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  • ethical.investor ethical.investor Feb 20, 2010 7:24 PM Flag

    My Final Thoughts on the Dividend, Taxable Income

    After having laboured over everything I could get my hands on, I am now firmly convinced that there will never, ever be another dividend. I'll explain why:

    Approximately 33% of the company Commercial Real Estate loans by balance, or approximately $295MM of $913MM of the loans were impaired as of Q3-2009. The company has reserves for loan losses against these loans of approximately $224MM, or 77%. The only realized loss (charge-off) the company has experienced was in the 3rd Quarter, that being a $25MM charge-off as uncollectible. The footnotes associated with some of the quarterly provisions reflect that some of the loans are in fact, fully impaired and reserved. Due to this fact, it seems HIGHLY LIKELY that we will see in excess of $50MM in realized losses, and possibly as much as $100MM. Give me a break, fully reserved, second lien loans not being charged off for over three quarters? ("The bean counters sitting up front at the receptionists' desk would like a few minutes of your time this morning"). These will be realized losses, are taxable issues and as such this will erase any possibility of a dividend being payable for 2009. I have not said anything about any possible impairment on real estate securities, buckets, etc., etc., etc. Just focusing on the empirical, observable information set forth in front of me, courtesy of Al Gore (the inventor of the net).

    There you go.....I've solved the dividend question, once and for all. I also finished the internet. I encourage all of you boys and girls to delve into all of that publicly available information and make yourselves a better investor. If not, trade away, but never bet more than you can lose.

    Now, for my final act, since I do not touch the stuff (here), I would like to see if there are any gutsy LONGS or P-U-M-P-E-R-S on this board that are so cock-sure of their skills that they would be willing to bet me (a gentleman's wager, of course) to this effect.


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