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Ray Merola

 
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  • So What Are My Vodafone Shares Worth? [View article]
    Debutant

    You have to buy your own cashmere sweater. VOD management can't figure what fits each shareholder; it was rumored some gained weight after the holidays. ADR holders get one sweater per ADR. UK shareholders only get one-tenth of a sweater per share.

    All cashmere. No polyester. However, the collar and one sleeve go to the tax man.
    Feb 10, 2014. 09:10 AM | 4 Likes Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    jayridescarbon
    The windfall is in the eyes of the beholder. For years, the ADR price never cracked $30; vacillating between $25 and $30. Without this Verizon Wireless deal, one could argue they shares had no reason to move beyond the $30 marker now, either. The ex-VZW part of the company certainly hasn't outperformed over the past year.
    Therefore, long-term ADR owners have seen somewhere around $10, or 33% additional shareholder value unlocked since the announcement of the transaction. That's not bad.
    Feb 10, 2014. 08:44 AM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    L1329-8
    While I cannot provide any tax counsel, I generally agree that long-term investors will pay more tax when holding the VOD shares plus cash and VZ stock distribution versus selling out unless his/her gain-on-sale approaches 50%. Assuming a 15% preferred tax on all VOD distributions, the taxable amount is about $17 per ADR. Unless one's long-term cost basis is less than around $19, selling ahead of the close will generate a capital gain of less than $17, thereby potentially "saving" some upfront taxation.
    Note: There's also a tax-free proviso regarding return-of-capital beyond VOD accumulated earnings and profits, but it's not clear to me if that kicks in.
    Regarding the forward yield, it's of course contingent upon the ADR share price coming out of the transaction. However, premising the same ADR price on either side of the transaction, one could expect the "new" cash dividend payout (and yield) to be about 8% higher on the post-close ADRs. I see that coming to about $1.78. However, I suspect currency conversion could adjust that one way or the other.
    Hope this helps.
    Feb 10, 2014. 08:36 AM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    Rebel

    This is a real consideration. VZ shares have been under pressure since November. It's hard to determine how much additional pressure will be placed upon the stock post-transaction. While it's likely there will be a flurry of selling, the 4.5% yield is pretty good, and the shares have dropped about 8% in a few months.

    Feb 9, 2014. 10:59 PM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    kolpin

    It appears that voting has ended. If you are a U.S. shareholder, the proxy voting was to ratify the disbursement agreement. There's no election to make regarding individual ADR shares.

    For U.K. citizens, there was an election to make: a Capital or Income option.
    Feb 9, 2014. 10:55 PM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    hi mikejnovo

    Your thought process is quite plausible. The U.S. telecom market is very competitive. I agree this may limit growth for any of the Telcos, and T falls into the camp. They may offset some of wireline loss with U-Verse, and data may sop up some flat telecom pricing and churn. But it's a slow-growth deal. My interest in AT&T is the bond-like dividend and the company being a Dividend Aristocrat: now 31 consecutive years of dividend increases.

    One reason I am holding post-divestiture VOD shares is due to the EU situation. The region won't stay down forever, and Vodafone is in a spot to capitalize on the eventual turnaround. The new company will be well-capitalized, and offer a sound dividend, too.
    Feb 9, 2014. 09:11 PM | 2 Likes Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    Mike

    You are absolutely right. I just amended my comment to kolpin. Apologies for missing a couple decimal points and the error.

    BTW, holding the VZ shares to see where they shake out is a reasonable approach. There are several choices for VOD shareholders to think through prior to Feb 21.
    Feb 9, 2014. 08:53 PM | Likes Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    kolpin

    Amend my previous note:

    On 100 VOD ADRs, you'd get ~$490, not $49 as stated above. Sorry for the mis-type.
    Feb 9, 2014. 08:51 PM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    Hi kolpin
    Here's my rough math: if you have 100 ADR shares of VOD today; let's assume they are worth $36 on Feb 21. If you hold them through that settlement date, this is approximately what you should end up with:
    ~50 ADR shares of VOD at ~$36 each; the new ADRs should yield about 8% more than the old ADRs
    ~$49 cash
    ~25 shares of VZ stock at ~$48 each
    Of course, there are some assumptions stewed into this regarding the pre-disbursement ADR price, and the Verizon share price. Mr. Market could also play havoc with the new VOD ADR price and VZ share prices immediately before or after distribution.
    But it should be in the ballpark.
    If you have been an existing VOD shareholder, the company sent out a detailed document outlining the deal mechanics, disbursement, schedule, taxation concepts, and voting instructions dated December 10, 2013. Your broker or agent should have sent it to you.
    Feb 9, 2014. 08:20 PM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    Thanks for the kind words, LennyJ

