BAC leverage

[ERICOPOLY]

Ok, question on the concept/model of "cost of leverage" as we have been discussing in this thread.  We've been defining it as the break even point versus the common, or the bond rate of the money left over from: (current stock price-premium paid) to reach the strike price, per annum.  This makes a fair amount of sense for most warrants, but it is confusing me a bit for the BAC-B's.

 

These have a strike price of 30.79, so even if you paid nothing for the warrants, there would still be a "cost of leverage" of 18% per year.  The fact that it is completely decoupled from the price you pay, in this particular instance, is setting of alarm bells in my head.  What am I missing?

 

When you say decoupled from the price you pay, do you think the rate of interest is cheap or expensive?  Are you realizing it's an extortionist interest rate, or do you think they are underpricing the "loan"?

 

You have 1 warrant priced at 80 cents and an $11.77 cent "loan" that you pay 18% annualized interest on.  You don't pay much of the interest upfront, rather you pay it in opportunity cost should the stock trade above $30.

 

On the other hand, the lender might not expect the stock to trade anywhere near $30 and thus isn't really demanding that high of a rate after all.

 

Well, I mean you could say the price was 0.00000000000000000001, and it would still show an 18% "cost of leverage", so that seems odd. 

 

Said another way, it could be a 0 cost, so you don't have any "leverage"--it seems pretty costless at that point, even though the calculation shows 18%.

 

It has an opportunity cost.

 

That 80 cents invested in the common would be worth something like $2.44.  So that's what it costs you.

 

 

[racemize]

Ok, question on the concept/model of "cost of leverage" as we have been discussing in this thread.  We've been defining it as the break even point versus the common, or the bond rate of the money left over from: (current stock price-premium paid) to reach the strike price, per annum.  This makes a fair amount of sense for most warrants, but it is confusing me a bit for the BAC-B's.

 

These have a strike price of 30.79, so even if you paid nothing for the warrants, there would still be a "cost of leverage" of 18% per year.  The fact that it is completely decoupled from the price you pay, in this particular instance, is setting of alarm bells in my head.  What am I missing?

 

When you say decoupled from the price you pay, do you think the rate of interest is cheap or expensive?  Are you realizing it's an extortionist interest rate, or do you think they are underpricing the "loan"?

 

You have 1 warrant priced at 80 cents and an $11.77 cent "loan" that you pay 18% annualized interest on.  You don't pay much of the interest upfront, rather you pay it in opportunity cost should the stock trade above $30.

 

On the other hand, the lender might not expect the stock to trade anywhere near $30 and thus isn't really demanding that high of a rate after all.

 

Well, I mean you could say the price was 0.00000000000000000001, and it would still show an 18% "cost of leverage", so that seems odd. 

 

Said another way, it could be a 0 cost, so you don't have any "leverage"--it seems pretty costless at that point, even though the calculation shows 18%.

 

It has an opportunity cost.

 

That 80 cents invested in the common would be worth something like $2.44.  So that's what it costs you.

 

So, I'm talking about if the price of the B warrants were 0--they cost nothing, so not the 80 cents they are now.  In that case there would still be a "cost of leverage" since the common has to make it to the strike price.

[ERICOPOLY]

Look at writing covered calls, for example.

 

I see the $22 strike 2015 call priced at a "bid" of $25 cents.

 

I can write that call and put the 25 cents into the common.  Once the stock gets to $22, that 25 cents will actually be worth roughly 44 cents.

 

 

People buying A warrants might just be looking at the B warrant as a long-dated covered call.  So perhaps they write the B warrant and invest the proceeds in the A warrant. 

 

That would put the B's under pressure.  But it would make the A's cheaper to finance.  So the A's might go up in price and the B's go down in price.  Or not, just brainstorming...

 

 

[ERICOPOLY]

Ok, question on the concept/model of "cost of leverage" as we have been discussing in this thread.  We've been defining it as the break even point versus the common, or the bond rate of the money left over from: (current stock price-premium paid) to reach the strike price, per annum.  This makes a fair amount of sense for most warrants, but it is confusing me a bit for the BAC-B's.

 

These have a strike price of 30.79, so even if you paid nothing for the warrants, there would still be a "cost of leverage" of 18% per year.  The fact that it is completely decoupled from the price you pay, in this particular instance, is setting of alarm bells in my head.  What am I missing?

