Preferred Stock Price Quotes

The realms of dating, marriage, and sex are all marketplaces, and we are the products. Some may bristle at the idea of people as products on a marketplace, but this is an incredibly prevalent dynamic. Consider the labor marketplace, where people are also the product. Just as in the labor marketplace, one party makes an offer to another, and based on the terms of this offer, the other person can choose to accept it or walk. What makes the dating market so interesting is that the products we are marketing, selling, buying, and exchanging are essentially our identities and lives. As with all marketplaces, every item in stock has a value, and that value is determined by its desirability. However, the desirability of a product isn’t a fixed thing—the desirability of umbrellas increases in areas where it is currently raining while the desirability of a specific drug may increase to a specific individual if it can cure an illness their child has, even if its wider desirability on the market has not changed. In the world of dating, the two types of desirability we care about most are: - Aggregate Desirability: What the average demand within an open marketplace would be for a relationship with a particular person. - Individual Desirability: What the desirability of a relationship with an individual is from the perspective of a specific other individual. Imagine you are at a fish market and deciding whether or not to buy a specific fish: - Aggregate desirability = The fish’s market price that day - Individual desirability = What you are willing to pay for the fish Aggregate desirability is something our society enthusiastically emphasizes, with concepts like “leagues.” Whether these are revealed through crude statements like, “that guy's an 8,” or more politically correct comments such as, “I believe she may be out of your league,” there is a tacit acknowledgment by society that every individual has an aggregate value on the public dating market, and that value can be judged at a glance. When what we have to trade on the dating market is often ourselves, that means that on average, we are going to end up in relationships with people with an aggregate value roughly equal to our own (i.e., individuals “within our league”). Statistically speaking, leagues are a real phenomenon that affects dating patterns. Using data from dating websites, the University of Michigan found that when you sort online daters by desirability, they seem to know “their place.” People on online dating sites almost never send a message to someone less desirable than them, and on average they reach out to prospects only 25% more desirable than themselves. The great thing about these markets is how often the average desirability of a person to others is wildly different than their desirability to you. This gives you the opportunity to play arbitrage with traits that other people don’t like, but you either like or don’t mind. For example, while society may prefer women who are not overweight, a specific individual within the marketplace may prefer obese women, or even more interestingly may have no preference. If a guy doesn’t care whether his partner is slim or obese, then he should specifically target obese women, as obesity lowers desirability on the open marketplace, but not from his perspective, giving him access to women who are of higher value to him than those he could secure within an open market.

We have advised against the purchase at “full prices” of three important categories of securities: (1) foreign bonds, (2) ordinary preferred stocks, and (3) secondary common stocks, including, of course, original offerings of such issues. By “full prices” we mean prices close to par for bonds or preferred stocks, and prices that represent about the fair business value of the enterprise in the case of common stocks. The greater number of defensive investors are to avoid these categories regardless of price; the enterprising investor is to buy them only when obtainable at bargain prices—which we define as prices not more than two-thirds of the appraisal value of the securities.

Shareholders have a residual claim on a firm’s assets and earnings, meaning they get what’s left after all other claimants—employees and their pension funds, suppliers, tax-collecting governments, debt holders, and preferred shareholders (if any exist)—are paid. The value of their shares, therefore, is the discounted value of all future cash flows minus those payments. Since the future is unknowable, potential shareholders must estimate what that cash flow will be; their collective expectations about the future determine the stock price. Any shareholders who expect that the discounted value of future equity earnings of the company will be less than the current price will sell their stock. Any potential shareholders who expect that the discounted future value will exceed the current price will buy stock. This means that shareholder value has almost nothing to do with the present. Indeed, present earnings tend to be a small fraction of the value of common shares. Over the past decade, the average yearly price-earnings multiple for the S&P 500 has been 22x, meaning that current earnings represent less than 5 percent of stock prices.

We define a bargain issue as one which, on the basis of facts established by analysis, appears to be worth considerably more than it is selling for. The genus includes bonds and preferred stocks selling well under par, as well as common stocks. To be as concrete as possible, let us suggest that an issue is not a true “bargain” unless the indicated value is at least 50% more than the price. What kind of facts would warrant the conclusion that so great a discrepancy exists? How do bargains come into existence, and how does the investor profit from them? There are two tests by which a bargain common stock is detected. The first is by the method of appraisal. This relies largely on estimating future earnings and then multiplying these by a factor appropriate to the particular issue. If the resultant value is sufficiently above the market price—and if the investor has confidence in the technique employed—he can tag the stock as a bargain. The second test is the value of the business to a private owner. This value also is often determined chiefly by expected future earnings—in which case the result may be identical with the first. But in the second test more attention is likely to be paid to the realizable value of the assets, with particular emphasis on the net current assets or working capital. At low points in the general market a large proportion of common stocks are bargain issues, as measured by these standards. (A typical example was General Motors when it sold at less than 30 in 1941, equivalent to only 5 for the 1971 shares. It had been earning in excess of $4 and paying $3.50, or more, in dividends.) It is true that current earnings and the immediate prospects may both be poor, but a levelheaded appraisal of average future conditions would indicate values far above ruling prices. Thus the wisdom of having courage in depressed markets is vindicated not only by the voice of experience but also by application of plausible techniques of value analysis.

