Sunday, June 22, 2008

Oops, I goofed on the # of new shares issued & book value

I took a shortcut and made a mistake. I had the wrong number of additional shares that were issued for the $7 billion. The company has 2.1 billion shares outstanding and about 21 billion in capital including some preferred. Book value is about $10 per common share. The LLR is said to be adequate, but bound to be light. But the dividend cut and expense reductions will help self fund additional losses. Either way I’m betting that you can buy the common for 50-75% of a solid book value. The price should rise as that is confirmed.

I haven’t done all the work yet, but NCC has a series F preferred that is yielding about 12%. If I’m willing to buy the common because of the new capital and dividend cut, I should be very comfortable with the preferred. Especially a preferred yielding 12% and the dividend should be secure. I don’t know how readily available this series is and if it can be bought in smaller lots.

I hope this week is more fun than last week.

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