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iStar Financial Inc. Message Board

  • quadruplemalt quadruplemalt Oct 28, 2010 10:51 AM Flag

    short perspective

    I'd be interested in the short thesis at this point. Someone please jump in.

    We do have 28MM or so shares short about which something will likely happen over the next few months. I doubt they'll want to wait until a debt restructuring is announced.

    I must say Jay sounded as positive and confident as he has in several years.


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    • suspect getting some short covering now.

    • Quad

      I always listen very intently to what he has to say. And clearly he is very seasoned with responding; sometimes you know, I think we can engage in analysis overload. He acknowledged very simply, that they failed in their attempted negotiations with bondholders.

      I would have liked him to address the Lazard assistance a little more, and also I thought that the analyst questions were the best on a long line of quarters, but the responses were not first class, he has done better than this.

      They clearly lack in-house hands on, nooks and cranny financial firepower, and I do not know enough about legals performance here. The chief accounting officer just does not have requisite knowledge of books. I deduct this, from the way Jay scrambled answers at times.

      I hate to say it, but the firm is at the mercy of the economy, then bondholders, then management expertise, more than in control of its own destiny. As the time accordion compresses the furnace will light up dramatically.

      I think we have to wait until January 2011; with some time for resolutions, particularly that large quality asset that went to NPL; hopefully LNR will become a positive contributor to cash flow; as well as knowledge discovery. We must not forget elections, and what that might bring with interest rate dynamics - QE2 looks like it will have a large part to play. I do not see what happens between now end of year.

      Still, I liked this report much more than Q2; which I thought sucked. I do think that they should have flagged/caught the LNR general provision.


      • 1 Reply to mullyjay
      • Mully,

        I seem to have had a slightly different take on the call.

        He did note that the attempted negotiation didn't work - in that sense it "failed" - but I read it as a statement that he was unwilling to accept terms that he believed he could improve upon. If true that's not a "failure".

        I completely disagree about the in house financial firepower. I think they've got all of that they need - as well as top notch legal support. I think the hesitation in some of his responses involved discretion and sorting out what he was willing to divulge to the questioners. There are undoubtedly many things up in the air presently and I'm sure he didn't feel it was appropriate or possible to provide as much information as the analysts might have been willing to devour. I think he could have had he been so inclined. I also think DiStaso is doing fine - some thought the world was ending when Burns left. In several calls Sugarman ended up clarifying or restating something Burns had said.

        While indubitably iStar is at the fate of the world I believe they have many options before then - Sugarman said as much. In fact I think they do control their fate - what I believe Sugarman is doing is trying to optimize their future financial and operating flexibility as he runs this little gauntlet.

        It would be hard for me to imagine a plausible thesis whereby iStar prepays a $1 Billion obligation 18 mos ahead of time without great confidence it their ability to thread the needle. I can't see his hole cards but he's got something or is a bluffer extraordinaire. I don't object to my lack of visibility into his hand.

        By the way Sugarman seems to be okay without instant gratification or approbation. That explains his taciturnity in responses as well as his discipline and willingness to take a long view on asset resolutions. He gets flack for both, undeservedly, I'd say.


    • Preface: Completely long a LARGE percentage of my portfolio.

      So, my "short perspective" or "cons list".

      1) Several analysts seemed worried about sources and uses - Jay did not seem able or willing to outline their game plan at all, not even a hint. Whether this is just good poker skills or not is up for opinion. It worries me though because I have a lot of money riding on whatever cards Jay holds!

      2) Short term - the 1 Bil pay off will mean low liquidity this quarter and likely even few bond repurchases.

      More thoughts later....

    • For some reason my player would not connect??? Anyone; please comment.


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