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mfpd33 -

8,616 is BWLD's shares outstanding on 12/31/05, and 8,776 is shares outstanding on 9/24/06.

As for preferred stock, it is a hybrid form of capital, containing elements of both debt and equity. A few important things to know about preferred stock/preferred stockholders include:

- Receive their dividends ahead of common shareholders;
- No voting rights;
- Is a separate class of stock from common stock and has its own stock symbol;
- In the event of a liquidation, claims are subordinate to creditors and bondholders but have a senior preference to common stockholders.

Because preferred dividends are not tax deductible (as is interest to bondholders), it is more expensive than straight debt. So, you'd prefer the companies you own not to issue this type of capital.

All this is a long-winded way of saying that I exclude preferred stock from book value. To me, "book value" is what remains after you liquidate the business and pay off all the claims ahead of the common stockholders.


Hewitt

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