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CapitalSource Inc. Message Board

  • codehead321 codehead321 May 6, 2009 2:12 PM Flag

    Deal of the Century?

    CSE paid 162 million for Fremont's deposits and assets of 5.2 billion. I would suspect that once all is done those assets will produce earnings of about 200 million. I am using a cost of funds at 4% and loaning at 8%, being conservative. CSE has stated that they want to sell less than 50% of the Healthcare REIT to raise 300 million which puts its value at least 600 million. CSE also has its legacy assets and debt which I would say still has a postive value. Just looking at these segments, my guess is that CSE is worth more than its current market value.

    Anyone, please poke holes in this analysis. I am sure I have oversimplified and missed a few things. Of course, all the debt that has to be paid off soon or refinances is what is giving this thing its low value.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • There's no doubt that CSE is significantly undervalued - I have a core position that I plan on holding for at least 5 years until the real value is attained. That being said the market is still pretty shaky and this stock can move with breathtaking swiftness up and down. If tomorrow's earnings are decent (or loss is minimal)AND they announce the debt restructuring the stock will be off and running up a couple of points at least over the coming weeks. If they announce a larger than expected loss then we'll see the low $3's easily. I'm keeping my core position and sold my trading position today just to be careful - it's had a very nice move up the past week and I took profits. ACAS, CIT, and CT have all announced serious losses this quarter (and share price hammered accordingly) and the potential is definitely there for CSE to do the same.

      After tomorrow the cards will be more visible and one can make trading decisions again. We'll see in the morning which way this ship is headed.

      • 1 Reply to ddbikessamsara
      • you kept your core position?...thats such a B/S statment in and of itself...what you should have posdted is that you had a small profit and you panicked and S*O*L*D* today to clear up your head case?... just be honest and say "Hey I took a profit and thats it!?...

        im expecting the Foward looking statement to be positive so IMO the worst sinario is even to up $.35 cents or more...get a freekin grip dude, CSEis going to the $7ssssss......

    • code:

      imo its all about the hung legacy assets...if they hold up and the NPL's aren't a disaster in relation to recoverable loan to value, CSE is a home run...CSE bank is not the problem.

      hopefully cse reserved enough last q for the year on the legacy asset deterioration...problem for the legacy stuff is cse cna't originate new loans at bigger spreads and much lower LTV's...new loans on the legacy side would imo solve the problem for cse and many reits.

      gl

      • 1 Reply to sendtodrew
      • But even on the legacy side, the loans are either paying off or going bad. I believe that the average term of the legacy loans is 3 years or am I wrong. If it is 3 years, some of them must be paying off and the cash is being used to paydown debt or reloaned. Of course, most likely paying down debt or held as additional capital.

        Loans that are going bad, hopefully are already reserved. But we are not out of a bad economy, yet. So I guess there could be more.

    • CSE is so crazy undervalued. When I think about where they will be in 3 years I'm already kicking myself for not buying more when I had the chance. That said I've got a dump truck full already and solidly in the green...really enjoying the ride now (unlike the last year or so which was sheer terror! lol) I'm hoping the fact that JD got such a nice raise is a sign of some good performance that's on the horizon. Can't wait for the CC/earnings. GLTA!

 
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