Wednesday, June 11, 2008

What puzzles me is about Indymac (IMB) ... is

why nobody is buying IMB at a price above ZERO.

I computed that it's value is about -1.5x it's "claimed" book value. Suppose a long term investor (with 30 year horizon is investing), he can expect, to return IMB into 1x book value (assuming he pays ZERO for the company)

(1 + 1.5)^(1/30) - 1 = negative 3.10% per year over 30 years.

This is comparable with most non-profits out there. Why the hesitations?

Make Warren proud my son.

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