TRADE #31 - Sell S 300s @ $27.91 in Datek
I sold 300 shares of S @ $27.91 in Datek with a commission of $11.40 (including SEC fee).
S had been turbluating since I acquired the position on October 23, 2002. Recently it has greatly recovered from its March low of ~$18 fueled by the management intention to sell its credit card portfolio. The deal should allow management to focus on the retailing business and strengthen S's balance sheet.
I ran a research after S announced its intention to sell the portfolio (on March 31, 2003). My conclusion is S should be valued at $30 or so.
1) I value that the credit card portfolio will be sold around $5.5b above book value, resulting in an after-tax value of $3.55b to S shareholders.
2) I assume S's retail business will get stablized and the current net income will sustain. Then I discount the current net income using 10% discount rate.
3) This yields a per-share value of the business at $29.37.
I'm willing to sell S at the discount for the peace of mind during vacation in early June. I'll hold the cash for the near future to prepare for the down payment of my house.
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