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UMH Properties Inc. Message Board

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  • balegoba1966 balegoba1966 Nov 30, 2007 1:29 PM Flag

    derivative losses

    The derivatives are supposed to hedge interest rate risk, so if the positions are laid on correctly, it eventually comes out to zero. I don't see anything that indicates the derivatives are outright speculating. I'm also assuming that UMH execs got into the derivatives with the assistance of brokers that analyzed UMH's rate risk and provided an appropriate derivative.

    Landry published a paper on the website that gives his perspective on leveraging cash by buying stock in MNRTA and earning an excess return. UMH just bought a lot of MNRTA for $8.50/share. So I'm expecting MNRTA to raise its dividend in the coming year and eventually to see UMH sell the MNRTA at a nice capital gain. Landry has been doing this for years, but on a long term cycle, not a short term one.

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