:

$0.67/share


Not bad upside from here.