I'd like to hear from others about what caused this downturn today. The earnings were not great but not bad either. Were investors expecting a lot more? Are people seeing a degradation in the company's performance or what?
I read the transcript from the conference call. They booked all kinds of "provisions" in Q4 against a loan portfolio they acquired - I think around $3 million. So, I assume they bought it at a discount then booked these "losses". They have very few non-performing loans and they have around $90 million in unrestricted cash which could be earning 5% or more. That's an additional $1.25 million per quarter in earnings. So, it appears between not deploying their cash and tossing everything and the kitchen sink into the loss column we got this outcome.
Unmet expectations. I was looking for a penny and now realize that won't happen until 3rd quarter and more likely 4th quarter if it happens at all. If other investors share my sentiment that explains why the down day. I do expect recovery as people look a little more long term. The stock has had a nice run but is still much cheaper with a higher dividend that nrf or nct. More pps increase possible with those but rso is covering the dividend with affo and the affo should increase if we can believe the expansion plans discussed in the conference call.
For a great total return rso should deliver slowly increasing dividends and a grudgingly slow increase in pps. I invested in rso because I thought that 4 or 5 years from now it would trade at 10.00 and pay 1.00 to 1.04 per share. I still think that is what will happen. In the meantime I collect the best sustainable dividend available. If anyone else has ideas as to high yield opportunity I would love to hear them. But no residential mortgage companies please. 2 years from now their dividends and pps will both be lower. GLTA!
Agreed completely. I sold my residential mREITS last year and have no plans to include them going forward. I had a nice run with them for a couple of years, but the handwriting remains on the wall. The only question is when and not how. We know how their dividends and pps will decline, we just don't when. I would rather buy more sustainable dividend stocks now at lower prices even if the current yield if below the mREITS. I've made a killing on NCT and with its spin off and movement into mortgage servicing rights I see it continuing to do well.
Investors were making a bet on RSO and that is why the price ran up in the past few weeks. I am pretty convinced of that. Investors were betting on the reward from an increase in earnings and the dividend versus the risk of a decrease in earnings and the dividend being cut back or even remaining the same. So that bet didn't pan out and now people are taking profits from the run knowing that earnings per share were down a little versus the previous quarter and no dividend increase is in sight. Some are selling and waiting for a lower price because they think it will drop more.
For me, all my RSO is tucked away in IRA and Roth accounts and I'll just sit on it for now. I considered selling and waiting for a lower price, but I am not confident that I can time it well enough to justify the risk. Today we could end up down 3% or so and then climb back slowly the rest of the week or just sit and simmer for a while. I'm just not a constant trader any longer. So I'll collect my dividends and enjoy them in retirement.