To summarize my ORB Strategy: After I build my watchlist in the morning, I closely monitor the shortlisted stocks in the first five minutes after the Open. I identify their opening range and their price action. How many shares are being traded? Is the stock jumping up and down or does it have a directional upward or downward movement? Is it high volume with large orders only, or are there many orders going through? I prefer stocks that have high volume, but also with numerous different orders being traded. If the stock has traded 1 million shares, but those shares were only ten orders of 100,000 shares each, it is not a liquid stock to trade. Volume alone does not show the liquidity; the number of orders being sent to the exchange is as important. The opening range must be significantly smaller than the stock’s Average True Range (ATR). I have ATR as a column in my Trade Ideas scanner. After the close of the first five minutes of trading, the stock may continue to be traded in that opening range in the next five minutes. But, if I see the stock is breaking the opening range, I enter the trade according to the direction of the breakout: long for an upward breakout and short for a downward move. My stop loss is a close below VWAP for the long positions and a break above VWAP for the short positions. My profit target is the next important technical level, such as: (1) important intraday daily levels that I identify in the pre-market, (2) moving averages on a daily chart, and/or (3) previous day close. If there was no obvious technical level for the exit and profit target, I exit when a stock shows signs of weakness (if I am long) or strength (if I am short). For example, if the price makes a new 5-minute low, that means weakness, and I consider selling my position if I am long. If I am short and the stock makes a new 5-minute high, then it could be a sign of strength and I consider covering my short position. My strategy above was for a 5-minute ORB, but the same process will also work well for 15-minute or 30-minute ORBs.

BARGAIN-ISSUE PATTERN IN SECONDARY COMPANIES. We have defined a secondary company as one that is not a leader in a fairly important industry. Thus it is usually one of the smaller concerns in its field, but it may equally well be the chief unit in an unimportant line. By way of exception, any company that has established itself as a growth stock is not ordinarily considered “secondary.” In the great bull market of the 1920s relatively little distinction was drawn between industry leaders and other listed issues, provided the latter were of respectable size. The public felt that a middle-sized company was strong enough to weather storms and that it had a better chance for really spectacular expansion than one that was already of major dimensions. The depression years 1931–32, however, had a particularly devastating impact on the companies below the first rank either in size or in inherent stability. As a result of that experience investors have since developed a pronounced preference for industry leaders and a corresponding lack of interest most of the time in the ordinary company of secondary importance. This has meant that the latter group have usually sold at much lower prices in relation to earnings and assets than have the former. It has meant further that in many instances the price has fallen so low as to establish the issue in the bargain class. When investors rejected the stocks of secondary companies, even though these sold at relatively low prices, they were expressing a belief or fear that such companies faced a dismal future. In fact, at least subconsciously, they calculated that any price was too high for them because they were heading for extinction—just as in 1929 the companion theory for the “blue chips” was that no price was too high for them because their future possibilities were limitless. Both of these views were exaggerations and were productive of serious investment errors. Actually, the typical middle-sized listed company is a large one when compared with the average privately owned business. There is no sound reason why such companies should not continue indefinitely in operation, undergoing the vicissitudes characteristic of our economy but earning on the whole a fair return on their invested capital.

Although Ball ended up priced far more cheaply than Stryker, the lesson here is not that Ball was a steal and Stryker was a wild pitch. Instead, the intelligent investor should recognize that market panics can create great prices for good companies (like Ball) and good prices for great companies (like Stryker). Ball finished 2002 at $51.19 a share, up 53% from its July low; Stryker ended the year at $67.12, up 47%. Every once in a while, value and growth stocks alike go on sale. Which choice you prefer depends largely on your own personality, but bargains can be had on either side of the plate.

If they follow our prescription they will confine themselves to high-grade bonds and the common stocks of leading corporations, preferably those that can be purchased at individual price levels that are not high in the light of experience and analysis.

Defensive investors, as we have defined them, will not ordinarily be equipped to pass independent judgment on the security recommendations made by their advisers. But they can be explicit—and even repetitiously so—in stating the kind of securities they want to buy. If they follow our prescription they will confine themselves to high-grade bonds and the common stocks of leading corporations, preferably those that can be purchased at individual price levels that are not high in the light of experience and analysis.

