Dividends In The Ring Vs. Share Buybacks: Mathematically Solved [View article]
I think you need to take percentage of distributable cash flow into account when you speak of how to compare value of dividends vs stock repurchases. You are assuming 100% distribution of earnings goes to either one, this is rarely the case unless you are speaking of mlps, bdcs, reits, etc. (in which case the argument is moot anyway). To really model this correctly you need to assume that some percentage of income will stay with the company as retained earnings. Say a company paid out 50% of its earnings through stock repurchase, when you eventually reach your 99/100 scenario, your 1 stock is significantly more valuable than it was when you started.
Why To Vote 'Yes' On Icahn's Proposals For Transocean [View article]
Just a few facts: As of 12/31/12 RIG had $5,134 million in cash and short term investments, $1,367 million in debt due this year, and $12,459 in long term debt.
There are approximately 360 million shares outstanding, a $2.24 dividend per share equals $806.4 million and a $4 dividend per share equals $1,440 million a difference of $633.6 million.
Considering the capital expenditures of new rigs and the debt load, I think the $4/share dividend is excessive.
Thesis For Owning Corning: Finding Value In An Up Market [View article]
Very nicely done. GLW seems to be a conservative, yet shareholder friendly company that likely has significantly more upside than down over the long term.
I would also add that with about 1/3 of it's current share price in cash and short term investments, GLW could be a target for investment by an LBO firm or might start attracting the attention of one of these large tech companies with excess cash on the balance sheet.
Bank Of America Could Raise Dividends, Though Revenue Growth Needed [View article]
With shares still trading below tangible book value, I would rather see them buy back stock than raise the dividend a few pennies. I expect to see more redemption of trust preferreds as well, since they are no longer considered capital.
Analyzing Transocean's Debt And Risk [View article]
Q3 2012 Total Debt = 14,117 Total Liabilities = 20,040 Total Equity = 15,272 Tangible Equity = 12,285 In 2011 RIG wrote down about 5 billion in goodwill. That should be mentioned as it affects the calculations using earnings, and equity. It is also a non-cash charge so although it had a huge affect on earnings, cash flow was not impacted by that event. I think that needs to be factored into your analysis.
Will Dividend Cuts Drive Annaly's Share Price Even Lower? [View article]
The refi may not make sense going from 4% to 3%, but 6.5% or 7% to 3% is a much larger difference and may make the closing costs tolerable, especially if they can be financed into the new loan. In my area, it is generally cheaper to own and finance on a 30 year note than it is to rent, assuming of course you can get financed.
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
A good point, but when I was looking at the cash flows I considered the realized loss of $222 million on the interest rate swaps to be a cost of insurance for the portfolio, there was a similar +$200 million charge in the first quarter and I expect a similar charge in the third quarter. I consider this a cost of doing business for NLY for the next several quarters to protect from rising rates.
If you are comfortable with the dividend being supported by capital gains sales of MBS, that is fine. Just know that if/when interest rates rise, the prices of the MBS will come down, and that may not be offset by the swaps, especially if we see a steepening of the yield curve.
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
Not significantly, my theory was to grab the next dividend and gain a little more income through the options and sell the shares if they stay above 17.
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
Actual rise or fall in interest rates has been mitigated somewhat via interest rate swaps, but ONLY if the entire yield curve all moves by the same amount. Of greater concern is what happens in the case of a steeping(my bet) or flattening yield curve and how does that affect the earnings potential of the company.
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
"That brings me back to Annaly Capital Management. Given its sheer size and market cap of above $16 billion (roughly its book value), I believe Annaly Capital Management would be the mortgage REIT that is the most susceptible to high or rising prepayment rates and hence, has the most risk of seeing its dividend yield start to shrink."
Any blanket statement about rising CPR does not take into account the mix of the MBS portfolio. For example an MBS consisting of higher yielding mortgages will have a higher CPR than a MBS with lower yielding mortgages.
Assuming that NLY is the most susceptible due to their market cap is ridiculous and shows your lack of research on this topic.
Of true concern, however, is the funding of a portion of the dividend (about 10%) through realized gains on the MBS portfolio.
Evaluating the probable earnings and cash flow for the current quarter, I believe a dividend cut may be looming next quarter; likely earnings and dividend will be about $0.50.
That figure does NOT include gains from the sale of MBS, which may once again inflate the earnings and carry the dividend. I am currently long NLY, but have sold $17 Covered Calls expiring in October for half of my position and am considering purchasing some September puts for downside protection and would advise other long holders of NLY to be cautious in this interest rate environment.
