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Vestin Realty Mortgage II, Inc. Message Board

  • paterson0918 paterson0918 Dec 18, 2007 12:45 PM Flag

    Appreciate informed views

    This stock looks to me like a remarkably good value, in view of the roughly 40% discount to tangible book value, minimal dept, prospect of some economies of scale if they merge with VRTA, and the policy of only lending about 70% of the value of properties which seems to confer a good deal of safety to their (otherwise rather risky) portfolio. The regular purchases by the CEO ($40K/week) are reassuring as well. The divvy may have to fall a little more if there are more bumps such as last quarter, but seems like a good long-term prospect.


    I'm thinking of adding to a modest long position.

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    • It looks to me like this board is set up with insider comments that bear no resemblance to reality. If you study the latest 10Q you will see that their loans are short term and defaulting one after another. The sad news is that most of the loans are on raw land, except of course the loans on the cemetery in Hawaii (are you kidding me?). Raw land has dropped more than 60% in some cases and so a loan to value of 70% is nuts--bad lending practice. Loans on raw land should be at 50% or less LTV. If the default rate continues, and I believe it will, they will have no interest income. Even worse the cash will have to be used for lawsuits as most of the lendees are declaring bankruptcy. Legal fees eat up cash fast.

      In case you havn't noticed, the dividend was eliminated. When the interest income goes to zip, they will not have enough cash flow to service the $78 million of debt on the balance sheet. Whoops-- do they now have to go bankrupt. When the 3rd quarter report comes out any day we will get to see how much worse it got in 3Q and that does not even count black October. Talk about not charging enough for risk--these loans should have been at 20% interest.

      This company could be a dead duck. At the very best it will take years to get all this raw land off the balance sheet for pennies on the dollar. In the meantime, the stock will drown in tax loss selling before year end.

    • There is plenty of cash on the balance sheet, so I think they can pay whatever divvy they want. This is not the only good company that has been beaten down by the bad news in the finance market. I believe that this company is actually better positioned to deal with the downturn than most.
      At this price I only wish I could buy more.

    • My question is how safe is the dividend these days. Is it going to hold at .04?

    • My thought is: You are right, this company is a great value.
      I have never seen a CEO accumulate shares with such aggression.
      I have doubled my position and will assume the risk of a divy cut.
      VRTB is due for a reverse split at the end of the year.

      My only negative thought is that the CEO might be buying a "get out of jail free card".

      • 1 Reply to tigerlinksmr
      • I have to agree with both of your posts regarding Vestin. This is a pretty quiet Reit, not a lot of info on the web or message boards (which may be a good thing) I came in last year at 5.90 and then a couple of months ago at 4.80.
        Now it's a 3.8 and I'm tempted again. I like the massive insider buying but I'm wondering about the shape of the business. Last year they annouced plans to buy back stock. I don't know that they have. I'm not sold on reverse splits either. Stocks have a tendency to trade right back down at the pre spilt level.
        Michael V. Shustek hasin the past, taken the public companies he's run private. I don't know if this will be the case here.
        By the way, could you explain the "get out jail free" reference.
        I'm going to wait to see how the price fares until I buy again. As well, I'd like to see how the latest quarter has been. Truly a value stock.

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