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William Greenfield

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  • Chevron: New Gulf Of Mexico Production A Significant Growth Catalyst [View article]

    How do you think the fall in crude will affect them? Won't they slow down production due to the lower prices?

    What is their tangible asset value given the lower prices for oil? How does this relate to their price?

    (I'm long CVX, but not nearly as qualified as you when it comes to these oil companies, so I defer to your expertise.)
    Nov 11, 2014. 03:28 PM | Likes Like |Link to Comment
  • Why Freeport-McMoRan Is A Great Buying Opportunity [View article]
    Thank you for writing this article. I only had time to skim through it but I will definitely come back to read more thoroughly after work today.

    However, I'm bothered that you used EBITDA as a metric for valuing FCX. As a mining company they have big capital expenses that must be taken into account. They must build rigs to get the oil out of the ground, they must constantly expand the mines and infrastructure within these mines if they wish to keep extracting copper and gold from their mines. EBITDA totally ignores all of this.

    What are the multiples if you had used free cash flow instead?
    Nov 4, 2014. 12:23 PM | 1 Like Like |Link to Comment
  • New York Community Bancorp: Advantageous Geography But Not Cheap [View article]

    I'm currently looking into NYCB and found your article helpful. However, there is one point that I was hoping you can clarify that you didn't mention in the article.

    When NYCB goes past $50 billion in assets they will be subject to greater regulation. What is NYCB doing to mitigate the effects of this? Will this adversely affect their dividend policy?

    It would seem that the fear of greater regulation is what is causing the stock to fall (and it's div. yield to rise). The real question here is two-fold.

    1. Is NYCB currently selling at an attractive price?

    2. Is NYCB selling at a price that reflects that investors fear the worst? If that is true than any good news (i.e. no change in dividend moving forward, Fed changes threshold for greater regs) will mean a big rise for NYCB.

    You clearly answered question 1. What are your thoughts on question 2?
    Oct 8, 2014. 09:28 AM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    That is true, there are preferreds that have old call dates that are still outstanding. However, as I mentioned in the article PSA seems to have a history of calling within short time of call date.

    Of course, that may change if they feel rates have risen to the point that it will cost less to leave PSA-O outstanding. This is precisely what investors must be betting on. However, like I point out in the article, investors don't seem to be getting paid much more dividend to take on this risk. PSA-P has a current yield of 6.2% (and a positive YTC), while PSA-O is yielding 6.6% but has the risk of a negative YTC. In my opinion investors aren't getting enough current yield to warrant that risk of loss.
    Sep 8, 2014. 11:07 PM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    You are right. In most cases YTC isn't something that an investor may place much significance in.

    However, in this case the price of PSA-O is at the point where IF PSA-O is called then the investor will lose money. The point of this article is to ask - Why are investors taking this risk? And, is the yield (straight dividend yield) so much greater than the PSA-P that they should take this risk?

    These are question that an investor should ask himself whenever buying preferreds. Especially one that has a negative yield-to-call.
    Sep 6, 2014. 09:12 PM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    Thanks for reading and for double checking my math.

    I think you are skipping one very crucial step in calculating the yield-to-call. When calculating yields one needs to annualize the capital gains/losses. This helps keep all security yield comparable. Since there is just over 7 months left until April the capital loss of $1.34 would be annualized to about $2.20.

    There is more math then that. There are 2 yields that you must calculate then find the average. If you would like please let me know I will message you the math or an excel spreadsheet.

    I would hate to have an article up for the world to see and then find out my math is wrong. So thank you for double checking my work.
    Sep 5, 2014. 04:59 PM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]
    Hey rprsw,

    Firstly, there is an ancient Hebrew saying that roughly translates to "the shy person will never learn", so don't be sorry for asking your question.

    The best way to learn more about this is to go to Investopedia. I will try to explain it briefly here.

    Basically, yield-to-call (abbreviated YTC) is when a security (bond or preferred stock) is yielding a return (interest or dividend) but has a callable feature. This means that the issuing corporation can "call" or redeem the security at a set time for a set price before the stated maturity. These are known as "callable bonds" or "callable preferred stocks".

    Since there is a possibility of the security being redeemed before its stated maturity, investors must calculate both the yield-to-maturity (YTM) and the YTC in order to see what the yield would be if the security is called before maturity.

    And if that isn't confusing enough, there is also the yield-to-worst (YTW) which is calculated to tell investors what the worst case scenario can be. This is possible when there are multiple call dates or other provision in the terms of the security that create multiple possible outcomes.

    Of course, the most important thing is that you should never invest in such assets until you are sure you fully understand these terms. So make sure you try to learn as much as possible before buying any of the securities mentioned in the article.

    Good luck!
    Sep 5, 2014. 03:50 PM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    Thank you for reading.

    It is interesting to note that Y & Z have lower YTC even though they are callable at later dates. Make sure you read the terms of these preferreds. There may be a good reason they so much yield less than the others.

    Of course, if you are right and they aren't called you will get a nice 6%. Definitely something worth looking into

    Good luck!
    Sep 5, 2014. 01:13 PM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    Thanks for reading.

    The difference between PSA and the PSA-Series is that PSA is a common stock. The Series' that we are discussing are preferred shares. It would take to long for me to explain what those are here, but you can learn more by going to Investopedia.

    The main points are - Preferred shares get a set dividend (like a bond gets set interest) but are not considered debt. This is an important distinction. Most investors who buy preferred shares are looking for income through dividends. Some preferred shares have a call feature which can cause a yield-to-call to exist. Investors need to pay attention to the terms for each preferred. These terms can change from series to series, increasing the risks that retail investors will make a mistake.

