The Original Profit-Taker
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- The ‘Game' in a nutshell
- Professor Smarba supplies ‘the team’.
The stock market supplies the action.
The experience empowers you.
- #1 'LIVE' Choice for April 2010
(First posted before market opening on Mon., April 12, 2010.
Based on closing prices of Fri., April 9, 2010.)
- KKR Financial 7.5% of 2017
In a Nutshell
________________________________________________________________________
2010 Orders Filled Profit (Loss)
________________________________________________________________________
April 12
Buy 24 bonds at $1267.20 each
Sell short 1025 common shares at $8.57.
(Based on our game investment of $15,000 plus an additional conservative 50% margin of
$15,000)
______________________________________________________________________________
2011
______________________________________________________________________________
February 10
Sold short 342 shares at $10.57 $684.00
(Locked-in profit)
______________________________________________________________________________
Total annualized profit 5%
__________________________________________
THE PROFIT-TAKER GAME PLAN:
KKR Financial
Common
Stock Price ($)
14.57 Long-term Goal (Uptrend)
12.57 Sub Goal 2 (Uptrend)
*10.57 Sub Goal 1 (Uptrend)
8.57 Initial Purchase Price
5.71 Sub Goal 1 (Downtrend)
2.85 Sub Goal 2 (Downtrend)
0 Long-term Goal (Downtrend)
*Underlined blue is price of last 'filled' trade.
Gamers! To verify current price, click here.
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Please Note Well:
In the beginning on April 12, 2010.
We bought 24 bonds. CALCULATION: $30,000 ($15,000 of which is margin) divided by
$1267.20 (price of a convertible bond) = 24 bonds (rounded off).
Total investment = $30413
We start our plan as a half-hedge. That is, we sell short half the shares represented by our
24 bonds which equals a total of 1025 shares sold short.
CALCULATION: 24 bonds x 85.42 shares per bond = 2050 shares.
So a half-hedge is ½ of 2050 or 1025 shares sold short.
Always sell short 342 shares on each move to an upside sub goal.
That is, 1025 shares sold short, divided by the 3 upside sub goals = 342.
Always cover ('buy in') 342 shares on each move to a downside goal. That is, 1025 shares
sold short divided by the 3 downside sub goals = 342.
________________________________________________________________________
CONVERTIBLE BOND FACTS:
KKR Financial 7.5% of 2017
CONVERTIBLE PRICE : 126.72% or $1267.20
NUMBER OF SHARES: 122.205 shares per bond
CONVERSION VALUE : 104.73% or $1047.30
PREMIUM : 21%
TERM CHANGE: 0
MATURITY: January 15, 2017
EXCHANGE: Over-the-Counter
CURRENT YIELD : 5.9 %
ISSUE SIZE: $ 150 MILLION
INTEREST PAYMENT DATES: July 15 and January 15
CALL PRICE: No call price
CUSIP : 48248AAD 10
INDUSTRY: Financial Service
_______________________________________________________________________
UNDERLYING COMMON STOCK FACTS:
KKR Financial
PRICE: $8.57
HI (52 WEEKS): $8.73
LO (52 WEEKS): $ .75
VOLATILITY (%) (52 WEEKS): 93 %
HI (LAST 3 MONTHS): $8.73
LO (LAST 3 MONTHS): $5.80
VOLATILITY (%) (LAST 3 MONTHS): 34%
HI (1 MONTH) $8.73
LO (1 MONTH) $7.46
VOLATILITY (%) (LAST 1 MONTH) 15%
EXCHANGE: New York
MARKET CAPITAL: 1.36 BILLION
DIVIDEND YIELD: 2.33 %
SYMBOL: KFN
_______________________________________________________________________
NATURE OF BUSINESS
- The Company has offices on four continents,
Company Official Website; http://www.kkr.com/company/company_overview.cfm:
_______________________________________________________________________
Suggested 100% Ideal Actual Rating
Is the premium on the bond under 20%? 10% 2%
Of the situations being considered, how does 50% 40%
the volatility of this common stock compare
with the other candidates?
Is the market price of the convertible bond 10% 2%
under $1000 (par value)?
Does the yield (%) paid by the bond, less the 5% 5%
common stock yield, at least offset the interest
paid to your broker for margin privileges?
Does the company pay dividends on the stock? 10% 7%
( The investor must pay declared
dividends on short sales).
Is there a record of convertible premiums? 5% 5%
Does the company have assets in excess of the 5% 5%
face value of the bonds?
Is the company in an industry in which there is 5% 5%
a possibility of growth?
TOTAL: 100% 71%
Is the premium on the bond under 20%? 10% 2%
Of the situations being considered, how does 50% 40%
the volatility of this common stock compare
with the other candidates?
Is the market price of the convertible bond 10% 2%
under $1000 (par value)?
Does the yield (%) paid by the bond, less the 5% 5%
common stock yield, at least offset the interest
paid to your broker for margin privileges?
Does the company pay dividends on the stock? 10% 7%
( The investor must pay declared
dividends on short sales).
Is there a record of convertible premiums? 5% 5%
Does the company have assets in excess of the 5% 5%
face value of the bonds?
Is the company in an industry in which there is 5% 5%
a possibility of growth?
TOTAL: 100% 71%
NOTIFICATION
The Profit-Taker Copyright 1978, 1980,1986, 2009
All rights reserved
Permission granted for personal and educational use only. .
Any unauthorized fund management and/or investment newsletter advice or advisory service
copyright.
All rights are reserved to take any action available to recoup all resulting financial proceeds
and damages therefrom awarded by the appropriate court in breach of this copyright.
DISCLAIMER
This game or website is not an endorsement of any security.
Information contained in this Website and attachments is of a general nature only and is not
intended to constitute advice for any specific situation. The terms of referral bonuses may vary
and are only applicable suitably qualified professional should always be sought in relation to
any particular matter or circumstance.
