Hi Ag, good to hear from you.
I have reduced my position in RSO by 30% over the past week and have a substantial cash position. I'm looking for secondary offerings to come along and purchase on the "dips". I have done great with RSO over the past three years, but I feel, like you that it is getting a little expensive right now. If the pps holds up at 7.55, I will be real tempted to sell some more tomorrow.
In March 2009 and then again when RSO had its second offering, I went onto margin. Going all-in and then some was fine when values were extremely compelling. However, the blue light special is over.
First, I had to get off margin (did that earlier this year). Second, I had to trim positions where I'm over exposed. I'm still over exposed to RSO. It has made me a lot of money, but I needed to trim back to a position size that I could hold long-term.
RSO's book value per share was $5.92 on 6-30 and $6.03 on 9-30. It seems that we are likely trading at about 125% of book value today. That sort of premium over book value is rather unique among the commercial mREITs that I follow. RSO is no longer a bargain. I think 125% of book value is a premium implying that the CDO world comes back to life and that RSO can go back to 2006-style business as usual. However, the reality isn't quite that bright.
RSO's dividend of 13.2% is nice . . . but not nearly as compelling as the previous yields offered by RSO.
I don't particually like cash . . . but the alternatives in the public markets are getting pretty expensive. Perhaps I'll take some more cash out of the markets and put to use in private deals.
AG55 and Ruby are very savy, and I enjoy their posts.
Nothing wrong with taking a profit.
I too have a large cash position. It helps me sleep.
I will continue to hold my RSO positions,as I am fully invested.
Well, because people always think that the weather will be constant, until a storm knocks their house down, it's a basic human fallacy. Just because the market is quiet now and seems to be creeping up every day, does not mean it's going to stay that way. It's why people were shoving each other out of the way to sell in March, 2009, and why they're bidding up everything now. I hate Cramer, he's a clown act, but he's right on one thing, you have to ring the register when everything is bright and sunny, because that cash will pay dividends when things are dark and windy.
I don't understand why so many longs are talking about selling (at least some of) their RSO. Anticipation of a market correction? Anticipation of a stock offering? Lack of confidence in RSO?
The CEO stated that dividends for 2011 were "solid," and that they were looking to increase it. RSO is fully aware of its CDO situation, and I take going on the "offense" to mean new business investments.
I find it strange that people who were buying this at $3 or $4 are talking about selling and holding cash. I'm curious why you feel you need to hold cash.
I sold my trading shares today.
I hated to do it with the way the stock is moving. But so many times I haven't sold my trading shares and have been very sorry. Taking a profit is always good. That's what I'm telling myself. I have a large position that I hold long. But I wanted to clean up my margin as well.
But since I sold I'm betting we'll hit a new high. It's all good