    REIT's (such as Public Storage) need to distribute 90% of their earnings. The dividends distributed to preferred shares count towards the 90%. Therefore, REIT's will usually have some preferred shares. This allows them to raise money without taking on more debt or diluting the earnings per share.

    The PSA shares you own are common shares. That means you are a owner in the actual business. If Public Storage does well your shares should increase in price since they can get more earnings and (possibly) more dividends, while the preferred shares won't since all they can get is the set dividend. However, if Public Storage does poorly your shares may go down in price and perhaps get a smaller dividend, while the preferred shares will still be owed the set dividend.

    I hope that was understandable. Like I said you can learn more about preferred shares on many other sites that will explain them better.

    Good luck!
    Sep 5, 2014. 12:24 PM | 1 Like Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    Thank you for reading.

    Have you thought about exchanging your PSA-O's for PSA-P's? As I mentioned in the article you would be getting a better YTC if they do call on time. This may be a good chance for exchanging. Benjamin Graham was very into exchanging securities under such circumstances.

    As for investors betting that PSA won't call due to higher rates - I understand that some people may think that is true. But as mentioned, by buying PSA-P they guarantee no loss (unless default), whereas PSA-O has a chance of loss. The difference in income is too small for this to appeal to an intelligent investor.
    Sep 5, 2014. 11:49 AM | Likes Like |Link to Comment
  • PSA-O Preferred Investors Risk Losses For Yield [View article]

    Thank you for reading.

    I didn't really give a hard look into PSA-V, W, or X. They were beyond my time frame.
    Sep 5, 2014. 11:42 AM | Likes Like |Link to Comment
  • Yield On Cost: A Vitally Important Consideration For Retired Investors [View article]

    I have been a long time critic of yours. I used to try to argue with you or your readers to show them why you are wrong, but after a while I gave up. There was no point. Lately when I click on your articles and my wife asks why I'm reading it if it will just make me upset.

    However, I now know why I kept clicking on your article. This article is one of the best you've written!!

    I'm not saying I will become a DGI suddenly.While I may disagree with you about certain point, I think I can say that this article shows your thinking in a clearer manner than any of your previous articles. This article is extremely well written and the case study you give is extremely informative. (I especially like that there aren't a bunch of FAST Graphs and other charts. It was a simple narrative with a few graphs, but not overkill.)

    Thank you.
    Sep 4, 2014. 05:53 PM | 4 Likes Like |Link to Comment
  • Volatility Has A Lot To Do With Risk [View article]

    Thank you for the article.

    By saying "Volatility doesn't cause risk; it reveals it" you are explaining volatility as a derivative of risk. This is an interesting way of explaining volatility that I haven't seen before. However, such a definition may cause you to overlook some great opportunities since you may deem them to be "too risky" due to their volatility.

    In "The Intelligent Investor" (Chapter 5 "Note on Concept of Risk" along with footnote/endnote #2) Graham is careful to define risk "...confusion may be avoided if we apply the concept of risk solely to the loss of value which either is realized through actual sale, or is caused by a significant deterioration in the companies position - or more frequently perhaps, is the result of the payment of an excessive price in relation to the intrinsic worth of the security."

    In essence risk is the defined as the risk of losing your principal due to a bad purchase or change in value of the asset.

    Graham believed volatility should be separated from the definition of risk since it may lead to confusion as to what real risk truly is. Volatility is only a risk if you need the money in the short term, in which case Graham questions if common stocks is the most intelligent place to put your cash.
    Sep 3, 2014. 12:15 AM | Likes Like |Link to Comment
  • Why I Will Start Social Security At Age 62 [View article]

    Thank you for this article.

    I would like to point out (as a CPA) that when you are discussing such a subject as this (when to take S.S.) you can't leave out taxes. I would even say that the tax implication of your choice is just as important as the actual choice. Warren Buffett once wrote in his partnership letters "...don't worry about the income, just the outcome".

    You should try to run scenarios in which you have your S.S. income with the dividends at the various rates and stages in life. Do this with a tax program that you know is good (there are so many variables that doing it by hand will guarantee it will be wrong).
    Aug 26, 2014. 02:38 PM | 17 Likes Like |Link to Comment
  • Sturm, Ruger And The Case Of Depreciation Deception [View article]

    Thanks for reading and commenting.

    Since you asked what I prefer regarding depreciation let me tell you what I would like to see. I want corporations to listen to the rules as put forth by FASB. I don’t agree with every rule, in fact there are some that I disagree with, but they are the rules currently. Public corporations that issue financial reports need to listen to the rules! What I desire most of all is the truth about what I’m looking to invest in.

    As for quickly depreciating assets being “safer” or “conservative” – this is a false premise. In what way is quickly depreciating assets “safer”? As I pointed out in the article, quickly expensing the assets can skew earnings and metrics that are used to determine profitability. What about that is “safe”?
    Also, where do you get the idea that “any investor in their right mind would prefer faster depreciation”? Again, I want the expense to reflect the rules and the truth.

    As for depreciating assets over 200 years: First off, there are not too many building around from 200 years ago, so clearly using that amount of time is crazy. But let’s look at 100 years. The Woolworth building in NYC was built in 1913, just over 100 years ago. Obviously it is still standing and in working order. So should the original owners have depreciated it over 100 years? No. While the façade is still standing much work has been done over the years to keep it modern and in good condition. (I don’t think you would want to use the wiring from 1913.) Even the exterior has been repaired. So to say that they should have depreciated the building over 100 years is also wrong.
    It would seem that a building can withstand time for about 50 years before it starts to need serious repairs. Of course, if you want to keep the building in good working order you will most likely have some maintenance capital expenses before the 50 yr. mark.

    So we see that the many corporations using 40 yrs. for buildings are being truthful (at least regarding their depreciation).
    Aug 20, 2014. 09:19 AM | Likes Like |Link to Comment