The indefiniteness of finance can be bizarre. Think about what happens when successful entrepreneurs sell their company. What do they do with the money? In a financialized world, it unfolds like this: • The founders don’t know what to do with it, so they give it to a large bank. • The bankers don’t know what to do with it, so they diversify by spreading it across a portfolio of institutional investors. • Institutional investors don’t know what to do with their managed capital, so they diversify by amassing a portfolio of stocks. • Companies try to increase their share price by generating free cash flows. If they do, they issue dividends or buy back shares and the cycle repeats. At no point does anyone in the chain know what to do with money in the real economy. But in an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.

Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

the data was plotted on mathematical diagrams that I invented. These revealed favorable situations and let me quickly specify the appropriate trades. Each day’s closing prices for a convertible and its stock were plotted as a color-coded dot on that particular convertible’s diagram. The diagrams were prepared with curves that were drawn by a computer from my formula and showed the “fair price” of the convertible. The beauty of this was that I could immediately see from the picture whether we had a profitable trading opportunity. If the dot representing the data was above the curve it meant the convertible was overpriced, leading to a possible hedge: Short the convertible, buy the stock. A data point close to or on the curve indicated the price was fair, which meant liquidate an existing position, do not enter a new one. Below the curve meant buy the convertible, short the stock. The distance of the dot from the curve showed me how much profit was available. If we thought it met our target, we tried to put on the trade the next day. The slope of the curve near the data point on my diagram gave me the hedge ratio, which is the number of shares of common stock to use versus each convertible bond, share of preferred, warrant, or option.

We live in a world where cures are not what Big Pharma is putting their research dollars into, nor are budgets allocated to “un patent-able” molecules like melatonin. What they prefer is a long-term dosing schedule that keeps the dollars rolling in, stock price up, and the shareholders happy. If you’re looking for a miraculous compound that can heal, cure, and prevent disease, you found it with melatonin.

The first, or predictive, approach could also be called the qualitative approach, since it emphasizes prospects, management, and other nonmeasurable, albeit highly important, factors that go under the heading of quality. The second, or protective, approach may be called the quantitative or statistical approach, since it emphasizes the measurable relationships between selling price and earnings, assets, dividends, and so forth. Incidentally, the quantitative method is really an extension—into the field of common stocks—of the viewpoint that security analysis has found to be sound in the selection of bonds and preferred stocks for investment. In our own attitude and professional work we were always committed to the quantitative approach. From the first we wanted to make sure that we were getting ample value for our money in concrete, demonstrable terms. We were not willing to accept the prospects and promises of the future as compensation

SoftBank, however, had invested more than $10 billion into WeWork and gotten nothing in return. The Vision Fund was down nearly $2 billion in the most recent quarter, during which Uber’s stock had slipped. SoftBank shares were down 10 percent since Wingspan’s release. Both WeWork and SoftBank executives were coming to grips with the realization that its IPO might be priced at a level far below its $47 billion valuation. While SoftBank’s preferred shares gave it some protection—it could get its money out before the company’s employees—a valuation below what SoftBank paid for its shares would mean that the firm’s investment was underwater, much as

Experience teaches that the time to buy preferred stocks is when their price is unduly depressed by temporary adversity. (At such times they may be well suited to the aggressive investor but too unconventional for the defensive investor.)

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The price fluctuations of convertible bonds and preferred stocks are the resultant of three different factors: (1) variations in the price of the related common stock, (2) variations in the credit standing of the company, and (3) variations in general interest rates. A good many of the convertible issues have been sold by companies that have credit ratings well below the best.3 Some of these were badly affected by the financial squeeze in 1970. As a result, convertible issues as a whole have been subjected to triply unsettling influences in recent years, and price variations have been unusually wide. In the typical case, therefore, the investor would delude himself if he expected to find in convertible issues that ideal combination of the safety of a high-grade bond and price protection plus a chance to benefit from an advance in the price of the common.

Most active-minded practitioners would prefer to venture into wider channels. Their natural hunting grounds would be the entire field of securities that they felt (a) were certainly not overvalued by conservative measures, and (b) appeared decidedly more attractive—because of their prospects or past record, or both—than the average common stock. In such choices they would do well to apply various tests of quality and price-reasonableness along the lines we have proposed for the defensive investor. But they should be less inflexible, permitting a considerable plus in one factor to offset a small black mark in another. For example, he might not rule out a company which had shown a deficit in a year such as 1970, if large average earnings and other important attributes made the stock look cheap. The enterprising investor may confine his choice to industries and companies about which he holds an optimistic view, but we counsel strongly against paying a high price for a stock (in relation to earnings and assets) because of such enthusiasm. If he followed our philosophy in this field he would more likely be the buyer of important cyclical enterprises—such as steel shares perhaps—when the current situation is unfavorable, the near-term prospects are poor, and the low price fully reflects the current pessimism.

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