Comments on: The Equity Monetization Strategy http://wheredoesallmymoneygo.com/the-equity-monetization-strategy/ A personal finance blog written by Preet Banerjee Sat, 11 Feb 2012 16:22:10 +0000 hourly 1 http://wordpress.org/?v=3.1.2 By: Guest Post: Looking Inside Insider Transactions : WhereDoesAllMyMoneyGo.com http://wheredoesallmymoneygo.com/the-equity-monetization-strategy/#comment-1904 Guest Post: Looking Inside Insider Transactions : WhereDoesAllMyMoneyGo.com Mon, 16 Feb 2009 02:48:26 +0000 http://symbiantcapital.com/2008/04/01/the-equity-monetization-strategy/#comment-1904 [...] concludes the guest post by the Intelligent Speculator - thanks very much for the article. You can read a little more about Equity Monetizations (the strategy referred to in the article) here... Share and [...] [...] concludes the guest post by the Intelligent Speculator – thanks very much for the article. You can read a little more about Equity Monetizations (the strategy referred to in the article) here… Share and [...]

]]> By: Preet http://wheredoesallmymoneygo.com/the-equity-monetization-strategy/#comment-1903 Preet Wed, 02 Apr 2008 01:04:01 +0000 http://symbiantcapital.com/2008/04/01/the-equity-monetization-strategy/#comment-1903 <p>You certainly could be leaving money on the table. Depending on how the contract is structured, if the stock is trading above the contract price by the end of the contract, you might have to pay the difference in cash to the financial institution. Certainly this would be part of your consideration in whether you would want to engage an equity monetization. You might be better off just holding onto the stock in some cases, and in some cases you might be better off selling the stock and taking the tax hit.</p><p></p> You certainly could be leaving money on the table. Depending on how the contract is structured, if the stock is trading above the contract price by the end of the contract, you might have to pay the difference in cash to the financial institution. Certainly this would be part of your consideration in whether you would want to engage an equity monetization. You might be better off just holding onto the stock in some cases, and in some cases you might be better off selling the stock and taking the tax hit.

]]> By: thickenmywallet http://wheredoesallmymoneygo.com/the-equity-monetization-strategy/#comment-1902 thickenmywallet Tue, 01 Apr 2008 23:21:55 +0000 http://symbiantcapital.com/2008/04/01/the-equity-monetization-strategy/#comment-1902 <p>Isn't the price on forward contracts determined based on the value of the stock today. For example, if the stock is trading at $10 today, you enter into a forward contract for $15/share whereas if the stock was trading at $15/share then the contract would obviously be a premium on that higher share price.</p><p>...the point being, aren't you leaving money on the table if you enter into a forward contract for a good stock trading below its historical range? Not an expert on this so just speculating. </p> Isn’t the price on forward contracts determined based on the value of the stock today. For example, if the stock is trading at $10 today, you enter into a forward contract for $15/share whereas if the stock was trading at $15/share then the contract would obviously be a premium on that higher share price.

…the point being, aren’t you leaving money on the table if you enter into a forward contract for a good stock trading below its historical range? Not an expert on this so just speculating.

]]> By: Preet http://wheredoesallmymoneygo.com/the-equity-monetization-strategy/#comment-1901 Preet Tue, 01 Apr 2008 10:53:09 +0000 http://symbiantcapital.com/2008/04/01/the-equity-monetization-strategy/#comment-1901 <p>Equity monetizations are normally associated with insiders (and I believe they now have to disclose them to public record). Some executives could have a pending million dollar tax hit. By using a forward contract they can mitigate short term price fluctuation of the portfolio if the stock they own is more volatile than the replacement holdings - and certainly they could win out. If the price of their stock is below the contract value, the financial institution would owe them money as well to make up the difference to the contract price.</p><p>I wonder if there is a link to insider equity monetizations and price declines in the underlying stock thereafter... Hmmmm... :)</p> Equity monetizations are normally associated with insiders (and I believe they now have to disclose them to public record). Some executives could have a pending million dollar tax hit. By using a forward contract they can mitigate short term price fluctuation of the portfolio if the stock they own is more volatile than the replacement holdings – and certainly they could win out. If the price of their stock is below the contract value, the financial institution would owe them money as well to make up the difference to the contract price.

I wonder if there is a link to insider equity monetizations and price declines in the underlying stock thereafter… Hmmmm… :)

]]> By: Michael James http://wheredoesallmymoneygo.com/the-equity-monetization-strategy/#comment-1900 Michael James Tue, 01 Apr 2008 09:22:54 +0000 http://symbiantcapital.com/2008/04/01/the-equity-monetization-strategy/#comment-1900 <p>This strategy significant costs. There is the interest cost on the loan and the cost of the expected negative return on futures contracts. These costs seem high compared to the benefit of delaying paying capital gains.</p> This strategy significant costs. There is the interest cost on the loan and the cost of the expected negative return on futures contracts. These costs seem high compared to the benefit of delaying paying capital gains.

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