Post by arcticfox on Aug 22, 2013 7:12:18 GMT -5
Golden, all investments tend to look good before people actually get into it. Remember how everyone were getting exited about grabbing the bonds? You and kid both switches to bond and with 20/20 we all know what happened. Wasn't it suppose to be a sure thing too? Worst case scenario was a double too right?
Looking at investment objectively and conservatively and practice due diligence before making the commitment. I know you do that but in all honesty you don't do enough of it.
Below was the conversation I had with a fellow member here when he asked me about the bonds back in Jan 2013 in private message. As you can see. Many of the concerns I raised turn out to be quite prescient.
A conservative view will allow you to see all the risks you are taking. Your valuation and the numbers you are quoting for new shares are not conservative numbers.
>>>>>>>>>>>
it500
New Member
Jan 4, 2013 at 7:51am Quote
Hey there Artic.
I've been in commons for half a year plus and read the posts here from a distance.
Just wondering your take on the bonds. I'm 100% in commons and not happy with the outcome from the sale. I want an opinion on the 7.25% 2013 bonds and the 9.2% 2021 bonds and their pricing now around 12 cents.
I have a thought/hope that these could recover considerably from their current state. Wondering if you might think so, too? Trying to get some confirmation.
I don't post. Just trying to get some more info for my head.
Thanks.
My Reply>>>>>€€
Participants: arcticfox, it500
arcticfox
GODZILLA
Jan 6, 2013 at 5:20pm Quote
Hi it,
Given the way things are suppose to progress, the bonds you mentioned are going to be lumped in with all the other unsecured claims. It's extremely difficult to predict the final percentage payout of the unsecured claim.
As I mentioned to another member that PM me with a similar question, to determine a percentage, you need a numerator and a denominator. We know that the numerator is going to be a small number and the denominator is going to be a big number. I believe the final payout will be far less than the 30% target that Kodak management are aiming for to get their bonus.
In fact they are so far away from that target that from their perspective they might as well try to make settlements with creditors that add to the unsecured claim. To use an analogy, its kind of like giving $50 to be split between 20 people with $2000 in claims. Even if we make settlements that cause the claim to jump to 25 with $4000 in claim it really doesn't matter. We are still going to only give them $50 to fight over.
The pricing of the bonds in the low teens right now implies that the market thinks that the return on the bonds is going to be less than 10%. That's because there is obviously time value that adds a few cents to the implied intrinsic value.
In any case I don't think the bonds are the sure bet that some people have been saying they are. The return in my opinion is not worth the risk. There are far better investment opportunities out there.
At the end of the day the bonds will do better than the common since the common will be eventually cancelled in my opinion. However, do understand that the bonds are less liquid and does not benefit from the volatility and possible short term spikes. So choose one or the other accordingly... or choose neither. But I would highly advise anyone from throwing additional money into the bonds if you are already stuck with the common.
Good luck
Arctic
>>
Looking at investment objectively and conservatively and practice due diligence before making the commitment. I know you do that but in all honesty you don't do enough of it.
Below was the conversation I had with a fellow member here when he asked me about the bonds back in Jan 2013 in private message. As you can see. Many of the concerns I raised turn out to be quite prescient.
A conservative view will allow you to see all the risks you are taking. Your valuation and the numbers you are quoting for new shares are not conservative numbers.
>>>>>>>>>>>
it500
New Member
Jan 4, 2013 at 7:51am Quote
Hey there Artic.
I've been in commons for half a year plus and read the posts here from a distance.
Just wondering your take on the bonds. I'm 100% in commons and not happy with the outcome from the sale. I want an opinion on the 7.25% 2013 bonds and the 9.2% 2021 bonds and their pricing now around 12 cents.
I have a thought/hope that these could recover considerably from their current state. Wondering if you might think so, too? Trying to get some confirmation.
I don't post. Just trying to get some more info for my head.
Thanks.
My Reply>>>>>€€
Participants: arcticfox, it500
arcticfox
GODZILLA
Jan 6, 2013 at 5:20pm Quote
Hi it,
Given the way things are suppose to progress, the bonds you mentioned are going to be lumped in with all the other unsecured claims. It's extremely difficult to predict the final percentage payout of the unsecured claim.
As I mentioned to another member that PM me with a similar question, to determine a percentage, you need a numerator and a denominator. We know that the numerator is going to be a small number and the denominator is going to be a big number. I believe the final payout will be far less than the 30% target that Kodak management are aiming for to get their bonus.
In fact they are so far away from that target that from their perspective they might as well try to make settlements with creditors that add to the unsecured claim. To use an analogy, its kind of like giving $50 to be split between 20 people with $2000 in claims. Even if we make settlements that cause the claim to jump to 25 with $4000 in claim it really doesn't matter. We are still going to only give them $50 to fight over.
The pricing of the bonds in the low teens right now implies that the market thinks that the return on the bonds is going to be less than 10%. That's because there is obviously time value that adds a few cents to the implied intrinsic value.
In any case I don't think the bonds are the sure bet that some people have been saying they are. The return in my opinion is not worth the risk. There are far better investment opportunities out there.
At the end of the day the bonds will do better than the common since the common will be eventually cancelled in my opinion. However, do understand that the bonds are less liquid and does not benefit from the volatility and possible short term spikes. So choose one or the other accordingly... or choose neither. But I would highly advise anyone from throwing additional money into the bonds if you are already stuck with the common.
Good luck
Arctic
>>