Some Interesting Facts from UBS Writedown

1. Shares are up 8%. I think all market prognosticators are scratching their heads. Just tells how impossible it is to trade this market. Time has come to start taking longer term views - that is, if one is possible (see point 2).

2. "The Mandatory Convertible Notes issued in March 2008 are subject to anti-dilution provisions, which will result in downward adjustments of the applicable conversion price to reflect the theoretical value of the Subscription Rights." - I guess it is almost impossible to figure out what the share count of the various banks will be once all this fund raising is over. How does one then calculate the normalized EPS (and the target price) for any bank? Or, should one simply try to time and enter at the dilution price which is the minimum price of all the dilutions. That way, one has benefited from the dilutions that happened at the higher price. But then, how does one figure out that minimum dilution price?

3. While positions in subprime and Alt-A declined, auction rate certificates increased. We all know about the turmoil in ARPS market. Didn't realize that brokers will take them on their balance sheet. But this shouldn't be a major cause of concern, as any writedowns should be low (compared to subprime). "Over 1Q , UBS's exposure to US residential sub-prime mortgage related positions declined to approximately USD 15 billion from USD 27.6 billion on 31 December, and the exposure to Alt-A positions was reduced from USD 26.6 billion to approximately USD 16 billion. Auction rate certificate positions increased from USD 5.9 billion on 31 December to approximately USD 11 billion."