A couple comments about the last FBR report, (in which the EPS estimate was corrected after you posted the link. This post refers to the amended, and "corrected" report).
First, I wish FBR would be consistent when doing these "updates" and continue to use a sum of the parts analysis. Just saying BV is this, or that, IMO tends to de-emphasize using proper multiples to value the other businesses, including the private equity (which there is, IMO, no justification to value at cost). IMO, the company is really as much, or more, a compelling value now than it has been at any time during the last year.
Second, I think that FBR is perhaps not making a proper calculation of estimated earnings when using the 64.4 million number for shares outstanding. The first quarter was based on 50.5 million shares outstanding, but if earnings were positive they would have been based on approx. 61.5 million, not 64.4. So, using the 61.5 number, the 1st quarter loss would be $.90 per share, not $1.11, and the FBR estimate for the 2nd quarter around $6.14, not $5.86.
If you add (1.11) EPS for the first quarter and $5.86 EPS (estimate) for the second quarter you get estimated EPS for the first half of $4.75.
This is FBRs' current calculation, and IMO, this is incorrect when referring to EPS.
If you add (.90) and $6.14 (FBR estimate on 61.5 million) you get estimated EPS for the first
half of $5.24.
Anyone agree with this?
I understand that FBR must use some conventions, and perhaps this share issue unduly complicates matters. Especially since most of the standard information that is readily and ordinarily available to investors does little to help them understand the company, and a lot of investors go no further.
However, the issue is relevant in that it affects EPS and affects the overall valuation assessment (perhaps close to $1.00 per share) of the company, for I believe LDP is showing the loan to the share trusts as a liability without showing any benefit other than stating that the loan is repaid as options are exercised.
BTW, one of the option programs is for agents that sell the company's annuity products. I previously posted that I thought this was a particularly good idea since these are products that I would say are more "sold" than they are "bought." The growth of sales has been very strong in the last year and one-half.
The following relevant excerpts are from note 3 to the financial statements from the 10q, 1st quarter 2000:
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Note 3. Earnings Per Share and Per ADR
The Group calculates earnings per share in accordance with SFAS 128, "Earnings per Share." This statement requires the presentation of basic and diluted earnings per share.
Basic earnings per share is calculated by dividing net income or loss by the weighted average number of ordinary shares outstanding during the applicable period, excluding shares held by the employee share option trust which do not rank for dividend.
The Group has issued employee share options, which are considered to be potentially dilutive. Diluted earnings per share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the applicable period adjusted for these potentially dilutive options, which are determined based on the "Treasury Stock Method." As the Company recorded a net loss for the three months ended March 31, 2000, the calculation of diluted earnings per share for this period does not include these potentially dilutive options as they are anti-dilutive and would result in a reduction of net loss per share. If the Company had reported net income for the three months ended March 31, 2000, there would have been an additional 11,563,292 shares included in the calculation of diluted earnings per share.
Net income (loss)….. $ (55,538)
Diluted:
Weighted average number of ordinary shares outstanding,
excluding shares held by the employee share option trust ...50,083,932
Weighted average ordinary shares used in dilutive earnings per share calculations ... 50,083,932
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