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----- Original Message -----
Sent: Wednesday, December 19, 2007 6:44 PM
Subject: Re: [astrofin] What to do in response to bad
mortgages
Same story with Cit i
they have to pay9% to the Sou-dies
if they were to print money(sell more of their shares)
that would bring it down to 25
so,,
as painful as it is,, the board voted to continue to pay the
div of 7% to its shareholders
and that cost by itself 4 billion a quarter!!!!
this is how scary this mkt is
this is why today European banks and American
added 34 billion to the needy companies
this are loans for 4.5%
guys
yes even we have a Christmas rally,, that should be an
opportunity to short
this problem is not going away soon
----- Original Message
-----
From: Darrin Vernier
Date: Wednesday, December
19, 2007 4:14 pm
Subject: [astrofin] What to do in response to bad
mortgages
To: astrofin@xxxxxxxxxxxxxxx
> Hello,
>
> I
found something I thought to be of interest today, something
> Ben
predicted here previously has come true.
>
> First I'd like to
define a couple of terms.
>
> Market cap = current market value of
all shares as valued by the
> open market
>
> Enterprise
value = sum of the assets and debt of a company, what
> it would
cost
> someone to buy it. This is similar to a house with a mortgage or
> a car with a loan.
> If the number is positive the asset
outweighs the debt. If
> negative the asset is
> 'under water' as
has happened recently with many homes. A
> negative number
>
indicates how much the company would have to pay someone to take
> the
> company off of their hands.
>
> Figures from:
http://finance.yahoo.com/q/ks?s=MS
>
> Morgan Stanley
>
> Market cap = 53 billion
>
> Enterprise Value = -235
billion
>
> To compare let's look at highflier Google, a company
whose
> valuation is largely perceived as vaporware.
>
>
Market cap = 211 billion
>
> Enterprise Value = 197 billion
>
> We might say Morgan Stanley is different being a financial so
>
let's look at Citibank, another entity in
> trouble from the mortgage
mess.
>
> Market cap = 150 billion
>
> Enterprise
Value = 89 billion
>
> It was reported today that Morgan Stanley
has received 5 billion
> from the Chinese government.
> In exchange
they will receive 9% interest per year (for an
> unspecified time) after
which the note
> will be converted in full shares.
>
> I
have to wonder what it means when, rather than just issue new
> shares
and sell them on the open
> market, a company has to pay someone to take
them.
>
> Doesn't it mean that an about to be foreclosed Morgan
Stanley
> just went to the pawn shop?
>
> Cheers,
>
Darrin
>
>
>
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