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RAIT Financial Trust Message Board

  • boiled_n_oil boiled_n_oil May 8, 2014 5:23 PM Flag

    Funny how manipulated RAS has become

    This was so promising until institutions and hedge funds got the greedy little hands all over it....

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    • For what its worth, the long institutional holdings continue to grow. Institutions have another week to report on their 1Q holdings and less than 35% have reported, but institutional holdings are up from 54% to 57.5%. Each increment in the institutional long position makes it a little harder to manipulate the price.

    • I think its pretty clear that one or more hedge funds are shorting RAS (and, more generally, a number of other REITs) pretty heavily right now. It isn't clear what the logic of their bet is. The Fed is going to be moving pretty slowly and events in Ukraine aren't likely to have much effect on U.S. Real Estate. But its pretty clear that the bet is being made. For the markets we have FINRA numbers (NASDAQ, NYSE, and ADF), 47% of today's RAS volume was short. That's not something to fixate on. At least some of that volume was covered. A lot of REITs were down. Losers outnumbered gainers 3 to 2 in the market numbers I've seen for today

      Still, RAS did not have the kind of quarter that you short unless you are willing to bet that a big shoe is going to drop, and unlike seven years ago, when at least some of our shorts got the shoe right, all they are offering these days is slash and burn personal attacks.

      So I'm betting the other way. You can manipulate the price to some extent, but you can't manipulate a companies results or set its dividend. You just have to be patient and let Mr. Market regress to the mean ... and beyond in his own time.

      (1380/1852 70035/160589 22303/|36688 93718/199130)

      • 1 Reply to davisfoulger
      • They could, of course, be betting on specific issues associated with RAS, but the first two quarters of this year have pushed a lot of REIT prices down (actually most stocks are down in 1H2014). Still, it can't hurt to review the possibilities associated with RAS:

        1 - the dividend. It seems pretty obvious to me that RAS will be increasing its dividend over the next several quarters (RAS has the money to increase the dividend; earnings are improving; and it has a streak of 7 dividend increases in a row that should grow to at least 12. Still, we had shorts betting on a dividend decrease last quarter (in the dividend contest), so the thought must be out there.

        2 - a new follow on offering. RAS raised $115 million in 1Q and another $60 million in a 2Q bond issue. IRT raised money as well. We can expect that IRT will do another raise in 3Q, but RAS shouldn't need to do another raise this year. The $155 million that RASgot back in its bridge loan securitization should carry it into next year without any trouble.

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