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Old 09-30-2008, 02:22 PM   #241
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ISM seen dipping under $10 today...


...how LOW can she GO!
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Old 09-30-2008, 02:50 PM   #242
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Originally Posted by cute fuzzy bunny View Post
ISM seen dipping under $10 today...


...how LOW can she GO!
0. Unless there is a hidden clause which requires bond holders to pay for the Chairmen's media training classes, in which case we could be on the hook for countless millions.
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Old 09-30-2008, 04:12 PM   #243
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While the low per share price gets my attention, I'm even more interested in the low volume this lil puppy trades at. With 75M shares outstanding, we typically only see a few K change hands per day. Even if you assume that each trade is pegged to a unique trader and each trader has never traded ISM before, these numbers would lead me to believe that the vast majority of the shares are still in the hands of the original buyers. Just seems kinda stange.....
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Old 09-30-2008, 04:20 PM   #244
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While the low per share price gets my attention, I'm even more interested in the low volume this lil puppy trades at. With 75M shares outstanding, we typically only see a few K change hands per day. Even if you assume that each trade is pegged to a unique trader and each trader has never traded ISM before, these numbers would lead me to believe that the vast majority of the shares are still in the hands of the original buyers. Just seems kinda stange.....
I believe it is 3 and 4 million shares of each ISM and OSM (respectively). Total par value was $75 million and $100 million for these issues. So volume may not be as low as you think. Maybe 1/2 of a percent of all shares change hands each day?
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Old 09-30-2008, 04:22 PM   #245
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I assume this is true for most corporate bond. ISM/OSM are actually unusual in that they are exchanged traded, so we have an idea of the volume. I imagine they are plenty of corporate bond issues where there are many days when no bonds get traded.

I own a stock SENEB makers of the Jolly Green Giant canned vegetables which also has ~3 million shares outstanding, average volume is about 800 shares. The low volume is why I've given up investing in microcaps stocks.

If it wasn't for the forum ISM/OSM volume would be even lower
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Old 09-30-2008, 04:44 PM   #246
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Yep, the IPO prospectus does say $75M which would be 3M shares. The trading summary box on Schwab clearly states "number of shares outstanding" - 75M. I've wondered about that before, so now I've finally got it straight. Thanks.

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If it wasn't for the forum ISM/OSM volume would be even lower
Ain't dat the truth!
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Old 09-30-2008, 04:50 PM   #247
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For anyone who doesn't have this cranking out of their computer automatically......

Nov 15 through Dec 14 yield for ISM, at PAR, will be 7.42%

If you bought some at ten bux, it'll yield ya 18.55% assuming SLM stays in business that long, the feds don't intervene, the check isn't lost in the mail, yadda, yadda yadda.....
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Old 09-30-2008, 05:06 PM   #248
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assuming SLM stays in business that long, the feds don't intervene, the check isn't lost in the mail, yadda, yadda yadda.....
This fed intervention is starting to look like risk #1. They are awfully quick off the blocks to arrange a "save". I hope there is a bar that will make it their business to explore this federal overreaching in courts of law.

I had thought the most likely event, following "muddle through", would be Chapter 11, followed by either being bought as a going business with the senior debt intact, or a Chapter 11 reorg with the senior debt replacing equity in a going concern. Face it, SLM performs functions that would be very expensive to replace de novo.

With Darth Vader now in charge I think the risks are much greater. I wish I owned less; but I am glad I don't own more.

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Old 09-30-2008, 07:42 PM   #249
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I actually tried buying some today on the cheap (well, at least cheap for the moment) around 10.20 but missed. (I had sold the shares I bought on the 19th @11.73 on 9/25 @ 12.99.) Maybe I should stop playing with this one, and stick to non-financial stocks. (I agree with the comment regarding Darth Vader...there have been some pretty amazing moves, especially Wachovia.)
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Old 09-30-2008, 08:20 PM   #250
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I'm thinking risk #1 is that the fed has their hands plenty full and runs out of money before they can bail them out when they crash and burn.
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Old 10-06-2008, 03:31 PM   #251
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There were some nice "arbitrage" opportunities today. I was able to convert 25% of my OSM position to ISM and take out an average of 1.17 per share, which I calculate results in a nominal YTM pickup of about 100 bp, at 3% inflation. I calculate the fair value of the swap to be about 0.50.
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Old 10-07-2008, 12:22 PM   #252
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ISM dipped under $9.50 several times this morning.
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Old 10-16-2008, 04:51 PM   #253
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Whooo hoo! Just noticed that ISM pooped out an interest payment on the 15th that was credited to my account. Just when I figured they were going belly-up for sure!

