The news about debt restructuring concerns some NON RECOURSE NOTES relating to the discontinued mortgage investments. KFN has already fully reserved for a complete loss and is now playing hardball to try to recover some of the written off loss.
If the Financial Times and Reuters would bother to listen to latest CC and read latest 10Q they would not have been duped. Also, this was all disclosed yesterday morning in 8K filing by KFN.
Morons please sell your stock I need more 14% paper-if you have not done the research you should not invest-these are non-recourse notes-if you do not know what that means sell your stock. Forget all this reputational crap that people talk about-in the real world of big finance a contract is a contract and the terms are what they mean. All these guys play hardball-amateurs get a grip or get run over
Get a clue! If KFN can hold on to these mortgages, then they stand to recoup some of losses they have already written off. With 5 billion in bonds, a 1 point move upward is worth 50 million which translates into a $.40 increase in NAV. This tells you that the write down was all of 5 points on very good bonds. As the fed eases and the conforming amount rises, even temporarily to $729,000, 81 % of these loans will become conforming and when refinanced , pay off at par. This is already happening to the bonds according to KFNs recent conference calls. This is good, not bad , but hey, it's your money, do what you want. I own plenty right here at 14. That said, the underlying bonds in the new portfolio will surely take a mark to market hit here so that will be the more immediate pain that we see. Look at the NAV of VTA, JRO, EFR, and other closed end funds that have senior paper. There bonds were trading at 83 on 12/31 according to ETF connect. They are now a great buy at 12-13% yields. Good luck.
You don't have a clue, do you? Everyone will lend them money all over again in a heart beat. Period. This is very old news. They are simply trying to recoup some of the already reserved loss due to fed easing making more loans refinancible and if the conforming amount rises to over 700k, 81% of loans in the portfolio could be refinanced, thereby paying off at par. This could reduce loss from 250myn substancially and INCREASE book value.
One fact remains. This situation has been discussed in the conference call and SEC filings and has been known for about six months. You appear to be implying that investors are so slow that it has taken them six months to wake up.
The smart money is buying from the dumb money. The smart money includes the insiders who have been buying.
I'm out at $13.95... very little loss on my investment and too sketchy for me to hang on. There are better investments out there to put $$ in why stick with this one? If they can't pay the bills they are going to suffer in the long run. Sure, a refi will send this back up but eventually it is going to hurt them worse than it has now.
The issue is the need to issue equity which will be dilutive to existing shareholders.
MLPs and Reits that make mistakes are left with no choice but to issue dilutive equity. Since KFN is an MLP it cannot issue dilutive preferred since MLPs are not corporate in structure so look for infusion perhaps by KKR but highly dilutive to you. Also look for a distribution cut. It is not a dividend, it is a distribution of your "capital" account where capital is your stock purchase price. Why this is referred to as a dividend for yield purposes is misleading to all MLP investors.