 

When you say decoupled from the price you pay, do you think the rate of interest is cheap or expensive?  Are you realizing it's an extortionist interest rate, or do you think they are underpricing the "loan"?

 

You have 1 warrant priced at 80 cents and an $11.77 cent "loan" that you pay 18% annualized interest on.  You don't pay much of the interest upfront, rather you pay it in opportunity cost should the stock trade above $30.

 

On the other hand, the lender might not expect the stock to trade anywhere near $30 and thus isn't really demanding that high of a rate after all.

 

Well, I mean you could say the price was 0.00000000000000000001, and it would still show an 18% "cost of leverage", so that seems odd. 

 

Said another way, it could be a 0 cost, so you don't have any "leverage"--it seems pretty costless at that point, even though the calculation shows 18%.

 

It has an opportunity cost.

 

That 80 cents invested in the common would be worth something like $2.44.  So that's what it costs you.

 

So, I'm talking about if the price of the B warrants were 0--they cost nothing, so not the 80 cents they are now.  In that case there would still be a "cost of leverage" since the common has to make it to the strike price.

 

I want some of that!  :)

 

First you need a seller.

 

The market currently thinks an 18% hurdle rate is worth 80 cents collateral for the non-recourse loan.

 

 

[racemize]

 

I want some of that!  :)

 

First you need a seller.

 

The market currently thinks an 18% hurdle rate is worth 80 cents collateral for the non-recourse loan.

 

Right, well I get that it doesn't make sense, I'm just pointing out that by using the definition of the "cost of leverage" we have been, even when the leverage costs nothing, it is still reported at a very high cost (i.e., 18% in my hypothetical 0 cost B warrants)--thus, it seems like there is a flaw in what we are saying about how much that leverage costs, if it has end cases which do not correspond to the price you pay.

[ERICOPOLY]

 

I want some of that!  :)

 

First you need a seller.

 

The market currently thinks an 18% hurdle rate is worth 80 cents collateral for the non-recourse loan.

 

Right, well I get that it doesn't make sense, I'm just pointing out that by using the definition of the "cost of leverage" we have been, even when the leverage costs nothing, it is still reported at a very high cost (i.e., 18% in my hypothetical 0 cost B warrants)--thus, it seems like there is a flaw in what we are saying about how much that leverage costs, if it has end cases which do not correspond to the price you pay.

 

 

I said 80 cents is the collateral.  It's the collateral in case you default on your non-recourse loan interest payments (or the cost of leverage to use another term).

 

The story starts off where you hold 1 share of common.  You then borrow $11.77 against it (cash you get to keep) promising to pay the lender all the profits up to $30.79 per share. 

 

He says, okay then, what can I hold in collateral in case you never pay me a dime?  Oh, how about 80 cents?  He takes it.

 

It's not a free loan!

 

And the 18% pound of flesh is charged because it's a very high risk that you'll default on a large portion of the interest payments (in his mind).

 

 

[Rabbitisrich]

The semantics aren't so important so long as you understand what you get for what you paid. The scenario that you presented isn't really applicable because the idea of an opportunity cost requires a cost, by definition. If someone hands you warrants, then you have no opportunity cost unless you are obligated to waive your right to purchase common.

 

 

[ERICOPOLY]

 

A lender who offers a non-recourse loan for no collateral is a rare bird.

 

You (Racemize) seem to be objecting to non-recourse loans that require no collateral.  I agree!

[racemize]

 

I want some of that!  :)

 

First you need a seller.

 

The market currently thinks an 18% hurdle rate is worth 80 cents collateral for the non-recourse loan.

 

Right, well I get that it doesn't make sense, I'm just pointing out that by using the definition of the "cost of leverage" we have been, even when the leverage costs nothing, it is still reported at a very high cost (i.e., 18% in my hypothetical 0 cost B warrants)--thus, it seems like there is a flaw in what we are saying about how much that leverage costs, if it has end cases which do not correspond to the price you pay.

 

 

I said 80 cents is the collateral.  It's the collateral in case you default on your non-recourse loan interest payments (or the cost of leverage to use another term).

 

The story starts off where you hold 1 share of common.  You then borrow $11.77 against it (cash you get to keep) promising to pay the lender all the profits up to $30.79 per share. 

 

He says, okay then, what can I hold in collateral in case you never pay me a dime?  Oh, how about 80 cents?  He takes it.

 

It's not a free loan!