Bakken Update: Northern Oil & Gas Provides Bullish Reasons To Own Bakken Stocks [View article]
Thanks for the article. Do you have a feel for the hedging activities and why the realized price per barrel is significantly lower than the swaps and costless collars, especially when about 68% of their production was hedged at around $89?
Altria: This Best-Of-Breed U.S. Tobacco Maker Sports A 4.6% Dividend Yield [View article]
Know what you own, equity in MO as of 6-30-12 was $4,273 million, Net Good Will was $5,174 million. Intangibles are $12,088 million.
Take out the Good Will and you have negative equity. The current liabilities also exceed the current assets by $938 million, which does include the dividend payable of $836 million.
You are essentially paying for cash flow, all the per share data looks good because MO has been borrowing money to repurchase shares to give the appearance of growth.
Annaly Quarterly Results: Things You May Have Missed [View article]
Thanks for that comment Patrick, to me the question between AGNC and NLY is the leverage and risk/reward associated with that leverage. AGNC has higher leverage and in the current environment, that leverage has led to better performance. If things should change and we get a rise in short term rates NLY is better positioned to weather that storm with lower leverage. So it all comes down to your risk/reward tolerance.
Dividends In The Ring Vs. Share Buybacks: Mathematically Solved [View article]
Why To Vote 'Yes' On Icahn's Proposals For Transocean [View article]
There are approximately 360 million shares outstanding, a $2.24 dividend per share equals $806.4 million and a $4 dividend per share equals $1,440 million a difference of $633.6 million.
Considering the capital expenditures of new rigs and the debt load, I think the $4/share dividend is excessive.
Thesis For Owning Corning: Finding Value In An Up Market [View article]
I would also add that with about 1/3 of it's current share price in cash and short term investments, GLW could be a target for investment by an LBO firm or might start attracting the attention of one of these large tech companies with excess cash on the balance sheet.
Bank Of America Could Raise Dividends, Though Revenue Growth Needed [View article]
Analyzing Transocean's Debt And Risk [View article]
Total Debt = 14,117
Total Liabilities = 20,040
Total Equity = 15,272
Tangible Equity = 12,285
In 2011 RIG wrote down about 5 billion in goodwill. That should be mentioned as it affects the calculations using earnings, and equity. It is also a non-cash charge so although it had a huge affect on earnings, cash flow was not impacted by that event. I think that needs to be factored into your analysis.
Otherwise, nice article.
Will Dividend Cuts Drive Annaly's Share Price Even Lower? [View article]
Will Dividend Cuts Drive Annaly's Share Price Even Lower? [View article]
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
If you are comfortable with the dividend being supported by capital gains sales of MBS, that is fine. Just know that if/when interest rates rise, the prices of the MBS will come down, and that may not be offset by the swaps, especially if we see a steepening of the yield curve.
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
Always trying to lower that cost basis.
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
Annaly: Is That Huge 13% Yield A Safe Bet? [View article]
Any blanket statement about rising CPR does not take into account the mix of the MBS portfolio. For example an MBS consisting of higher yielding mortgages will have a higher CPR than a MBS with lower yielding mortgages.
Assuming that NLY is the most susceptible due to their market cap is ridiculous and shows your lack of research on this topic.
Of true concern, however, is the funding of a portion of the dividend (about 10%) through realized gains on the MBS portfolio.
Evaluating the probable earnings and cash flow for the current quarter, I believe a dividend cut may be looming next quarter; likely earnings and dividend will be about $0.50.
That figure does NOT include gains from the sale of MBS, which may once again inflate the earnings and carry the dividend. I am currently long NLY, but have sold $17 Covered Calls expiring in October for half of my position and am considering purchasing some September puts for downside protection and would advise other long holders of NLY to be cautious in this interest rate environment.
Bakken Update: Northern Oil & Gas Provides Bullish Reasons To Own Bakken Stocks [View article]
Bakken Update: Northern Oil & Gas Provides Bullish Reasons To Own Bakken Stocks [View article]
Altria: This Best-Of-Breed U.S. Tobacco Maker Sports A 4.6% Dividend Yield [View article]
Take out the Good Will and you have negative equity. The current liabilities also exceed the current assets by $938 million, which does include the dividend payable of $836 million.
You are essentially paying for cash flow, all the per share data looks good because MO has been borrowing money to repurchase shares to give the appearance of growth.
Annaly Quarterly Results: Things You May Have Missed [View article]