timpb oversold on back of tim, page-6

Have you neglected the coupon payments?

I actually do a DCF on outcomes and work out what alternate (bank deposit) rate of return is required to get same NPV of cash flows.


If TIM survives to Sep09 and based on TIMPB today at 90 cents:

and TIM is 50 cents per share in Sep09, TIMPB presents 173 % PER ANNUM return to Sep09.

If TIM=25 cents in Sep09, rate of return is 58% PER ANNUM

If TIM=15 cents in Sep09, rate of return is still 10.5% PER ANNUM


Clearly, the lower returns could be improved by shorting, short CFD’s or options

But I suggest these returns would not be seen with the TIM equity