SBY 4q12 ER loss hiding presentation in press release
A confusing presentation of "consolidated statements of operation". A little "post formation period" foot note hides the trick. The standard format would give revenues, expenses, sharecount, then calculate loss per share for each time period. If you see a number "loss per share" in a row below columnar revenue and expense numbers for a particular time period one would assume that that loss per share shown under that column represents (revenue-expense)/sharecount for that particular column. Three month and year ended columns are shown, here is no column given for the twelve day "post formative period". The three months and year ended columns should properly show losses of 9 cents and 15 cents respectively instead of the mystery number of a four cent loss calculated using numbers that aren't disclosed. Disclosing both sets of numbers would have shown good faith. Slapping a 4 cent loss under columns that compute to 9 cents and 15 cent losses appears deceptive to me.
This is a bad sign, TWO had that midwestern honesty and forthrightness in their reporting and corporate communications. SBY seems to be lacking in those qualities thus far. TWO always discloses beyond what is required, is always straight up and never over hypes or over sells. TWO comes out with the SEC filings on the same day of the press release. I'll give SBY another chance, If SBY also rapidly files a 10k that discloses upon what numbers this mystery 4 cent loss was calculated and the numbers make sense then I will stand corrected.
Hopefully this is just a new company glitch and they'll start displaying straight up results like TWO always has.
TY very much for the discussion that you bring to bear with your post. It is very informative for some of us who do not understand all of the nuances of the housing & REIT plays. The most valuable portion for me is the question of ethical practices and transparancy. I truly hope that SBY is as upfront as TWO has been in the past and that they both hold to high standards in this regard. Perhaps the most perplexing aspect of today's investing/trading world is the unethical aspects that abound and are basically blind-eyed by the SEC.
OK, sorry that was way too harsh. Reading through the 8k that they just put out I can see that they are trying quite hard to disclose a lot and to communicate as much info as possible. If they are doing everything they can to communicate well, but made one little judgement error I shouldn't jump all over them, especially because I trust the TWO and the PRCM folks. I don't know the Provident folks at all yet, but we'll have to give them a chance. I did vet Irvin Kessler a bit on google and he basically passed, no complaints, no wells notices, no dirt. Does anyone know more about him, honesty, work ethic, etc...?
When I was your first message, I had t take a look. The loss wasn't bad considering 1/2 the portfolio was acquired within the past six months -- occupancy rate of 50% is about right, especially when they likely have to renovate most of the newly acquired houses.
The loss of almost 9 cents per share, reported as 4 cents was confusing. I still don't understand the footnote explaining this (something to do with 12-days in Dec when shares were actually outstanding). My take is that thay had a loss of $3.2 million for Q4. But over 1700 houses were still vacant, and if those were rented at $1,100 per month (the average), and assume 95% occupancy, then they would have had an extra 1700 * $1100 * 3 * 0.95 = $5.3 million. That tells me that they could become cash-flow positive in about 6 months. (Of course, they will likel;y build the portfolio size, so it may take longer than 6 month.)
In addition to the cash-flow positive, there will be depreciation that they can use to lower any taxable income. TWO said that they were targeting about 6% dividend; that's vary possible in about one year, plus some capital appreciation.
We all knew the first earnings report would not look great. IMO, it's actaully not bad when you consider that most of the property was recently acquired.
Irvin Kessler: PRCM would not have brought him on board unless he was highly qualified.