Re. reported EPS.
Hold on, Dave. They did $.19, fully-diluted, and fully taxed. If you are going to use the share count that assumes they convert all the debt to stock, you get a share count of 28,642. You can't use the same interest number as if they converted the stock, they wouldn't have to pay interest. Your $.167 number double penalizes VNTV for the convert they did. Before the convert, VNTV did $390k in interest income and they had cash of about $33mm at the end of March and June. This implies they earned about 4.7% interest on the cash (you have to annualize the $390k). If you use the diluted share count, you have to assume they earn interest on the cash. Assuming the same 4.7% interest rate on the new cash balance, gets you almost $1.2mm in interest income which if you run it through the income statement gets you to $.1899 (using 37% taxes). Even if you only assume a 3.9% return on cash, you get $.185 which rounds up to $.19. Therefore, they did $.19 clean.
I understand and agree with your point re. fund managers. In general, they are a group that doesn't know what they own. This is another great argument for diversification. Anything can happen in a quarter so your performance can lag badly over the short-run despite making good bets if you don't weight your bets correctly.
More later. |
