quote:Originally posted by stocktrader22: Wow KFN is a GEM! 2bill in net tangible assets...
Its an incredible co. 22
I jumped in yesterday at $6.30
Actually let me take that back! I dont like it. 3billion in mortgage loans, but worse is 9billion portfolio in corporate bonds and loans all rated in low B's, barely investment grade IMO. Downturn in economy and OH CRAP look what happens.
On a side not just bought a wachovia October put at intrinsic value.
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Expectations low for Wachovia stock: It is difficult to estimate the bank's share price, analysts say, but about $2 sounds right
Richard CraverWinston-Salem Journal, N.C.
Released : Thursday, October 02, 2008 4:00 AM
Oct. 2--About $2.
That may be the most that common shareholders of Wachovia Corp. can realistically expect in value for each share of a bank that plans to operate without retail banking services, according to two analysts.
By comparison, the stock was worth $51.31 a share a year ago today.
Citigroup Inc. would gain all but two divisions of Wachovia as part of the hastily brokered deal announced Monday. The deal is valued at about $2.2 billion in stock and $95 billion in assumed debt and loan losses.
Wachovia would be left with Wachovia Securities and its Evergreen Asset Management group.
Jefferson Harralson, an analyst with Keefe, Bruyette & Woods, wrote in a report that, based on limited details provided by Wachovia so far, he valued the securities division at between $6 billion and $9 billion and the asset-management division at between $2 billion and $3 billion.
The bulk of the company's value would go to Wachovia's preferred shareholders, whose stake would be worth $9.8 billion of a potential $14.2 billion company. After that, common shareholders would own "a company worth between $200 million and $4.2 billion, between 9 cents and $1.94 a share" when counting the two divisions and the Citigroup stock, Harralson said.
Andrew Marquardt, an analyst at Fox-Pitt, Kelton Cochran Caronia Waller, said in a note to investors Tuesday that although he also found it difficult to estimate a share-price, he valued the projected new Wachovia at $1.40 a share. He added that the range could run from a loss of $2.13 a share to $5.77 a share.
Harralson cautioned that his stock evaluation is based on Wachovia keeping the two divisions, which he does not expect to be realistic.
"We believe that Wachovia will most likely look to sell its remaining businesses in the near term," Harralson said.
Wachovia's share price has bounced back slightly -- from less than $1 Monday to $3.55 yesterday -- on investor expectations that such deals will happen.
"We believe that while the new company will have little debt, the common shareholders will be most likely left with little value," Harralson said.
Tony Plath, a finance professor at UNC Charlotte, said that the two remaining divisions of Wachovia were "never intended to be the organizational structure for a publicly held entity."
"It represents the corporate debris left over from the FDIC's carving up of Wachovia, and the remaining business units that Vikram Pandit had no interest in buying," Plath said. Pandit is the chief executive of Citigroup.
Plath said that Wachovia shareholders will not directly get any Citigroup stock in connection with the deal.
"Rather, the Wachovia shareholders will indirectly own $2.1 billion of Citigroup through their ownership of Wachovia's common stock," he said.
The post-sale Wachovia will likely be handicapped by staff defections, Plath added.
"People are speculating that the brokerage folks are likely to abandon ship, moving their client relationships to a stronger, more viable firm," he said. "This is entirely likely."
As for Wachovia pensioners, Wachovia spokeswoman Christy Phillips-Brown said yesterday that Wachovia's pension plan "is fully funded by assets in a trust fund, which is governed by the Employee Retirement Income Security Act and is a separate legal entity from Wachovia."
Plath cautioned that the pension plan would become the legal obligation of Citigroup if the deal is completed. It requires the approval of Wachovia shareholders and regulators.
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posted
I have been on some banks/financial including WB. Mostly larger banks like NCC and Fifth Third...
abk, etc...m
thanks for the article. As you can tell though, as of late companies are not being sold at the correct "values", producing bargains and maybe an increased stock price on troubled companies because of demand...
most of my calls are for Oct... this I put longer term. but hay.
im doing a mix of Oct/nov and 6mths to a year on many.
Posts: 208 | Registered: Sep 2008
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posted
I havn't spent too much time looking at all the details right now on all these banks and financial companies. The bottom line is they plumeted on bad news for the last few weeks. Now you have undervalued huge companies... that may be at risk of closure. Some due to customers panicking and pulling money.
Now WB is a huge, was strong company that has taken over many firms themselves over the last ten year. Forced into a merger/buyout of one or more divisions.
Which will not take place until LATER this year.
It should continue.. lets say 80% chance. Then can rebuild and possible grow again.
These companies are taking huge losses from subprime etc... finally off the books. Cash flow issues etc...
Most will survive.
As far as your put I think it's a little soon (OCT) yet may end up working... or you could always sell it
Maybe I will buy a put just to make sure I do win. I doubt WB will remain at $4.00
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