Its book value is $19 without taking into account the fall in real estate prices of 30%++.
1. Insiders are not buying, not even when the stock was at $0.60.
2. GKK Creditors are satifisfied with 30-40 cents on the dollar for their loans. Bad sign..
3. Company post first loss in company's history.
4. Commercial real estate has not bottomed.
I would buy gkk for no more then $1.50.
PS. am not short
We still have commercial retail shopping center projects being completed. Very strong developers who started over two years ago. I expect no new construction for quite a while in the commercial retail sector of any scope.
Residential has also been scaled back (about 90%) in our area for new construction, but they are working down the backlog of houses as the residential market is slow but not shut down. Foreclosure properties sell very quickly, and some "regular" sales are also going forward.
Also, some are converting to lease to own with potential buyers, until financing can be obtained-- or their old house can be sold.
I don't know about the areas you all live in but in my neck of the woods the only construction that is going on is on small, 1/4-1/3 acres of commercially zoned real estate and what is going there -- bank branches. I have 4 TD Bank branches within 10 blocks of my house, not counting all the other banks. I've never seen saturation like this (although pizza parlors, nail salons and Chinese restaurants run a close second.
I agree, retail commercial properties will be highly stressed, especially new properties, until the consumer has paid down debts and can begin purchases again. Probably will be 2 to 3 years before we start recovering in earnest.
However, the reason I was drawn to GKK is its portfolio is leased to major banks, and consists mainly of branch facilities-- the main source of deposits for banks. Going forward the banks will want to increase their deposit bases, so it is very unlikely to allow branch facilities to remain vacant.
If GKK had a high proportion of retail in its leased facilities, I would be more concerned about its viability.
If you have the software, you might overlay a 12 month moving average on some of the mREITS and see when they gave buy and sell signals. I use the monthlies for a long term indicator of the trend.
You might also want to compare the 12 week moving average position to the 25 week moving average as a trend indicator as well for the intermediate trends. I think you will find the rallies rarely last if the 12 week is below the 25 week moving average.
Just a couple of suggestions, but IMO the results you obtain are based on your own reactions to the market rather than the market action itself.
I usually do not trade stocks that are below their 12 month moving average, which to me indicates a long term downtrend. I could not resist GKK-A at a 95% return, and, GKK under $1, so purchased some.
My interpretation of some of the indicators I use (which may not be the same as yours) follows:
The long term trend (monthly) appears to be trying to put in a bottom, but is hitting resistance at the 12 month moving average ($3.32), so it is still below that average (in downtrend).
The intermediate (weekly) had stochastics above 80 for the first time in a long time and some of my weekly moving averages are moving up (potentially an uptrend).
The short term topped at 200 day and is moving back down.
IMO for indicators I use, Short term support is about $1.70, with intermediate around $1.40 to $1.50, but I believe GKK's price is influenced by the index funds and ETFs for financials, so it is helped or hurt by the movement of the whole sector, and doesn't necessarily trade solely on its own fundamentals and technicals.
I tend to be a position trader rather than a short term trader, but this market is IMO better suited for short term swing trading.
Their assets are mostly senior secure bonds (75%) thats there is a market for so its not that far from reallity what they are reporting.
Anyway, my point is even if they only got 50% of the NAV in case of liquidation, lets say 6$, I would still have a nice 50% profit from todays price. Because you only are paying 30 cents on the dollar for KCAP.
Doesent this make sense folks? Its nice to know that even in case of liquidation today, I would have a profit, and that is the case for KCAP right now.
You're not short, you just sound like someone bashing the stock so you can get it cheap.
If you think the "fair value" now is $0, why would you pay $1.50 for it? Are there really no stocks out there with a positive "fair value" that you can buy?
"I think your car is complete junk! Not even worth a cent! But I'll buy it from you for half price..."
Sounds like a bad pawn shop trying to milk the customer for a better profit.
If we get the crash many people are expecting, you might get your chance to get in at $1.50. Will you still be trumpeting your "fair value = $0" line then or will you change into one of those overly enthusiastic longs with rose-colored glasses?
The fair value represents current value if GKK was to liquidade, so I would pay $1.50 for it because I belive GKK wont liquidade any time soon. In the long term the real estate prices will come back up.
$1.50 is a good entry point, I would not go all in though...
Why do you think a lot of people bought this at $0.60? That is dam close to zero...
So far I havent heard any good arguments regarding what GKK can do to offset real estate declines, anyone?
"fair value is proberbly zero."
What basis do you get your numbers from? A small loss in one quarter does not bring $18.4 book down to "proberbly zero".
If your numbers are as good as your spelling then you're dead wrong.
Its pretty easy to calculate:
Just subtract 30% of their 3 billion real estate assets, you get a 1 billion loss.
Some are saying they can offset this loss with depth buyback at a discount, but that is ridicously since they dont have much cash to do that. What ever they have been buying back only offset their loan losses. So far nothing has been done to offset the losses on real estate value...