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  • Implementing Dividend Arbitrage: Verizon Wireless [View article]
    thanks angad for the trade strategy. very interesting. but as others mentioned, your trade still suffers from "early exercise" risk as well as a tail end risk associated with the share price of VZ. if something horrible and unforeseen ala the 2008 subprime crash happens or an accounting scandal, share price may drop below $20 and result in principal loss. the easiest way to eliminate this tail end risk would be to purchase a $20 Jan 14 put when you open your position but that would reduce your profit margins by 25%.
    keep thinking about these arbitrage events because they do exist in a risk-free way and thanks again for posting this. it was a good read.
    Jan 3, 2012. 02:41 PM | 1 Like Like |Link to Comment
  • A Useful Metric for Evaluating Shipping Companies [View article]
    wow. very interesting metric on GNK @ 5.8x especially since they breach their loan covenant at 5.5x
    May 25, 2011. 02:29 PM | Likes Like |Link to Comment
  • Genco Shipping: Overvalued and Overleveraged in a Collapsing Market [View instapost]
    Legimate concerns for not believing a short GNK thesis. However, you seem to be mistaken on certain points.

    1) It has been referenced by Eagle Bulk Shipping and various other media sources that Vale is in the process of acquiring 35/36 Chinamax ships @ 400,000 dwt as well as 12 converted VLCCs @ 300,000 dwt. The driver behind this is for Vale to push shipping costs lower so that they are more competitive with iron ore exporters from Australia who currently have lower shipping costs due to mine distance. Vale is due to take delivery of its first Chinamax ship in June of 2011. (Just as a reference point. The 35/36 Chinamax ships alone would displace as many as 168 Capesize ships) This will place significant supply side pressure on the current shipping market.

    2) Though it is true that the floods and natural disasters in Australia along with Chinese New Years have softened the market, it is simply not enough to alleviate the upcoming supply pressure.

    I would actually counter with the argument that with China increasing their interest rates and attempting to cool their domestic markets due to inflation concerns, I would be surprised to see a huge push in demand. In addition
    Feb 10, 2011. 04:58 PM | 1 Like Like |Link to Comment