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RAIT Financial Trust Message Board

  • seeds.bill seeds.bill Apr 23, 2009 3:57 PM Flag

    RAIT

    Well, I spoke with someone at RAS. An announcement on the Common Dividend will post BEFORE the earnings call on May 6th. So, what-a week or so. Just thought all would like to know. GLTA.

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    • I guess it will be one day prior to earnings report. but either way RAS seems to be on fire at least to mid 2's.

    • I think we are coming at this from the same angle. Maybe I wasn't clear enough...I agree with you.

    • You said, "I spoke with someone at RAS."

      "An announcement on the Common Dividend will post BEFORE the earnings call on May 6th."

      Well seeds.bill less than 2 days. Do you have anything you want to say?

    • The fed can't control the creation of "money". Since consumers were able to use 100% debt financing to purchase consumer items-- autos, homes, big screen tvs-- the fed could not control the demand side of the equation. RAS created "money" through its CDOs, which the fed did not and does not control. The "bubble" was caused by non-fed controlled entities creating debt which was used to purchase tangible assets.

      When the consumer is not purchasing but is instead paying down debt, the money supply contracts. It is the weakness in the fractional reserve banking system we use. The Fed Rsv and Treasury can't force people to borrow money, so they can't force the money supply to increase in the private sector. They certainly have been trying to encourage everyone to go further into debt, but so far it is not working.

      Also, the companion effect to the consumers not borrowing is a loss in the velocity of money as well.

      We are now returning to using an asset "money" instead of a liability "debt" to make purchases. Long term it will be beneficial, in the short term it means lower demand for goods and services.

    • Well, it won't be MUCH before the earnings call! They're running out of days here.

    • You mean the velocity of money...this is what the Fed can't control. MV=PY.

    • Ghost, thanks for the insight. you're o.k. in my book. GLTU.

    • Just watch total private sector debt. When it starts to increase again, it will signal a potential start of a recovery. As long as total debt is contracting so will the economy, sincie it reflects the total money supply.

      It has been dropping steadily since September 2008, so the economy is contracting. GDP drops in 4th quarter of 2008 and 1st quarter 2009.

      GLTU as well.

    • There are a lot of interesting responses on this. Most of them aren't thinking this through terribly well.

      There will be a dividend. There was never any likelihood that there wouldn't be.

      The dividend will almost certainly involve a split of cash and stock. The best way to improve long term investor value right now is to continue to deleverage the company, and the only way you do that is to use cash to pay down debt, buy back more senior tranches at a discount, buy back bonds at a discount, and repurchase preferred stock at a discount. All of those actions require cash, and a dividend/stock split is the best way to generate that cash without incurring additional debt.

      This isn't a question. It is reasonable, based on the 4Q conference call, to presume that RAS has been executing on a strategy in line with that for at least several weeks now.

      That means the dividend announcement is far less important to the coming stock price than the quarterly report. That's not why the announcements will be close together, however. They are close together because RAS won't compute the 1Q dividend until they have completely rolled up all 1Q activity. They'll know that at about the same time that the board is asked to approve the 1Q report (so don't expect any insider buys until after the 1Q report and conference call are in the can).

      I don't expect the quarterly report to be entirely pretty. There will be new losses reported. There almost certainly will be new loss reserves declared. But I expect there will also be indications that RAS has used available cash to continue to deleverage the company. Indeed, those actions may be one of the principle drivers of the dramatic increase in the price of the preferred stock classes over the last two months.

      I'm sure some bashers out there will try to make much of some negative aspect of the coming news (and there will be some measure of bad news). It may be that some pumpers out there will try to make to much of the good news. That's all about the short term. The actions that I expect (based on what they said 4Q) RAS is taking are about the long term, and I'll benefit in the long term whether the price goes up or down in the short term.

      I'm unlikely to have much more to say right now. The only reason I have time to post now is that I'm sitting in a waiting room at Sloan Kettering waiting to hear how my partners cancer surgery has gone. All best.

    • Well, tomorrow is the 27th. It could be the magic day. If RAS announces on a Monday that will be a good thing. if on a Friday, not so hot. Monday, mostly or all cash, Friday-anybodies guess. GLTA.

      • 1 Reply to seeds.bill
      • Just curious. Why do folks expect a cash dividend for common when the credit markets, except for government backed debt, are essentially still closed? Thus, the RAS business model is still shut down. Also,I believe most of the Taberna, and RAS CDOs are no longer in compliance with the overcollateralization requirements, so income is being shifted from RAS to more senior tranches, and, likewise its fee income is being decreased while the collateralization covenants are not met.

        I expect they will continue to conserve as much cash as they can, and, pay only the preferred dividends.

        BTW I am long RAS, but anticipate it will be sometime before it recovers.

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