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RAIT Financial Trust Message Board

  • pegasusaig pegasusaig Dec 28, 2010 12:49 PM Flag

    BIG bucks with RAS is a matter of timing and patience

    Why do so many think today's numbers matter? This is a long-term stock. When the real estate market recovers, ras will recover. Barring a bankruptcy or financial disaster, the only barrier is returning to a profitable mode, which seems imminent. If they accomplish that, the the later re-finance of debt will be a given. Today's low price says it's an opportunity, not a loser.

    You can wait until there is no doubt, and it will cost you dearly. I have 20K shares at under $2. When ras is 10, that will gain $160,000. If I wait until it's looking stronger to buy (say $5) the same money would buy 8000 shares, and the gain would be reduced to $40,000. Am I willing to take the risk that my own analysis is solid with the potential of quadrupling my gain? Indeed I am. To be a successful investor, you have to be a bit clairvoyant- to see the future, or at least have confidence enough to bet on it. And you have to do that before it's clear to everyone else. The sooner you see it, the bigger you win.

    The chance of a lifetime for investors is called "the recession". I manage four portfolios, and all have done very well. One started for my mother just prior to the recession (it's 34 months old) has gained 593% in that time. The really monster buys that made that possible are now priced so high they offer only nominal potential. These REITS are the last opportunity. REITS, particularly RAS, but including ACAS and several others are late rebounders because of their sector. When they are back to normal, there won't be any more opportunities to multiply wealth like we have seen in the last couple years. And every time they gain, those who aren't in lose the potential to gain.

    Sometime in the next three months, RAS is likely to hit $4, and never look back. When it does, you will have lost 75% of the gains you could have made if you bought it now.

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    • Good pointers!

      Missed opportunities because of the impatience of short term greed can keep a person on the sidelines, or just chasing small trade gains. I think t5he New Year, Bush tax cut extension beneficiaries, and QE2 and the new SEC rules will bring more stability and growth to the trading environment.

      I am seeing alot of bloated large cap reits that I wouldn't pay 2-4 times book for or paying for P-E's floating over 20 for a declining dividend yield that pays out in excess of the eps, dipping into FFO.

      Some of these large reits look like crash candidates. I will disclose more of this later in a comparative analysis I am working on.

    • Thanks again... Already own a good chunk of KFN up 450%. Holding long term. Hoping for the same with RAS...

    • Yes, your post is very intelligent because I waaaaaant RAS to go up. Some have mentioned 3 important measures, but forgot the most important element: desire. If you waaaant RAS to go up, very sincerely, and broadcast your waaaaanting to attract like-desiring owners of RAS, then RAS must go up.

      • 1 Reply to rvsh_limbaugh
      • Ha! If everything I wanted to go up did go up, Buffet would drop down the list to make room for me! Aside from shorts, I can't imagine any owner of any stock not wanting it to go up... Unfortunately, it just don't happen that way. Positive thinking works well within our own minds, but has limited effects on the minds of others.

        Wish it were so!

    • Yes I know what you mean, I like nct and waited and bought in the $5 range , I got in early here. Doyle

    • Today was tomorrow yesterday.

      If "today's numbers" don't matter, will you ever sell?

      Or won't it be "today" on that speculative day?

      All the numbers matter. Some matter more than others.

      What numbers matter most?

      There a three numbers that *I* think matter:

      1) How much you pay when you buy.
      2) How much you receive when you sell.
      3) How much you receive in dividends and/or capital gains distributions while you hold.

      What other numbers make a bottom-line difference?

      Let's hear your thoughts.

      • 2 Replies to t_ed_mac
      • Of your numbers, only the first ... what you pay when you buy ... is a known at any given time except when you sell or take a dividend.

        So long as you haven't sold, "how much you receive when you sell" is a projection based on an unknowable future. Anything can happen and sometimes does. Today's price matters only the extent that it is an estimate of what you can sell for today, but there are other perfectly reasonable surrogates for that:

        1 - RAS P/B (.26 as of today's close) suggests that it would have a price of at least $9 when Mr. Market decides to price it the way it prices other profitable REITs.

        2 - RAS P/E (2.02 based on today's close) suggests that it will have a price of at least $16 a share when Mr. Market decides to price it the way it prices other profitable REITs.

        That provides a pretty big range, and their are certainly other measures that suggest smaller gains. Those numbers are more important than today's price if if you accept the investment philosophy's that suggest that they are meaningful numbers. I'm with Graham on this one. Your mileage may vary.

        The dividend is another unknowable until one is announced, but REIT rules make it easier to guess at future dividends. Here earnings trajectories are meaningful, and my read on the earnings trajectories is that RAS will be need to pay a dividend next year at some point (could be the end of the year. 2012 looks stronger, and its pretty easy to estimate a 15 to 25 cent quarterly dividend that year.

        But there is one last number, and that's the price you can trade into. RAS has high volatility, and trading around a core position has substantially reduced "how much" I hand other people have paid for our shares. For that I can only thank you for the volatility and call it a night.

      • Yes- those are the key numbers. But WHEN you buy or sell and what you buy are the keys to making that strategy into profit. Today's numbers usually mean little, and if you always react to them- you will be on prozac, and you will make mistakes most of the time. This weeks numbers are more significant, as are this months' numbers. TREND is the real issue- where is it going? If you buy at 2.30 and set to stop out at a 10% loss, do you bail at $2.07? NOT if you are sure it's going to 20.

        Now if you bought, as my nephew did- 1000 wynn at 16 when it issued, and it went to 174... then you rode it down to 17 in the recession, you have screwed up. Because- long-term trend was all negative. At $100, I begged him to bail, sit on the cash and buy back in at the bottom. Had he done that and bought back in at 20... he would own 5000 shares today instead of 1000, and he would be $400,000 ahead. If the stock fully recovers... he would then be 696,000 ahead. That's one hell of an error when there was nothing to lose by doing what needed to be done.

        Selling to preserve capitol is a smart way to profit in a falling market. However, it doesn't work when there is not far to fall, or- if we are in a recovering market, as we are now. If RAS goes to a buck before permanent recovery sets in, fine- I will buy more and make double the end gain for doing it.

    • finally something intelligent. investment = risk. ras is on the mend. now that the cohen kids are out of the mamagement equation, ras can concentrate on it's core business.

    • I have the same opinion. RAS is big winner in 6-12 months and I will keep it to enjoy the dividend. I do expect a dividend of 0.4-0.6 in 2012.

    • I agree.

      The recession damaged many stocks very badly. RAS is one of the few remaining that's going to survive, but hasn't recovered enough to preclude large, near term gains.

 
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