 

And the 18% pound of flesh is charged because it's a very high risk that you'll default on a large portion of the interest payments (in his mind).

 

Ok, finally got it--I think my brain has stopped functioning after all of my SXSW craziness this week.  Thank you for the explanation.

[ERICOPOLY]

Compare that B warrant to a non-recourse mortgage with 18% rate:

 

93.6% Loan-to-value ratio at fixed six year rate. 

Cash-out-refinance.

Underlying asset is BAC equity (uncertainty).

 

High LTV ->High Risk Partial Default -> High Loan Rate.

 

And none of the interest payments are due until expiry.

[ERICOPOLY]

I suppose since I'm using the mortgage analogy, instead of "collateral" I could call that 80 cents "home equity".

 

You mortgage your common share, leave 80 cents of equity in the stock, and walk out the door with $11.77 in cash at an 18% interest rate.

 

Your "interest" is due as a balloon payment in Oct 2018.  If you don't make that payment in full, your common stock is foreclosed on and you lose all of your 80 cents of equity.

 

See --  any Mom and Pop investor can understand the risk of these B warrants.

 

As a businessman, I'm not interested in them.  There are cheaper forms of getting my 1.5x leverage.

 

 

[hyten1]

great way to explain it!

 

"You mortgage your common share, leave 80 cents of equity in the stock, and walk out the door with $11.77 in cash at an 18% interest rate.

 

Your "interest" is due as a balloon payment in Oct 2018.  If you don't make that payment in full, your common stock is foreclosed on and you lose all of your 80 cents of equity."

 

 

I suppose since I'm using the mortgage analogy, instead of "collateral" I could call that 80 cents "home equity".

 

You mortgage your common share, leave 80 cents of equity in the stock, and walk out the door with $11.77 in cash at an 18% interest rate.

 

Your "interest" is due as a balloon payment in Oct 2018.  If you don't make that payment in full, your common stock is foreclosed on and you lose all of your 80 cents of equity.

 

See --  any Mom and Pop investor can understand the risk of these B warrants.

 

As a businessman, I'm not interested in them.  There are cheaper forms of getting my 1.5x leverage.

[txitxo]

 

First of all, I didn't bet my life savings against the BAC buyback/dividend outcome, it was more like half of it.  So even if I lose I probably have $1 or so left.  So don't worry about me.  That and government assistance from the all the good folks in America will keep me and my family just fine.  I don't actually invest much, maybe a few dollars here and there if at the end of the month my public assistance debit card has a little room left on it.  I just find that living in the shelter gets lonely during the day sometimes so I like to hang out on this board. 

 

In terms of the dead pool, there are still viable candidates.

 

An Ask Kraven thread?  Damn, son, why if that isn't the finest idea I've heard since they added meat in the gravy here at the shelter.  Please feel free to start it and ask the first question.  I am happy to share my curmudgeonly wisdom.  Oops, sorry, got to go.  The attendants here don't like it if you take up the computer time too long.

 

Kraven, if the guys at the shelter don't treat you right, you can always come visit us here in Southern Spain. We don't need no stinking shelters here, the weather is great, you can sleep under an olive tree most of the year. Free doctors, almost free food and very cheap (and very good) wine.

 

 

[txitxo]

 

This thread has been entertaining to me as well, although I've only skimmed it.  It's like a train wreck that I can't avert my eyes from.  It's dangerous, but in that high wire without a net kind of way.  The greed and envy pours from this thread like water from a tap.  On the one hand you have Eric who is a brilliant, self taught investor.  While there has been some luck involved in his results (there is always some luck for any of us), he put himself in a position to take advantage of the situation and had the stones to do it. 

 

So how many people are (1) brilliant and (2) fearless?  Not too many.  I think there are a lot of particularly younger posters who have stars in their eyes and the investment equivalent of a huge man crush.  I suspect there will be some casualties along the way as "regular" folks try to attempt to split the atom in their basement. 

 

Believe me, I don't pretend to understand half of what is said here, but I know my limitations.  I think too that while we all have much we can learn and the education never stops, in these kinds of situations if you have to ask, it's probably not for you.  But hey, what do I know?  Go forth and blow thyself up!

 

 

  Kraven, I also have a little trouble seeing what all the excitement is about on this thread...we know that the best value investors can do >20% per year, so it is obvious that if you leverage by a factor of 2 or 3 you will be able to get 60-90%...on the years where your return is positive. Of course you expose yourself to terrible risks along the way, and it is obvious that Eric's amazing skill has minimised them and maximised his profits. So, olé tus cojones, Eric.

