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Author: Wotdabny Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 455796  
Subject: Re: New Lows Date: 9/17/2008 6:41 PM
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"The company has the right, at any time, to defer dividend payments for up to 20 consecutive quarters ..."

I don't buy anything with that type of clause.
Wendy


Thank you for the link, Wendy. While that's an excellent point, it needs context. Simply put, the preferred issue has that clause, but the clause here is a guarantee regarding the worst possible outcome for WFC, assuming it were to still exist. Common stockholders have no guarantee of anything. This is hardly a drawback.

The preferred stock is cumulative; if WFC were to miss paying out their dividend -- the one they raised 10% on July 16 in the midst of the enlarging financial crisis -- WFC would be required to pay its preferred shareholders in full before paying holders of common stock any of their dividends. Remember, the company has the right, at any time, to suspend their dividend payments to their common stockholders indefinitely, with no payments, ever, should it decide that doing so "could be deemed an unsafe or unsound practice," according to the most recently filed 10k. It appears to me that JWF is safer, in this and other respects, than WFC.

As an investment, it seems to me that it will be a very short period of time before JWF is trading in the low $20s again -- a 25% gain. It is callable on April 9, 2009, or any time thereafter, for $25 -- a 50% gain. In the meantime one is paid around 8.5% to wait for these gains.

It's one investment idea. I'd like to hear others. This is a volatile market, which to me indicates a strong chance of finding many excellent investment opportunities. I'd much rather not be saying to myself, as I too often do, "why didn't I think of that then?"

Wot
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