Monday, October 15, 2007
Thursday, October 4, 2007
Corporate Capital Management
Management has 2 basic choices on how they fund themselves:
1) Issue Debt
2) Issue Stock
If you were a manager when would you issue debt vs. stock and vice versa?
Generally it is a some combination of both but there are reasons for each.
Debt gives you better tax benefits and when interest rates are low, you might want to issue debt so you pay out less interest. Debt also depends on the credit worthiness of the company (ie AAA vs AA vs A vs BBB....etc). There are a lot of variable that go into issuing debt.
Stock on the other hand is a one and done deal. If you are public company then you already know what you are going to get. If your stock is trading at $50 a share then you are going to get roughly $50 x # of shares you are going to issue. Most likely you will get less than $50 a share since you will be adding to the total shares outstanding and diluting the stocks value but the current price is a good proxy.
So back to the question or more specifically, when would you issue stock?
The answer is when you think it is as high as it's going to get! That way you get the most bang for your buck.
The lesson here is when you hear of a good company getting ready to issue more stock - be very weary - it has a higher probability of going DOWN!
Check out WYNN stock:
1) Issue Debt
2) Issue Stock
If you were a manager when would you issue debt vs. stock and vice versa?
Generally it is a some combination of both but there are reasons for each.
Debt gives you better tax benefits and when interest rates are low, you might want to issue debt so you pay out less interest. Debt also depends on the credit worthiness of the company (ie AAA vs AA vs A vs BBB....etc). There are a lot of variable that go into issuing debt.
Stock on the other hand is a one and done deal. If you are public company then you already know what you are going to get. If your stock is trading at $50 a share then you are going to get roughly $50 x # of shares you are going to issue. Most likely you will get less than $50 a share since you will be adding to the total shares outstanding and diluting the stocks value but the current price is a good proxy.
So back to the question or more specifically, when would you issue stock?
The answer is when you think it is as high as it's going to get! That way you get the most bang for your buck.
The lesson here is when you hear of a good company getting ready to issue more stock - be very weary - it has a higher probability of going DOWN!
Check out WYNN stock:
Wednesday, October 3, 2007
CLNE from a different standpoint
Cramer on CLNE from Aug 27th
http://www.stockpickr.com/popupLinks.php?all=allvideo&url=http://www.thestreet.com/video/cramermarketupdates/10376279.html
Just a reminder that it is purely a spec play!
http://www.stockpickr.com/popupLinks.php?all=allvideo&url=http://www.thestreet.com/video/cramermarketupdates/10376279.html
Just a reminder that it is purely a spec play!
Tuesday, October 2, 2007
2 Quick Lessons
1) If you have a strong conviction about a stock - go with it. I wrote last that I would be back in on CLNE regardless of price on Monday. I didn't do it and now I have watched it go from $15.25 to $16.50. A 6% gain in 2 days. It was even up today on a down day!
2) A lesson about commissions - Buy in 50 share lots or more. Preferably 100 share lots. Think of it this way. If you buy 20 shares of a $20 stock and commissions are $10 each way (buy and sell) that stock has to go up $1 dollar or 5% just to break even. If you bought 100 shares now the stock only has to go up $0.20 or 1% to break even. Got it? Good.
2) A lesson about commissions - Buy in 50 share lots or more. Preferably 100 share lots. Think of it this way. If you buy 20 shares of a $20 stock and commissions are $10 each way (buy and sell) that stock has to go up $1 dollar or 5% just to break even. If you bought 100 shares now the stock only has to go up $0.20 or 1% to break even. Got it? Good.
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