 

  But if you take 1000 young people and manage to teach them to invest like, let's say, Walter Schloss, and they keep at it for 40 years, you know that they will get 15-20% per year and all of them will probably retire rich. However, if you take 1000 other young investors, and tell them to concentrate their bets in 1-2 financial stocks while leveraging by a 2-3 factor, it is almost sure that all of them will end up broke, even if a few manage to post astonishing numbers during a period of time. 

 

  This thread reminds me of a story I heard, about a minor Russian oligarch who apparently started his fortune in the early 90's playing Russian roulette, betting double or nothing. At one session, he pulled the trigger 6 times, without spinning the cylinder, and then turned the gun on the other side of the table to make sure he could leave with his winnings.  Of course, in the same way as Eric, the guy had an edge, and he stayed within his circle of competence. The story says that he had spent years as guard of some mostly empty official building, and he and his tovarischi did nothing all day long but sit on a chair and play with their Nagants. So he could tell almost exactly where the bullet was in the cylinder by the way the revolver weight was distributed.

 

  Amazing investing skills, he compounded his money by 6400% in a few minutes. But not a strategy I would recommend to anybody else. First, because not many people can probably become that skilled, even if they try hard, and second, because if you keep playing long enough, that almost is a sure death sentence.

 

 

 

 

[Kraven]

 

First of all, I didn't bet my life savings against the BAC buyback/dividend outcome, it was more like half of it.  So even if I lose I probably have $1 or so left.  So don't worry about me.  That and government assistance from the all the good folks in America will keep me and my family just fine.  I don't actually invest much, maybe a few dollars here and there if at the end of the month my public assistance debit card has a little room left on it.  I just find that living in the shelter gets lonely during the day sometimes so I like to hang out on this board. 

 

In terms of the dead pool, there are still viable candidates.

 

An Ask Kraven thread?  Damn, son, why if that isn't the finest idea I've heard since they added meat in the gravy here at the shelter.  Please feel free to start it and ask the first question.  I am happy to share my curmudgeonly wisdom.  Oops, sorry, got to go.  The attendants here don't like it if you take up the computer time too long.

 

Kraven, if the guys at the shelter don't treat you right, you can always come visit us here in Southern Spain. We don't need no stinking shelters here, the weather is great, you can sleep under an olive tree most of the year. Free doctors, almost free food and very cheap (and very good) wine.

 

Txitxo, many thanks for the offer.  If the need arises I will take you up on that.  Perhaps you can show me the best olive trees and where to find the doctors, food, and very good wine.  I will need an internet connection though so that I can answer all the questions that have come in on the Ask Kraven thread.  It's proving extremely popular, especially among the cool and hip crowd.  Who knew that curmudgeonly wisdom would be the next in thing with the youngsters.

[Kraven]

 

This thread has been entertaining to me as well, although I've only skimmed it.  It's like a train wreck that I can't avert my eyes from.  It's dangerous, but in that high wire without a net kind of way.  The greed and envy pours from this thread like water from a tap.  On the one hand you have Eric who is a brilliant, self taught investor.  While there has been some luck involved in his results (there is always some luck for any of us), he put himself in a position to take advantage of the situation and had the stones to do it. 

 

So how many people are (1) brilliant and (2) fearless?  Not too many.  I think there are a lot of particularly younger posters who have stars in their eyes and the investment equivalent of a huge man crush.  I suspect there will be some casualties along the way as "regular" folks try to attempt to split the atom in their basement. 

 

Believe me, I don't pretend to understand half of what is said here, but I know my limitations.  I think too that while we all have much we can learn and the education never stops, in these kinds of situations if you have to ask, it's probably not for you.  But hey, what do I know?  Go forth and blow thyself up!

 

 

  Kraven, I also have a little trouble seeing what all the excitement is about on this thread...we know that the best value investors can do >20% per year, so it is obvious that if you leverage by a factor of 2 or 3 you will be able to get 60-90%...on the years where your return is positive. Of course you expose yourself to terrible risks along the way, and it is obvious that Eric's amazing skill has minimised them and maximised his profits. So, olé tus cojones, Eric.

