If you are long. Nothing here to comfort shorts.
25 cent dividend speaks for itself. Yeah, they raised the payout ratio to 80 % (85/1.06 = 80.19%).
CAD of 1.06 (actually 1.057 rounded up) in upper end of estimated range despite 69 million shares issued in December.
Already got a 1 billion deal to acquire healthcare properties (have term sheet), thanks to Flaherty. Already made 100 million in loans. 2014 growth starts off with a bang!
I'll nitpick, since it's about all shorts can point to: At 2Q CC, Hamo estimated 700 million in 2013 raised for nontraded reits. Actual was 683 million....97.6% of estimate. Horrors!!!!...NRF fell short, so short some more.
Form SC 13GA just filed. Cohen owned 5.75 million nrf at 12/31 via SAC entities, which now are almost all his own.
SAC had a big selloff last June to fund redemptions but then bought 2.9 million in 3Q to own 4.25 million as of 9/30. Soooo, he bought another 1.5 million in 4Q.
Here's a guy/fund busted by the sec/justice department, has to refund third party money, and he adds significantly to his nrf position in such dire times. Says a lot, at least to me, of what Cohen thinks of nrf.
On March 10, 2009, NRF common traded at a high of 1.54, low of 1.39 and it closed at 1.50.
Since then, including the 25 cents to be received Friday, it has paid 2.77 in dividends. Those who had the guts to buy for 2.77 or less and who held thru next Friday have received all their money back in about 5 years.
That ain't bad.......5 years to pay out 100% of initial cost.
Oh year, I almost forgot......those shares with a net after dividends cost of zero or less are worth almost 16 today.
Put another way, 2.77 of dividends + 15.89 for stock = total return of 18.66 on what could have been bought for 1.50 5 years ago.......gee, more than a 12 bagger in 5 years....an 1,144% return.
Hamo done good, beginning with surviving the panic and crash. Hats off to Hamo today!!.
After Hamo commented on what a great 2013 NRF had, he said, .....see subject line.
I'm going to re-listen to CC and read transcript if SA publishes one, but here's some preliminary take-aways.
Growth opportunities so far from RXR and Flaherty exceeding expectations. Will do joint nontraded reit with RXR, multi-billion, and expect to be selling later this year. NSAM gets 50% of fees directly and 15% (30% of 50%) via 30% ownership of RXR.
Expect 73% of NRF 2014 assets = real estate counting direct and indirect via private equity deals & RXR. If market does not value appropriately, can do two spins. Not named, but healthcare and manufactured housing can each stand alone via spinoff.
Slides with 2014 projections will be posted on website tomorrow after close.
Lotsa questions about growth with RXR and Flaherty. No numbers given. Just to date is exceeding our expectations.
Broker can peddle 4 deals at same time. RXR deal makes 3. Room for one more, but not talked about.
SEC ok = biggest hurdle, time-wise, to spinout. Was some talk about exchanging notes before spin in June left me thinking more so spin will be June 30. Need to read transcript on this.
Still have some number crunching to do, but all seen and heard so far makes me believe Hamo is right: "The best is yet to come".
In the money calls expiring tomorrow totaled 32,193 at yesterday's close and only 1,151 of these have been traded as of 3pm. Assuming all of today's volume is closing transactions, that leaves 3.1 million shares to be called.
Why do I expect a close of 14 today? Because that makes both the 14 strike puts and calls worthless.......maximum pain for the long side.
This is 2 of 2 of this lesson:
CAD for 9 months ending 9/30/13 was 159 million. The midpoint estimate for the year was 229 million in the 11/7 presentation (range 224-234). That means a midpoint 4Q cad of 70 million (229-159).
Now assume not one penny was earned with the proceeds of the new offering due to the time lag in putting the money to work. When one assumes no incremental earnings from new money, they are actually calculating the dilutive effect of a new issue by using issue-adjusted weighted shares outstanding. In other words, we have more shares outstanding but no incremental income from the proceeds of the new issue.
