Curious if anyone on the board has thought about being long the common and hedging out some of the rate risk with bond futures. Hard to get a good handle on it given RAIT's longer term circumstances, but performance YTD looks similar to a lot of interest rate sensitive stocks, closed-end funds, etc. Looking at it since BOY, I get roughly a 10-13 year effective duration. If business is stable, dividends improving, and the relationship reasonably robust going forward, looks like you can clip 4.5+% yield on a (semi)-hedged basis.
Similar opportunities appear to exist looking at some muni CEF's trading at discount to NAV w long AAA munis now yielding ~120% of long bonds.
Given tax status of RAS distributions and obviously muni CEF's, trade has even more appeal if you are in a high tax bracket.
Kicking myself a bit for not seeing this 3 months ago...
what is the rate risk? the portfolio is mostly floating rate and duration matched. the dividend yield should be around 10% by year end, which is a wide enough spread vs. treasuries that another few basis points on the long end of the curve shouldn't matter. if you want to short bonds that's fine, but it's not a hedge for this company.
U Were Lucky Not Getting In 3 Months Ago But If Like U Said U Have Up To 13 Years, Now Seems To Be A Good Time To Get In. But For The Last Year Or 2 The Money Being Made In Ras Was In & Out Meaning It Would Get Way Ahead Of It Self & Then Come Down Big Time. There Are Many Pumpers On This Board As Most So U Have To Watch Which Way The Wind Blows.& Watch Out 4 SnakeHd . Good Hunting