 

  But if you take 1000 young people and manage to teach them to invest like, let's say, Walter Schloss, and they keep at it for 40 years, you know that they will get 15-20% per year and all of them will probably retire rich. However, if you take 1000 other young investors, and tell them to concentrate their bets in 1-2 financial stocks while leveraging by a 2-3 factor, it is almost sure that all of them will end up broke, even if a few manage to post astonishing numbers during a period of time. 

 

  This thread reminds me of a story I heard, about a minor Russian oligarch who apparently started his fortune in the early 90's playing Russian roulette, betting double or nothing. At one session, he pulled the trigger 6 times, without spinning the cylinder, and then turned the gun on the other side of the table to make sure he could leave with his winnings.  Of course, in the same way as Eric, the guy had an edge, and he stayed within his circle of competence. The story says that he had spent years as guard of some mostly empty official building, and he and his tovarischi did nothing all day long but sit on a chair and play with their Nagants. So he could tell almost exactly where the bullet was in the cylinder by the way the revolver weight was distributed.

 

  Amazing investing skills, he compounded his money by 6400% in a few minutes. But not a strategy I would recommend to anybody else. First, because not many people can probably become that skilled, even if they try hard, and second, because if you keep playing long enough, that almost is a sure death sentence.

 

Fascinating story.  I think the thread is very interesting.  I have no problems with people asking questions and Eric has been more than generous and patient with his time in answering them.  Agree or disagree it doesn't matter.  As I said before, it's fine to learn and get educated and perhaps there's something the average joe can add to their toolbox.  I fear it's something more than that though.  It is obvious that it is being viewed (as per your story) as a get rich quick scheme.  Just pick BAC or something like it and lever up!  For those with the skills, more power to you.  I just think though that for most people who are rifling questions on a message board, they will not have the skills to do it properly.  Maybe they will learn enough to do so.  If so, god bless.  If not, well, perhaps you can show them where those olive trees and good wine can be found!  Perhaps not a bad consolation prize!

[berkshiremystery]

I might the first time intervene in this thread, since I was only reading it for some days silently. I personally think Eric's thoughts and theory seemed well reasoned and good structured. He has a concentrated portfolio of mostly BAC common + some "prudent" leverage with BAC Leaps,... and he "protects" his small outstanding margin loan. Very simple. As we all know, he had the warrants before, and only found the Darwinian way, a "cheaper" and more "secure" solution to leverage up. Specially in a market crash has this structured BAC position some big advantages compared with his old mixture. But all board members should beware, that he has done this mostly in his tax-free retirement account as I remember. But in general,... I personally have nothing to complain about his portfolio structure. My personal concentrated BAC mixture consists mostly in common + 2015 Leaps, my warrants are prisoner in a taxable account.

 

[racemize]

My personal concentrated BAC mixture consists mostly in common + 2015 Leaps, my warrants are prisoner in a taxable account.

 

I think that's what mine will look like fairly soon--prior to this thread it was common + A warrants and then B warrants in non-taxable--I think I'll just switch the B warrants to the LEAPs (it is a very small position, that I already considered somewhat speculative) to get my feet wet.  I think Eric is right on the A vs LEAPs, but I'm not confident enough to change those, and I'm happy with my understanding of them anyway.

[Studesy]

 

This thread has been entertaining to me as well, although I've only skimmed it.  It's like a train wreck that I can't avert my eyes from.  It's dangerous, but in that high wire without a net kind of way.  The greed and envy pours from this thread like water from a tap.  On the one hand you have Eric who is a brilliant, self taught investor.  While there has been some luck involved in his results (there is always some luck for any of us), he put himself in a position to take advantage of the situation and had the stones to do it. 

 

So how many people are (1) brilliant and (2) fearless?  Not too many.  I think there are a lot of particularly younger posters who have stars in their eyes and the investment equivalent of a huge man crush.  I suspect there will be some casualties along the way as "regular" folks try to attempt to split the atom in their basement. 

 

Believe me, I don't pretend to understand half of what is said here, but I know my limitations.  I think too that while we all have much we can learn and the education never stops, in these kinds of situations if you have to ask, it's probably not for you.  But hey, what do I know?  Go forth and blow thyself up!

 

 

  Kraven, I also have a little trouble seeing what all the excitement is about on this thread...we know that the best value investors can do >20% per year, so it is obvious that if you leverage by a factor of 2 or 3 you will be able to get 60-90%...on the years where your return is positive. Of course you expose yourself to terrible risks along the way, and it is obvious that Eric's amazing skill has minimised them and maximised his profits. So, olé tus cojones, Eric.

