The trick is to get out BEFORE that happens. Otherwise you'll give up all that nice return in a loss of principal.
I'm out right now, but I recently used RSO as a trader because of the range it seems to float around in. If any unexplained dips come along I'll buy. Worst case I have to hold through a couple dividends to get out again.
Two things have become fixed at RSO. First, regardless of the logic, this is perceived to be in the same category as agency REIT's like NLY, and therefore is doomed to trade at near the same yield, even though arguably the business model here is much more forgiving to changes in interest rates.
Second, as some on this board foresaw, the legacy securitizations are running down, the reinvestment periods are lapsing in sequence, and further repayments have to be returned to investors until they are paid off. Therefore, without new CLO/CDO entities being created, it becomes increasingly difficult to maintain cash flow. It would seem that if the securitization model was going to be revived, we would have seen it by now. Say goodbye to the long defended dollar, 80 cents is the new "promise", and how long will that stay good? They're scrambling for other business, but that changes the whole model of what RSO was about.
So, can you own this? The return is very enticing. I think the answer is yes, but it's probably only safe to hold it for about three dividend payments (and be prepared to flee if there's a shortfall in AFFO). After that things could get dicey. And don't expect much in the way of price movement, if 80 cents is going to be it for 2014, then we're probably stuck right about here. I'm out, but considering coming back in, briefly, just as a place to park money. I'd like a better price, but it doesn't seem like there's much chance of getting it if you want the January dividend.
Yeah, you calling me a Troll suggests that you're just jealous because your father didn't work as a Truck Driver most of his life, like my father did. My father worked hard. I admired him. (He worked as a Truck Driver most of his life)
Well, I believe that the share price of RSO is going to climb to $9 by the end of 2014. Should that happen, then the compound annual growth rate (CAGR) over that period =BOOKOO %
In addition, I believe RSO will continue to pay an annual dividend of AT LEAST $1.
We could see price appreciation at the 20 cents dividend level without any dividend increase. What is still needed here is for RSO to convince the "market" that it can cover the dividend from AFFO. Frankly, I was a little surprised about the 80 cent dividend guidance for 2014. I already lightened up my position from 10,000 to 3,000 shares several months ago. I wanted to hold some because somehow RSO has managed to maintain a good dividend. (Another way to look at it is that I already made a large profit and the 3000 shares are free.)
Remember, at the end of 2010 they did say that their $1.00 dividend looked solid for 2011. That was true, but then we saw a cut in early 2012. We'll see what happens in the next quarter or two...
Yea, Pierre, go figure. Doesn't fit with "Pierre's rules" of investing. I suffer from CONGNITIVE DISSONANCE. You, of all people, should understand that psycho term. One voice says RSO is a great undervalued stock, but another voice says that RSO ain't worth a rat's #$%$, and I should never own one share of it.
My thinking is that the share price could move higher with the present dividend. Current yield is like 13.6%. I think it's there because of fear it won't be covered in the future by FFO. If FFO continues to improve with the new investments coming on line, the market fear could abate and the yield decline. I have a substantial position in NRF and their yield has declined to 8.5%, though they have been growing their div and CAD. Mr. Market is feeling the glass in half-empty, not half full with RSO, but ain't necessarily so! OK, I have been adding to my already large position and have cash set aside to add more if RSO continues to be powdered by opinions like Zacks Investment posted on Yahoo Finance the other day. It #$%$ me off enough that I wrote a comment under the article and also emailed them with their wonderful "technical" analysis without any analysis of the underlying company. Maybe RSO falls to book value or below. I don't know, but I will be there buying. I don't think JC would have stuck his neck out with guidance of paying the current div thru 2014 if he wasn't pretty darn sure their FFO will improve. GLTA.
Well, management did give guidance of $.80 for 2014 and the numbers they reported seem to back that up. I can live with that regardless of share price for another year. We will not, IMHO see significant share price appreciation until we see dividend increase. GLL
When will RSO complete its securitization? They said they would do one in Q4 and there is only 4 weeks remaining. The stock should get a pop when it is done.
No new capital needed in 2014. Just new loans. $500 million to $600 million new ones required..........