I dumped all of my trading position in SFI keeping only my small portfolio position I have owned almost forever.
Reason. Issuance of shares at $28.41 and those shareholders were entitled to the $0.375 special dividend so they really paid $28.04 for shares.
Goldman Sachs immediately reported that issuance was dilutive and necessary to paydown debt associated with Fremont purchase. Goldman further commented that SFI dividend growth rate will have to shrink from 5% to 3% going forward.
It got me thinking that SFI pulled the trigger very quickly on Fremont's commercial business. Perhaps the reality is SFI overpaid for Fremont and had they waited they could have gotten for a much lower price. Otherwise, I cannot figure out why SFI would issue so many shares near the end of the year at such a low price.
Now, since then shares have fallen 25% and NOT ONE insider has stepped up to make a buy in the market. Sugarman exercised stock options and has further exercises on restricted shares. But not one market purchase has been done to send a message that SFI represents value.
I put it all into ACAS. There you still have much better annual dividend growth but more importantly the CEO, and several directors have been stepping up and buying a lot of shares in the open market.
I don't trust Sugarman anymore. The last two conference calls have me questioning their judgement on Florida deals they have done. It looks to me like SFI may have been too aggressive on Fremont acquisition and other loans and NEEDED to float equity. They may not have had a choice and that is not a good thing for a specialty finance reit.
Compare ACAS rise from its 52 week low and SFI's and you see a tale of two stocks and a tale of which company's insiders have the confidence to go and buy shares in the open market.
Ferdi-I hold both SFI and ACAS and believe that both will be rewarded in the coming years. I disagree with your conclusions re management. While in hind sight the price of Freemont can be second guessed, the transaction is one that I believe will reward shareholders handsomely in the future. It will ultimately raise the growth rate of the company be acretive to earnings and will result in higher not lower dividends.