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Thread: Hey Melonie

  1. #1
    Senior Member guywholikesdancers's Avatar
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    Default Hey Melonie

    Got any opions on SCO? This is the NYSE French insurance company, not the NAS tech-stock-turned-incompetent-law-firm. They paid out 99 cents this week to compensate for extra shares that were issued in Europe, and consequently dropped by about that much. If you look at some reports on their cash-per-share, revenue etc they look like a bargain at current prices, but insurance companies are hard to value anyway and foreign ones even more so. I bought a little bit this morning at 1.85, but I'm thinking I should have waited for 1.66 (apparently that's what an equivalent amount of shares of the European issue would cost right now).

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    ..or anyone else. There are a lot of smart folks here.

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    Senior Member m's Avatar
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    Default Re:Hey Melonie

    scor re is in a little flux now, i do business with them on the insurance/investment side through a company they hold out of fl. the group just got their s&p rating re-affirmed but are still waiting on am best to re-evaluate and bring them back to an a-. their main forte has been p&c reinsurance and with past flooding probs in europe combined with super low interest rates they have been hit as hard as any of insurance co (roi has been dismal for the industry as a whole). combine the loss of reserves with tha amount of business that they have picked up state side on the investment channel and the ratings companies dropped them about 6 months ago. they should be selling of a couple festering subs pretty soon to raise some captial suprlus back up. ive been told 1q '04 this will be done but then again telling and doing are different things. all in all i would suspect some fluctuation on the share price if and when this happens. for what it is worth that is the background of what i know, i have all the confidence in the world that mel can get give it a good evaluation for you :...

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    God/dess montythegeek's Avatar
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    Default Re:Hey Melonie

    $60 to $1.85 in 4 years. 35% owned by insiders. Debt is 60% of capitalization 3 months ago. Selling at a premium to home price. Tricky valuation issues. And on top of that French?

    Would you like to buy some Italian milk stock?
    My evaluation is its a pure crapshoot on a takeover bid. I hope you didn't bet the Christmas club money.

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    You mean Parmalat? Why not, I made 50% in a couple of days on Enron. 20 cents to 30 cents, something like that.

    And yes, it's just my play money.

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    Banned Melonie's Avatar
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    Default Re:Hey Melonie

    Frankly, with the potential consequences of future terrorist acts looming in the background, with the original 9/11 insurance claims far from being litigated let alone settled, with a seemingly armageddon like sequence of natural disasters lately, and with the state of most insurance companies already shaky enough that some must seek reinsurance, the true economic outlook of this segment of the market isn't exactly something which is straightforward to evaluate. Add to this that France is a known hotbed of terrorist recruiting, and that a good chunk of this company's revenues are in falling dollars while their costs are in rising euros, makes this stock a roulette wheel bet. I might make a small bet anyhow, though, since the long odds might pay off big time ! Maybe I can get a brokerage house to write March call options ? (if you're going to gamble long odds you might as well go for broke)

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    Featured Member Lilith's Avatar
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    Default Re:Hey Melonie

    My first thought was to inquire if you're interested in some oceanfront property in Jersey. But if you're serious...

    This is your play money. A sharp eye and an ear to the ground could make you a quick tidy sum (*snort* ... or not...) and would likely be exciting. At the very least, a loss would make your taxes easier.

    A more fun gamble to make, in my opinion, would be California energy companies. "More fun" would be totally subjective, however.
    He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you. ~ Friedrich Nietzsche

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    The other thing that makes this company interesting is the 14% dividend yield. One thing I'm not clear on is the tax implications; if a foreign company trading on the NYSE pays a dividend, is the dividend taxble income or not?

    p.s.: Lilith: love the quote. Someone should post that on the Yahoo SCOX board.

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    God/dess montythegeek's Avatar
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    Default Re:Hey Melonie

    Depends on whether they are a "qualified foreign corporation"
    see http://www.house.gov/jct/x-54-03.pdf
    What qualifies is going to change from year to year so what may be true one year won't be the next. Furthermore the dividend is by no means [email protected]% debt is cheaper than equity and working your way out of this is a trap if they maintain nominal dividend.

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    Veteran Member NVJosh's Avatar
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    Default Re:Hey Melonie

    Quote Originally Posted by guywholikesdancers link=board=6;threadid=5475;start=msg59160#msg59160 date=1072533036
    The other thing that makes this company interesting is the 14% dividend yield. One thing I'm not clear on is the tax implications; if a foreign company trading on the NYSE pays a dividend, is the dividend taxble income or not?
    Dividends from foreign corporations are taxable. And, there's a pitfall. The foreign dividend may not be eligible for the new lower 15%/5% tax rates. Only dividends from "qualified" foreign corporations are eligible for the lower rate. Here's a quote from BNA's commentary on the 2003 tax act (BNA is the Bureau of National Affairs and is a leading tax research provider):

    "The Act defines a qualifying foreign corporation as any foreign corporation if the corporation is incorporated in a U.S. possession or eligible for benefits of a U.S. income tax treaty. A foreign corporation not qualifying under such definition could qualify with respect to dividends paid if the stock with respect to which such dividend is paid is readily tradable on an established U.S. securities market. A qualified foreign corporation will not include any foreign corporation for the taxable year in which the dividend was paid, or the preceding taxable year, which is a foreign personal holding company, foreign investment company or passive foreign investment company. "

    I'm not sure if the company in question qualifies or not. It soes meet the "readily tradeable on an established U.S. securities market" clause, so I think you're okay, however don't quote me on that.

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    Featured Member scorpio's Avatar
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    Default Re:Hey Melonie

    Vegas is a much more fun way to blow money

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    Doubled down this morning at $1.66. Who needs Vegas?

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    Banned Melonie's Avatar
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    Default Re:Hey Melonie

    did you double down again today at $1.59 ? Considering that the stock should have gone up 2% today based on nothing else except a stronger Euro, this ain't looking good !

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    Nah, it'll trade sideways to down until the rights offering for the European issue is completed Jan 9th. A few days to a week or so after that it should start trending upward, but I missed the chance to get out with a quick profit. C'est la vie; I still expect to make a bit, but it's tying up my play money for longer than I like. Not much entertainment value in that. Hope your plays are doing better.

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    >> Nah, it'll trade sideways to down until the rights offering for the European issue
    >> is completed Jan 9th.

    Except the rights offering is completed on the 7th, not the 9th, and it started recovering the day before, not a few days after. Doh! Good thing I don't do this for a living.

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    Senior Member guywholikesdancers's Avatar
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    Default Re:Hey Melonie

    OK, I got bored and bailed on this at 1.84 this morning. I was averaged in at 1.75, so after commissions I made enough for 4 lap dances and a decent tip, unless you count the opportunity cost.

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