 

  But if you take 1000 young people and manage to teach them to invest like, let's say, Walter Schloss, and they keep at it for 40 years, you know that they will get 15-20% per year and all of them will probably retire rich. However, if you take 1000 other young investors, and tell them to concentrate their bets in 1-2 financial stocks while leveraging by a 2-3 factor, it is almost sure that all of them will end up broke, even if a few manage to post astonishing numbers during a period of time. 

 

  This thread reminds me of a story I heard, about a minor Russian oligarch who apparently started his fortune in the early 90's playing Russian roulette, betting double or nothing. At one session, he pulled the trigger 6 times, without spinning the cylinder, and then turned the gun on the other side of the table to make sure he could leave with his winnings.  Of course, in the same way as Eric, the guy had an edge, and he stayed within his circle of competence. The story says that he had spent years as guard of some mostly empty official building, and he and his tovarischi did nothing all day long but sit on a chair and play with their Nagants. So he could tell almost exactly where the bullet was in the cylinder by the way the revolver weight was distributed.

 

  Amazing investing skills, he compounded his money by 6400% in a few minutes. But not a strategy I would recommend to anybody else. First, because not many people can probably become that skilled, even if they try hard, and second, because if you keep playing long enough, that almost is a sure death sentence.

 

I don't think anyone should be looking at this thread as some sort of a course in achieving 75% annualized returns but rather a lesson via Eric in how to look at these (LEAP/Warrant) instruments in a different and logical way.  The way I understand it, Eric isn't out pushing this "implied cost of leverage" method as a way of using options in every undervalued security one finds......he's just using it to logically compare two very similar vehicles (leaps&common vs. warrant) and choose the best alternative.  I love the concept of looking at investment decisions as business-like as possible and Eric's way of thinking definitely achieves this.  Thanks again!

[ERICOPOLY]

I love the concept of looking at investment decisions as business-like as possible and Eric's way of thinking definitely achieves this.  Thanks again!

 

I believe they are objecting to my comparing the prices of two hookers.  I'm considering their relative advantages and using price as a consideration.

 

Their chief complaint seems to be that they're hookers.  However, the title of this thread is effectively "hookers"...  so why aren't they at home clutching their bibles anyway?

 

[Kraven]

I love the concept of looking at investment decisions as business-like as possible and Eric's way of thinking definitely achieves this.  Thanks again!

 

I believe they are objecting to my comparing the prices of two hookers.  I'm considering their relative advantages and using price as a consideration.

 

Their chief complaint seems to be that they're hookers.  However, the title of this thread is effectively "hookers"...  so why aren't they at home clutching their bibles anyway?

 

Very coincidental that as I read this Jane's Addiction's "Whores" came on.

[Studesy]

I love the concept of looking at investment decisions as business-like as possible and Eric's way of thinking definitely achieves this.  Thanks again!

 

I believe they are objecting to my comparing the prices of two hookers.  I'm considering their relative advantages and using price as a consideration.

 

Their chief complaint seems to be that they're hookers.  However, the title of this thread is effectively "hookers"...  so why aren't they at home clutching their bibles anyway?

 

Very coincidental that as I read this Jane's Addiction's "Whores" came on.

 

:) I love the fact that we can discuss, debate, learn...and have some damn funny jokes/comments along the way!!

[ERICOPOLY]

By the way, the "cost of leverage" has slipped under 12% annualized now for the warrants -- it was at 13% annualized when this discussion began.

 

 

Regarding what BerkshireMystery said...  I was on the fence due to tax issues, but then I went ahead and sold all of the class A warrants the next day after doing more analysis of the relative merits.

 

[Studesy]

By the way, the "cost of leverage" has slipped under 12% annualized now for the warrants -- it was at 13% annualized when this discussion began.

 

 

Regarding what BerkshireMystery said...  I was on the fence due to tax issues, but then I went ahead and sold all of the class A warrants the next day after doing more analysis of the relative merits.

 

I noticed that as well Eric.  The BAC 2015  12's are at about 9.6%

Also...I noticed the AIG Warrants at roughly 8.3% range vs the 2015 37's Leaps at 8.8%

 

[hyten1]

its possible the cost advantage will swing back and forth btw calls vs warrants

 

maybe its best to own both to compensate for the switch?