Dear Lawrence,

You are right in pointing out that I may have used the term “little more” for dramatic effect, but not so much that the concept was not worth pursuing, but that from a holistic and optics point of view, it can sometimes seem that share buy-backs unnecessarily certain vested-interest groups, perhaps to the detriment of the long term growth and interests of the company.

I would suggest that it is difficult and perhaps in some cases, dangerous to assume that companies and their executives have done all that is necessary and available to increase their capital stock when share buy-backs are an option in their toolkit that will directly benefit their economic interest. The point I was trying to make was that the incentive structure of the most senior level executives at companies today skews the decision-making process to perhaps favor outcomes which have pecuniary benefit to the individual as opposed to the endeavor.

I am most happy to note that you have profited from high-yield preferred stock of companies and acknowledge your astuteness as an investor. The only point I was trying to make is that given the legal implications of the various instruments, many investors do not consider liquidation scenarios and look strictly at yields to compare what are essentially apples and oranges. Is there a reason a debt should be “valued” more highly than a “share” — depending on the risk-reward ratio one is looking for, there is a reason that a share and a debt should be priced differently. What I am suggesting is that when yields on stock are compared to yields on debt in the same breadth, we are crossing the Rubicon in terms of assessment of value.

Thank you once again Lawrence for taking the time to add to the discussion and I must add that I enjoy thoroughly hearing from you.

Best,

Patrick Tan