WSJ mention. Nice strong volume today, which was expected. All to the positive. More notice, more buying. Gotta like the direction the past few weeks.
Well, they are still running a business which is generating cash from collecting interest and principal. The deal doesn't close until 5/2012 so I guess there is some time to collect cash past 12/31/2011 balances.
$157 MM in non-recourse cash at the end of 2011. $170MM needed for the new MSR deal. And they gotta keep some liquidity for day to day operations.
Any idea where the $$$ is gonna come from? Non-recourse side? Credit market? Between the couch cushions?
There is no basis for them to raise cash at the moment thru the markets. Blindly seeing that even though they raised the divvy doesn't mean the money put to work from last year has shown any results. Most here do not have the history. Let me refresh them.
1. Raised about 100M by offering shares at $6. Did nothing with it.
2. Raised 100M by offering shares at $4.55. Mentioned the MSR investment with a 44M intention.
3. Made investment in first REIT deal into MSR's. Still had money on the table. Presented the ROR could be around 20%+
4. Dividend moved from .10 to .15 without a MSR investment cashflow. This was spitout of the CDO's and mentioned they are futer healing and spitting out more cashflow to them.
5. Stock price moved to $6 after the second .15 divvy. Market testing the sustainability of this.
6. Announced they were going to invest into a 67B deal. Cost to us 170M. This would take up all the money from bothe SPO's. Deal will close in Q2 of 2012. Well that is 2 weeks away. So somtetime in june we will here from them about the second deal. Cashflow will increase but how much.
7. When the market sees that NCT can maintain the .20 then PPS will follow.
8. When the divvy is raised and management gets a healthy sign to raise capital then they will. I think from the past 2011 mgmt has realized that capital cost and effects of dilution need to be incorporated into their growth stategy.
Now IMO the effect of the second deal is not being priced in. Even the first deal is not being priced in. The market is waiting for you know what SPO. The market is waiting for the results from the cash deployed from both SPO's. If NCT plays it smart they will be able to get more for less. At $10 pps they can offer 20M shares for $200M. This IMO would mean they would have to pay minumum of .25 per share divvy. If a 44M MSR investment gets us to .20 per share divvy then how much more can a 63B investment get us to. But the market doesn't want to see oh this is just for this qtr. They want to see 2 or 3 qtrs of sustainable payments. I do too. If growth is the goal then why continue todo multiple SPO's per year to maintian a divvy that doesn't go up. They are not ARR, AGNC, or the other mReits that have todo this to maintain their hedges. NCT go big on the divvy the next time and pay the same for the fourt qtr and then you'll get to offer shares without the massive pps decline for the dilution. My guess next qtr they will raise it again and the market will still be behind in the divvy yield curve. Just take the chance to accumulte at 12% now. It will grow.
Major buying is over already this morning. You can see that in level 2. Now people are taking profits and it's starting to drag the price back down. High was $6.75 today. Already back to $6.58... sorry, $6.56. It should close today around the $6.45 mark for a great.... .22 gain.