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Newcastle Investment Corp. Message Board

  • gogomets13 gogomets13 Mar 27, 2013 12:38 PM Flag

    What are the chances?

    What are the chances we see NCT do a reverse split at some point in the not to far future after the spinoff? I mean, NCT is sitting at ~250 million shares outstanding right now. If they did a 1:2 reverse split? That would bring it down to ~125 million shares, bring the stock price after the spinoff most likely back to around ~$10 a share and allow for more secondaries (although I don't think NCT themselves will have to do them as fast after the spinoff) without making the outstanding share count get out of control. I am not saying I think this will happen, just thinking about all scenarios. Any thoughts?

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    • Gogo, I don't think that's in the cards for NCT. Desperate times call for desperate actions and NCT's position is far from that. Rarely have I seen a reverse split help a company. Actually I own NATDF which reversed 1:5 a few months back and it's been languishing, although it pays a nice divvy that is reasonably secure.

      • 4 Replies to bobdbeck
      • no chance for a split.

      • robin0635 Mar 27, 2013 8:09 PM Flag

        Bob: Happy Birthday ! Hope you have many, many more !!! Give my regards to your friends and family alike.... ( I added a post to your previous reply below...)

      • robin0635 Mar 27, 2013 5:26 PM Flag

        Bob: You are absolutely correct that reverse-splits rarely helps any company, but let's be fair regarding NATDF in that the 5 to 1 split occurred before it traded OTC on the NYSE, and before a formal listing (to occur sometime in the near future) with a potential IPO in conjunction with it... You are right that it languishes pitifully for the moment, but it has a decent dividend and when we started with NATDF, it wasn't even a $2.00/share stock... With patience, as you have advised, it might just turn out quite well... (aside: you have been missed on that board, too)
        Regarding NCT, it was easily a $7/share stock well before any discussion of a stock-split was mentioned and a simply cost/benefit analysis would show a reverse-split to be detrimental to the company in the long run, if nothing more than to dampen investor confidence...
        Hopefully you can shed some light on my query, and maybe I am missing something here, but why do "professional analysts", as well as many seasoned posters on this board, advance the dictum that NRZ will have a higher "end valuation" than NCT itself, post-split?
        Just curious for the rationale for the bias toward NRZ with numbers such as 8.6pps and only 5.40pps for NCT itself, when NRZ has not performed one iota, to date...What am I missing in re this spin-off that suggests that NRZ will out-pace NCT in the long run???
        Thanks in advance and GLTA

      • I don't actually think it's in the cards either, it was more or less just a 'talk about' post. RAS suffered for about a year and a half after the reverse split before finally breaking where the price was when they did the split.

    • Reverse splits are the kiss of death. NCT will be just fine with the share count they have. Let's just look to the yield compression. Based on the valuations by the analyst post split there seems to be some more upside. I'm valuing NCT at 8% based on a .50 per year divvy. That woul put it in the ballpark of 6.25. NRZ is at a 6.5% of .56. This gives it 8.60 pps. So all in all $14 between the both. Credit Suisse has been a valuation follower as usual. UBS has been more future leading. But the market tends to find a price it can be comfortable with. As for the bots that trade NCT they just gave a gift to those for entry.

4.76-0.02(-0.42%)Mar 27 4:02 PMEDT