So, assume 70 million of cad for 4Q. Without the new issue, divide by 249 million shares = 28.112 cad per share which rounds to 28 cents. Now divide by 258.375 (from lesson 1 of 2) = 27.092 cents which rounds to 27.........resulting in 1 cent dilution assuming no earnings from new shares.
For the year, 229 million / 218 million before issue = 1.0505 per share or 1.05 rounded. Now divide by 220.363 million shares (from lesson 1 of 1) and you get 1.0392, which rounds to 1.04........again one penny dilution with zero earnings from new money.
There!!! You learned something.
I was right......all the new depreciation blew away taxable income, at least enough for the common dividends to be 100% tax deferred return of capital!!
Partial roc for different classes of preferred. Tax sheet on the website.
Whoopee!!! Hamo made my day. Gunna toast him twice before dinner tonight.
My portfolio up 2.79% this month thanks to NRF and SUI, my two largest positions by far. Would be seriously red without the performance of these two. NRF up 8.48% this month and SUI up 9.64%, neither going ex during month. S&P 500 down 3.56%.
Since I allow myself two drinks before dinner, tonight it's one for Hamo and one for Shiffman.
The discount drip price is 95% of the average of the daily highs and lows for the 5 trading days preceding the pay date. Since the pay date is 2/14, the calculation period begins with 2/7 and ends with 2/13.
I will report the discount drip price here after the close on 2/13.
Hell no. If I even thought the probability of such a surprise was more than nil, I'd have a helluva lot smaller position.
BUT, the point is that bad things can happen to good companies (which BWP wasn't), sometimes overnight.
A well-placed earthquake which is strong enough can take out 50% of SCCO's copper production for six months to a year. A one-product biotech can have a failed clinical trial.
BWP is largely a pipeline rental company which is also exposed to commodities prices. No question, today's news blindsided the market.
Lots of us here are way overweight NRF. This thread is just a reminder. It CAN happen. My advice is be sure you can take the hit if it ever comes. If the answer is "no", then lighten up. For me, I can take such a hit without it destroying a comfortable retirement. I sure as hell would be unhappy about it, but I can survive it easily. For me, it means my kids get a smaller inheritance. Tough.
Since you have no US trading to watch today, I suggest you spend some time on this dilution (actually, weighted average shares) lesson.
Per share operating metrics (like earnings per share or cad per share), which cover a period of time (quarter, half, 3 quarters or year) are calculated using weighted average shares (and share equivalents) outstanding during the reporting period. The numerator (such as earnings) is the dollar amount of the metric during the respective reporting periods (such as quarter and year to date). The denominator is weighted average shares outstanding during the respective reporting period.
Weighted average shares outstanding is determined by adding up the number of shares outstanding on each day during the reporting period and the total is divided by the number of days in the reporting period. The divisor for 4Q is 92 days (31+30+31) and the divisor for a non-leap year is 365 days.
NRF issued 57.5 million new common shares on 12/17. Even though the trade date was 12/12, they were not issued until 12/17, the settlement date. Thus, these shares were outstanding for 15 days during the quarter and year. So what is the effect of these shares on the weighted average during the respective reporting periods???
Start by multiplying 57.5 million by 15 days = 862.5 million / 92 days = 9.375 million added to 4Q weighted average. At 9/30 there were about 249 million shares and units outstanding. Without the December issue and ignoring dripping and new freebie units issued and assuming no buybacks, 4Q weighted average would have been 249 million. So, 249 + 9.375 = 258.375 million weighted average for the quarter.
For the year, 57.5 x 15 days = 862.5 / 365 = 2.363 million added to the year's weighted average which, without this new issue would have been in the neighborhood of 218 million. Thus, the weighted average for the year will be about 220.363 million (give or take a million).
Now read 2 of 2 of this lesson for the effect on per share cad.
