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Newcastle Investment Corp. Message Board

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  • dgmcpa dgmcpa Jun 20, 2012 2:10 PM Flag

    Cash Flow from MSR

    Thanks Dave. What is your opinion on the share price? Do you think that the yield will come down from 12+ to a around 10, therefore equating to a share price of $11 to $12 by this time next year or conversely if the qtrly div goes to .30 and yield stays at 12% SP will be in the $10 range? Your opinion is greatly appreciated as I also have a fairly large position and will be retiring in 2 to 3 yrs and will be relying on NCT for approx 35% of my div income. Thanks and GLTA longs.

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    • To take the advice of someone from a Yahoo message board about a stock that you are going to count on 35% of your retirement dividend from is absolutely absurd.

      • 4 Replies to gogomets13
      • Gogo, I was just going to post the same thing. That's like putting all your employers 401k into their company stock. Just isn't done anymore, especially when you look back at ENRON. I built my own personal mutual fund with over 30 different positions, and in different sectors, none over 5% of the total investment. I can sleep at night.

      • Thanks for the reply Dave,I knew the 35% number would get a response, my present NCT position at current div rates will account for approx 5 to 6% of my retirement income which will be around 150K per yr. I have a portfolio of $1.2 mil consisting of 20 diversified stocks that earn an average div yield of 6.50%. I have held NCT shares since 2007 and my avg SP is $7.50 and I will be reducing my position probably in 2013 when I expect the yield to come down to under 10% and a SP that will exceed $8.50 based upon the current MSR deals and the increase in the available distributable cashflow. I think Dean has the most accurate assessment of NCT and its business model.

      • And please don't take that last post as being an attack or mean spirited, it's not meant to be.

      • I agree Gogo, but what most concerns me is that people are planning their retirement with the expectation of a continuous flow of dividend income to help them out. I don't accept advice, so I won't give it either, but I will say that I plan to continue working until I can't get out of bed anymore.

        The entire world economy is undergoing changes that could undermine the value of many assets that we now take for granted. The growth of debt over the past 50 years has been astronomical. It has happened because of the explosion of financial products available for investment, from the Keynesian belief that debt can actually be beneficial, and from financial support of the Fed which has made both companies and citizens more risk tolerant. But it now relies on the Fed to hold it all together.

        I believe I can safely make the blanket statement that all serious disruptions in the economy were the result of bad decisions by those in control. Two outstanding examples are actions by the Fed which drove the 1929 recession into a full blown depression in 1931, and the formation of the Euro. The world financial system is now so complex that anything is possible.

        Most of my money is in real estate to which I personally hold title. People will always need a place to live, and I will benefit from higher inflation rates, which is one of the primary means the Fed has to reducing the burden of leverage in the economy.

    • I have never been able to figure out the share price. I too think it should trade higher. Is NCT share price a function of book value? Maybe. Perhaps it goes back to the CDOs still being underwater. And the B$ tax loss carry forward. Wish the imparement could get reversed soon; but that's probably not going to happen until the housing market finally corrects.

    • That's too much income coming from one company. You gotta diversify it out a bit.

 
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