Sorry KThomp, I must have missed this bucket of replies. I'm sure you've been anxiously waiting for my responses. :)
It's a slow post day, so good time to catch up.
"I think it's a 25% chance of none converted and all written down.
50% that all of it is converted.
25% that only the $193B worth of balance sheet SPS is written down and the rest is converted."
Thanks for sharing. Personally, I think this is a bit too simplistic. You are inferring the impact to common, but what happens to JPS in each scenario?
"whether or not this is possible isn't really the point. What matters is the probability estimate of whether or not it will happen. [...] Possibilities don't matter here, probabilities do."
For me... Planning for success means planning for both - probabilities and possibilities. In other words, based on your scenarios above, I can make money in any of them depending on what happens with the JPS in conjunction with the common. Having the right mix of JPS and Common means the only way I lose is if common goes to zero and JPS takes a haircut greater than 78.5%. I'm prepared for this possibility - I could lose my entire position. However, I am giving this a less than 20% probability of happening. Any other resolution puts me in the green - so in my mind, I'm 80% sure I'm in the money. It's just a matter of how green, and if it was worth the opportunity cost. If common goes to $2 and JPS gets 50%, I get a 3x return - far short of my goal for the amount of time vested. But it doesn't take much upward action to put me in the serious green. If your first scenario of all write-down happens, I'll be swimming in it.
