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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (56355)	12/7/2015 3:04:48 PM
From: robert b furman	Read Replies (1) of 78704

Cumulative interest is 3 years at 4.875 going back to 10/26/2015 or $14.625 if bought upon issuance and held to maturity. But on a quarterly basis they can pay cash or stock. OH that clears it up<smile> How in the world would you determine cost basis of that stock 1.21875 x the number of shares they gave you I guess. That keeps them from paying cash if they need it, but does dilute common a bit. today's low of 32.49 - interest if it is paid would be 14.625 = 17.865 / 1.8142 (conversion rate if common is below $27.56) = $9.85 per share. If they cut the dividend in half to a $1.00 it would yield 10 %. Am I looking at this set up correctly? My first impression is for the next 3 years buyers of the convertible would be getting stock vs the cash payment of 9.75 %. What do you think about how that will go? Bob The other way I looked at it was selling a January 2017 put for strike at 12.50 for 12.50 bid ask today is 1.96 to 2.60 bid ask. Buying KMI for 10.00 looks like a long term good deal if any resemblence of past dividends is maintained or put on hiatus and re-established. Bob

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