Now....let's see....how many more months to go before redemption at maturity at PAR?

As a side note.... to entertain myself and to occupy time so I don't mess around with my main account, I've been day-trading SLM (which has been super volatile lately) and have done well with it. I'm sure if I keep that up long enough, I'll wind up giving it all back!
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Old 11-19-2008, 09:11 AM   #254
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Today's CPI report showed the biggest year-over-year decline since October 2007. Year-over-year CPI-U was up "just" 3.7%. This will result in a substantial drop in February's interest payments for ISM and OSM. For the next three months, the annualized current yield (on the par value of 25) for OSM will be

Dec 7.37%
Jan 6.98%
Feb 5.66%

ISM's yield will be 5 basis points higher. At yesterday's closing price of 9, these yields are multiplied by 2.8. Pretty nice so long as the interest keeps getting paid.
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Old 11-19-2008, 09:12 AM   #255
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Originally Posted by FIRE'd@51 View Post
Today's CPI report showed the biggest year-over-year decline since October 2007. Year-over-year CPI-U was up "just" 3.7%. This will result in a substantial drop in February's interest payments for ISM and OSM. For the next three months, the annualized current yield (on the par value of 25) for OSM will be

Dec 7.37%
Jan 6.98%
Feb 5.66%

ISM's yield will be 5 basis points higher. At yesterday's closing price of 9, these yields are multiplied by 2.8. Pretty nice so long as the interest keeps getting paid.
Isn't that usually the fly in the ointment? Pesky little issues.

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Old 11-19-2008, 01:46 PM   #256
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Weren't "the smart people" saying awhile back that the foresaw us (holders of
these) getting at least 50% of par back in the event of bankruptcy of SLM ?
Do they still think that ?
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Old 11-19-2008, 02:39 PM   #257
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Weren't "the smart people" saying awhile back that the foresaw us (holders of
these) getting at least 50% of par back in the event of bankruptcy of SLM ?
Do they still think that ?
Well, we are mostly dumber than dirt. Still want our opinions?

Ha
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Old 11-19-2008, 03:10 PM   #258
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I still think we will get back 50% or more. SLM isn't technically insolvent like the Big 3.
Last quarter it lost .40 a share, but excluding mark to markets loss made .30.

In this environment I wouldn't be shocked to see a bailed out or bankruptcy, but we are still getting double digit interest payments.
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Old 11-21-2008, 02:43 AM   #259
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Originally Posted by FIRE'd@51 View Post
Today's CPI report showed the biggest year-over-year decline since October 2007. Year-over-year CPI-U was up "just" 3.7%. This will result in a substantial drop in February's interest payments for ISM and OSM. For the next three months, the annualized current yield (on the par value of 25) for OSM will be

Dec 7.37%
Jan 6.98%
Feb 5.66%

ISM's yield will be 5 basis points higher. At yesterday's closing price of 9, these yields are multiplied by 2.8. Pretty nice so long as the interest keeps getting paid.
Thanks FIRE'd. I do these calculations too and got the same numbers. Usually post them here but got too lazy......

Yep, at these prices, the interest rate is mighty attractive, if SLM keeps paying as you say. Every month when the bux arrive in my account, I let out a little whoop and run for the liquor cabinet!

If equities weren't so tanked, I'd buy some more at under $9. But, my portfolio is so awash in red on the equity side, the last thing I need would be more risky, low rated bonds.......

So, for now, ISM just gives me something to look for on the 15th of every month!

clifp, I reviewed your calcualtions regarding SLM's ability to cover debt and sure hope you're right. Everything looked good to me, but I also thought the equity markets would be OK...... maybe just a little tick down..... So my opinion is somewhat less than worthless, like my portfolio these days.....
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Old 11-21-2008, 10:19 AM   #260
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So a buyer today would get ~ 18% dividends? Very interesting.

Just remember that The Vanguard and Fidelity Junk Bond funds (ahem... "High Yield") are paying >10% right now. 10% is not 18%, but that's a lot of diversification, plus some potential NAV upside as they are both down ~ 30% over the past year.

yeah, "upside", that's funny isn't it, but not "funny like a clown funny"

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