I disagree with your buyback prediction. They had $57mm or so at year-end and despite the dividend savings from buying back stock, they will need that money when they find more deals to invest in. I bet their returns are north of 15% when they find the right businesses to invest in. There aren't that many shorts out there, so the best way to get the stock moving is to keep finding deals to add to distributable cash.
I made the same argument with GLS when they were yielding over 13%. These types of businesses are somewhat similar to REITs in that their large dividend payments don't leave them much money to reinvest, which is why they seldomly buy back stock (doesn't help bookvalue either if you buy back at a market price over book).
Let's hope the quarter went well. They had a lot of moving parts over last year. The market should begin to appreciate the stability of their assets and the 9% yield, especially if it keeps growing.
Thanks for your eloquent clarification of MIC's financial status. This really looks like a bottom here, though it does baffle me that the stock dropped even more here in the last few days. Do you think that the current $2.54 dividend is safe?
yes, I think the dividend is safe. They wouldn't have raised it last quarter if it wasn't. When they make the decision to raise dividends, they don't just look at the quarter that passed, but they look out into the future to see if the raise is sustainable.
Now don't be alarmed if they have charges related to their interest rate swaps. Swap rates probably decreased from where they entered into them, but that would be a non-cash charge and not effect the cash available for distribution. The reported earnings should benefit from the refinancing that they did last year, but this is a cashflow story, not a GAAP earnings story.
These guys aren't going to do deals just for the sake of doing deals so that reduces the risk of doing stupid deals that aren't accretive to distributions. Eventually as more desperate sellers need to raise money from asset sales, the prices will come back and they will be there to buy. Financing will be available to MIC with real businesses with real cashflow. Once the market sees that they can do deals, it should start to pay attention. A rising 9% dividend yield should compare favorably with sub 3% money markets, especially if the assets are not connected with subprime residential real estate. Let's hope I'm right.