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Novation Companies, Inc. Message Board

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  • res_severa_est_verum_gaudium res_severa_est_verum_gaudium Dec 22, 2004 8:57 PM Flag

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    DDD:<<You really have a problem with the REIT rule that requires them to pay on Taxable Income, huh?>>

    CP ***No, I don't have a problem with it at all. That's one of the stipulations Congress put on them when they created the concept of a REIT.

    DDD<<You refuse to acknowledge that TI, and only TI, is used to come up with the dividend.>>

    CP***No, I fully acknowledge that.
    -------------------

    What, pray tell, should be the dividend policy of NFI??

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    • <<What, pray tell, should be the dividend policy of NFI??>>

      It's not an issue of NFI's dividend policy, it is what it is from the tax code. If I owned NFI, however, I would be concerned that the company has to pay more in "dividends" that it makes economically.

      Please don't get me wrong, I'm happy with the policy they've got. I love being short a company that pays out more than it makes.

      • 3 Replies to Carlo_Ponzi
      • res_severa_est_verum_gaudium res_severa_est_verum_gaudium Dec 22, 2004 9:12 PM Flag

        Then you will agree that for aa REIT with a stable portfolio,

        TE>GAAP in early years
        TE~=GAAAP in middle
        TE<GAAP in late years, as losses are recognized

        that implies the dividends will be less than 90% of GAAP in late years

        so, for the stable portfolio, you would agree that dividends in excess of GAAP [your surrogate for EE] is simply timing

      • Quote:

        It's not an issue of NFI's dividend policy, it is what it is from the tax code. If I owned NFI, however, I would be concerned that the company has to pay more in "dividends" that it makes economically.

        Please don't get me wrong, I'm happy with the policy they've got. I love being short a company that pays out more than it makes.

        But it makes the money to pay it. It does not pay out more than it makes. It does not pay out more than it makes. It makes the money to pay the dividend. It makes the money to pay the dividend. Really. Novastar makes enough money to pay the dividend. Novastar brings in enough cash through their operations alone, without secondaries, to pay the dividend. GAAP does not take into account if their hedges are making money. The taxible income rate does. Hedges can't be included in GAAP. But the hedges create real cash, real money, that is paid to the shareholders.

        Really. These hedges may even make more CASH (that stuff longs get paid) than the associated "write downs" as you called the impairments. So money/capital is created for shareholders.

        They make enough money to pay the dividend, regardless of secondaries.

        Are you a paid basher? Because I think this has been repeated 5000 times now. I think I'm just in it for the recos! (Cheap audience pop!)

      • Exactly how much more is NFI paying out than it is making and how long has this being going on by your calculations. Please be kind enough to explain with refrence to figures that we can all check on ourselves.

        Thank you

 
NOVC
0.274-0.006(-2.14%)Aug 29 3:57 PMEDT

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