Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
A presentation by:
Technical Analysis
Value =
Forecast Scenario 1 -
Future 4 yr EPV assuming $60bln NNA (Net New Assets), 0.25% FFR
(Fed Funds Rate), 850 S&P 500 and a 40bps ROCA (Return on Client
Assets)
Forecast Scenario 2 –
Future 4 yr EPV assuming $60bln NNA, 2% FFR and 1,000 S&P 500, and
a 45bps ROCA
Quality Framework Example:
TD Ameritrade (AMTD)
Less optimistic forecast of earnings: Forecast 1
Quality Framework Example:
TD Ameritrade (AMTD)
More optimistic forecast of earnings: Forecast 2
Quality Framework Example:
TD Ameritrade (AMTD)
Key Metrics:
Net New Assets (NNA) – annualized 11% growth in NNA, 77% of NNA
are organic (not a result of dislocation on Wall Street)
The notes are unsecured and rank equal with other senior unsecured notes (including future
notes). They rank junior only to the senior secured outstanding notes (or future) of the
operating subsidiaries. As of 3/31/2006, there were only $3,500,000 of senior secured notes.
The proceeds were used to pay down $200,000,000 of the outstanding balance of credit facility @
5.60% and to be used towards the 8/2006 maturity of 7.25% senior notes due.
Optional Redemption:
The notes may be redeemed at any time in whole or in part at a price equal to the greater of
100% of the principal amount to be redeemed and the sum of the present values of the
remaining scheduled payments on the notes to be redeemed consisting of principal and
interest, exclusive of interest accrued to the date of redemption, discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the applicable Treasury Yield plus 30 basis points plus accrued interest to the date
of redemption.
All issues of covenants, liens, and voting matters will not be discussed here in depth. However,
the company may not change principal amounts, interest rates or payment dates, legal rights
or senior status without vote of the note holders.
The above information was taken from the prospectus and prospectus supplement dated
3/31/2006.
Humana Inc – The Case For Bonds
Humana Inc – The Case For Bonds
Of most significance to interested bondholders are three items:
1. EBIT / Interest Expense is very high, currently 13.37 and in past record 11.73 (2005).
2. Working Capital / Debt is 1.10. The company has adequate resource to pay off debt without
incurring any fixed asset sales and with high liquidity.
3. The 3 year average performance of the common stock has been poor at -14.6% (as is the
case in this major bear market with most common issues). Yet the common market value
trades at a multiple of 1.77x that of the debt, a reassuring sense of confidence in the health
of the company.
Given the fact working capital has adequate coverage of total debt, in depth analysis of
expected real market value of tangible assets is not significantly important. Duration is
intermediate with low probability (in this author's opinion) of significant increases in interest
rates within the time frame of maturity. Looming are massive health care reforms at the
national level that could materially impact Humana's top and bottom lines. The probability of
this occurring remains unknown as well as specific details of a plan.
Investors should view these intermediate term Humana bonds as attractive investment grade
securities with a wide EBIT/interest expense margin of safety.
As of 7/7/2009 the bonds traded at around 90 cents on the dollar. All three nationally recognized
rating agencies have rated the bonds at the lowest tier of investment grade.
Economics – The Dismal Science
Kondratieff Wave Cycle Theory
Credit Inflation:
Conditions are different under a credit expansion which first affects the loan market.
In this case the inflationary effects are multiplied by the consequences of capital
malinvestment and overconsumption. Overbidding one another in the struggle for
a greater share in the limited supply of capital goods and labor, the entrepreneurs
push prices to a height at which they can remain only as long as the credit
expansion goes on at an accelerated pace. a sharp drop in the prices of all
commodities and services is unavoidable as soon as the further inflow of additional
fiduciary media stops.
Austrian Economics: Deflation & Credit Contraction
1. A government aiming at deflation floats a loan and destroys the paper money borrowed. Such a
procedure has been, in the last two hundred years, adopted again and again. The idea was to
raise, after a prolonged period of inflationary policy, the national monetary unit to its previous
metallic parity. (under a gold standard, exchange or fixed regime currency)
2. Banks, frightened by their adverse experience in the crisis brought about by credit expansion, are
intent upon increasing the reserves held against their liabilities and therefore restrict the amount
of circulation credit.
3. The crisis has resulted in the bankruptcy of banks which granted circulation credit and that the
annihilation of the fiduciary media issued by these banks reduces the supply of credit on the loan
market.
Now, it is true that even with no restrictions in the supply of money proper and fiduciary media
available, the depression brings about a cash-induced tendency toward an increase in the
purchasing power of the monetary unit. Every firm is intent upon increasing its cash holdings, and
these endeavors affect the ratio between the supply of money (in the broader sense) and the
demand for money (in the broader sense) for cash holding. This may be properly called deflation.
Prices of the factors of production— both material and human—have reached an excessive height in
the boom period. They must come down before business can become profitable again. The
entrepreneurs enlarge their cash holding because they abstain from buying goods and hiring
workers as long as the structure of prices and wages is not adjusted to the real state of the market
data. Thus any attempt of the government or the labor unions to prevent or to delay this
adjustment merely prolongs the stagnation.
Portfolio Management
Trade & Risk Management
Long/Short Exposure
Trade Management
Trailing Stop Loss
“Flation” expectations