    There are many ways to use options and you've outlined one that has worked for you and VOD stock. Likewise, I accumulated my initial position (some time ago) using puts, too.
    Feb 9, 2014. 04:34 PM | Likes Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    EDGI

    Indeed. As a longer-term VOD investor, I recall the ADR price didn't get above $30 for years. Unlocking value via the VZW divestiture has created an additional $10 per ADR.

    I'm quite happy to have some of the cash from the deal passed along. While I may buy some other Telco shares with it, that cashmere sweater might be a good idea, too.
    Feb 9, 2014. 02:50 PM | 1 Like Like |Link to Comment
  • Caterpillar Is Not Worth Your Money Despite An Outstanding Performance [View article]
    My "going in" view is that all on-air opinions are skewed or manufactured. I choose to listen for facts, if I choose to listen at all.
    Chanos has talked his book for a long time, and his fund's recent performance record requires it. It's terrible. At some point, he may be right.....but he's been dead wrong since the middle of December.
    While I agree that CAT stock appears it's getting ahead of itself, that's based upon valuation metrics and fundamentals; not what guys lucky enough to get a forum on national TV are saying. Indeed, I also find it nearly impossible to guess the short-term price movements for most any stock.

    If Chanos was broadcasting he's shorting CAT today, I could reconcile that with some data points. Maybe. I believe he's been short for several months. That also means he's paying the dividend to someone else, too.
    Feb 9, 2014. 02:07 PM | Likes Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    vraykin
    I'm looking at it this way: if one has 100 ADRs @ $36 that paid a dividend of $1.60, that's a 4.4% yield. After the Share Consolidation, let's say that person now has 50 ADRs @ $36. The new, annual dividend should be ~$1.73 per share. This is the old $1.60 dividend plus an 8% uplift.
    Assuming the same $36 ADR price, the new yield would be 4.8%. Fair enough.
    Now, the amount of cash received versus the "old" 100 VOD ADRs will be "less than" what was received before since he/she owns half the ADRs. However, the owner must remember that he/she had received cash and VZ shares valued about approximately $17 per ADR. That disbursement must be put to work. VZ shares pay a comparable dividend to VOD, so that money will work right away if the owner chooses to keep the shares. The cash requires separate consideration: reinvest in something else, plow it back into VOD ADRs, or go out and buy a cashmere sweater.
    Feb 9, 2014. 01:53 PM | 1 Like Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    david

    When current VOD shareholders receive cash and VZ shares, that's real, tangible cash and stock. The Verizon shares may be sold or retained. If sold, that's cash money.

    The "Share Consolidation" is intended to keep the per share (or per ADR) stock price approximately the same coming out of the transaction as it is going into it. There's no loss of value.

    For example, if one owned 400 ADRs of VOD prior to February 21 and the price is $36, then post-close he/she may have roughly 400 shares @ $18. However, what Vodafone is going to do is re-jigger the number of shares: so that instead of 400 at $18, the shareholder would have 200 @ $36.

    No loss of value, just less shares at a higher price. Separately, the cash and VZ stock disbursed as part of the deal is unaffected. That value will be stripped out of the shares in consideration for the VZW sale. $84 billion out to shareholders, and about $46 remain within Vodafone.
    Feb 9, 2014. 01:41 PM | 4 Likes Like |Link to Comment
  • So What Are My Vodafone Shares Worth? [View article]
    rw1270

    Thanks, I trust my article may contribute a bit to assisting others make individual choices.

    The key takeaway from your comments is that you have keen awareness of what's going on and are trying to handicap it. Good luck with all your investments.
    Feb 9, 2014. 01:32 PM | 1 Like Like |Link to Comment
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