I love the yield, but before I buy, what will cause the actual price per share to go up? I see in better days the share price was really up, yield seems to stay in the same range however. Thanks in advance.
The share price will jump by 10% to 20% within days of release of the restated financials.
I believe that the restatement relates to the Re-REMIC segment of the CIM business. By way of explanation, instead of leveraging investments in non-agency RMBS, CIM repackages the mortgages and sells off somewhere near 80%, retaining the portion that sustains first loss. According to GAAP, the resulting VIE must be consolidated so that the mortgages are shown as assets, and the obligation to the new mortgage owners is shown as a liability. Because of the way this particular VIE is structured, the mark-to-market can overstate the economic value of the portion of the VIE that CIM retains. It's a case where application of GAAP unquestionably distorts the book value of CIM. That's why CIM has lately been reporting GAAP book and economic book values. The GAAP book contains the distortion; whereas, the economic book does not. As CIM increases its non-agency business, the distortion can become much larger than the approximately 10% that it is now, resulting in increased confusion over CIM financial results.
GAAP needs to catch up to innovative business practices so that the rules provide an honest picture of a company's financial condition. I believe CIM objects to employing the current rules which distort the financials, so are trying to get a rule change or deviation approved by FASB. That's the reason for the delay.
Once the restated financials are issued, the concern that's currently depressing the stock price will end, and the stock price will jump. Rule changes can take a lot of time, so I can't say when the process will be completed. An agreement could occur any day or easily take another six months. When CIM is satisfied that they have achieved the best resolution possible, I expect an announcement which will provide an accurate forecast of the schedule for release of restated financials.
Putting out the financials for the last 3 years would be a good start on improving share price.
Right now all you can do is accept their word for what their BV is. If you believe them buy, if not don't buy. If you buy it you can afford to lose the money, since this one falls in the lottery ticket gamble.
It's very hard to accept the word of a totally incompetent management team... Did they have their head up their #$%$ when they hired this inept auditing firm ? Did they not check their work on a regular basis ? Have they filed a law suit against them to recover what the shareholders have lost because of their failure ?
Inquiring minds demand an answer to these questions_____