RMBS
Some very good questions, and subsequent discussion of the current situation with RMBS‘s price was raised by one of our Members today…
Sammy was supposed to settle, RMBS was to go to 100 the next day and my portfolio was supposed to skyrocket overnight…
I was going to buy my parents a house, a private plane for myself, and submit my retirement papers and live off the income from selling calls…
That was the dream, the reason I put all my money in RMBS and made it the only stock I have owned and accumulated over the last 10 years…
Is that dream still alive…?
Seriously … is there a value of my portfolio or a level of PPS at which point I can consider RMBS an income producing investment, and can count on a consistent income selling calls and/or puts, regardless of stock direction?
Is that an attainable goal…?
[Coach BD] The short answer to your questions is yes, I believe we can achieve those goals. The real question is, when…? That’s the big unknown. I too thought that if Samsung settled we would see the stock price move much more strongly than has been the case.
However, in the past two days it has been discussed on the Investors Village Discussion Board that the probable reason for the big institutions holding the price back is the situation with RMBS‘s convertible bonds that expire this Friday. As I recall, if the stock price is not above $26-and-change then a couple Hundred-Million worth of these convertible bonds will NOT be converted to shares.
This seems like a very logical and reasonable explanation for why the big RMBS holders are keeping the price down at this time… they don’t want their shares diluted by the conversion of these bonds into shares. I guess we’ll see over the next couple of weeks whether that hypothesis holds any water. If it does hold water, I would expect that there won’t be any big news coming out of the CC tomorrow.
In any case, I think many of our LTL holder brethren are having a similar feeling of disappointment at the reaction of the stock price on the heels of the Sammy settlement, the favorable ITC decision, the EU agreement, the Hynix verdict, etc……
I truly believe, however, that this is not the time to give up on the bus ride. As Warren Buffett has always said, when the market is fearful that’s when I start buying. It appears that many are disheartened by the price reaction so far when there may be significant forces at work to encourage that exact feeling in LTL holders in order to capture as many shares as possible from these disappointed holders at lower prices.
Who knows…? My gut tells me that sooner or later the word is going to get out about the significance of all of these events and then the price will begin moving north, hopefully at a steady pace over a longer period (2-3 years). That would be the ideal situation in which we could realize the maximum benefit and profit, being among the small group of investors that really do KNOW MORE than even many of the big institutional holders and we understand the breadth of the potential that RMBS has in their IP Portfolio.
In my opinion, when the smoke clears from all of this, RMBS will be a company worth anywhere from $10 – $40 BILLION. I’m postulating that in 2-3 years, if things continue to go as they have in the last 2 years, RMBS will be worth $10 – $20 BILLION… roughly 4 – 8x today’s value.
Coach BD
01/27/2010 at 4:05 pm
Posted in: Alerts & News, Income Generation Trades, RMBS, Trading Rules & Strategy.
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