Thank goodness nrf up 52 cents this week. Would rather have 14.99 vs 14.52, but I'm pleased with the week and ytd price performance. Gimmee 3% a week and I'm a very happy camper.
Remember, 12/31 close was 13.45 so price is up 1.07 or 7.96% in less than a month.
Shorts put together back to back days for the first time in a long time. Of course, they had lotsa help from the macro market to do it. Still, imo, shoveling sand against an incoming tide.
Thanks to nrf my portfolio is up 1.98% ytd vs down 3.14% for the S&P 500. Gimmee this kind of spread for the year and I'm happy.
Boo hoo, two down days. So what. We'll be ex 22 cents in a few weeks and it should be a helluva CC with Hamo talking about the plans with RXR and Flaherty. I just know both will accelerate the rate of growth for NRF and especially for the higher multiple NAM.
Hang tight. Don't get scared by this nutso market. China farts and the world goes nuts. Good things to come from NRF, but it will take time. Just be patient and collect dividends.
Net cash cost per pound of copper: FCX = 1.49, SCCO = 1.00
Of course, they both play definitional games with net cost per pound, so a better measure is after tax bottom line profit per pound of copper: SCCO = 1.156 FCX = .839
On a bottom line basis, SCCO made 31.7 cents per copper pound more than FCX.
They both produce all they can. They both sell all they produce. The selling price is set by the world market.
Thus, the difference is cost. SCCO clearly the winner.
The exchangeable notes presented a problem with the spin......the price of nrf.....since the notes do not get spin shares. Yes, it was very expensive, as was retiring the other notes with shares at discount prices....truly dilutive, as reflected in estimated cad using 360 million shares as the divisor.
It's the price they paid for the deals they made.
I believe 100% of the 2014 dividends from NRF, both pre and post spin, will be tax deferred return of capital.
I expect only one dividend in Nov from NSAM, and that will be taxable as a qualified dividend since it will come from a C corp with taxable income.
2013 nrf taxable income was only a little better than 16% of preferred dividends paid, way short of any being taxable to common. I attribute this to increased depreciation coming from equity reit investments made in 2012 and 2013.
For 2014, we will have about a half year or a little more of depreciation on 1 billion of healthcare properties about to be acquired.
A half year of NSAM's taxable income will not be on NRF's 2014 consolidated tax return.
The tax loss on buying these exchangeable notes, financed with debt due in September will be about 308 million.
How the new debt gets refinanced, I don't know. I do know it will produce a huge loss, real and taxable.
Thus, I expect NO nrf 2014 dividends will be taxable, including preferred dividends. I expect they will have a net operating loss carryforward to 2015, but don't know how much. It should be disclosed in 10-K.
Maybe NRF will admit an expected tax loss for 2014 at a CC if asked. To date they have refused to estimate in advance the expected taxability of dividends.
So, I just transferred 3,000 shares of NRF to a brand new, otherwise empty, Roth IRA from my regular IRA. If I do not revoke the Roth conversion, in part or in full, I will pay a tax on today's NRF value. After I know what my taxable income will be for 2014, if it is too high, I just undo as much of the Roth conversion as I want AND I have until Oct 15, 2015 to make my decision.
So now I don't care if I won't know what the tax status of nrf dividends is until next Feb because I have the ability to choose how much, if any, of this Roth conversion I want to pay tax on in 2014.
Nothing we have not heard before except some details on the RXR investment. NAM gets asset management, the broker and a contract to manage NRF. When the 10-K is filed, look at the segment information. If it is not spelled out how much, if any, of the RXR deal goes to NAM, maybe one could guess by comparing NAM assets in the 10-K to the same in the 3Q 10-Q. NAM is asset-light for its business compared to NRF.
The specific details will be in the prospectus which I expect will be filed early may (probably after 1Q earnings release). I expect a spin date of 6/30 or 7/1, when the books would otherwise be closed for interim reporting. IF (notice I say IF) undistributed taxable income is a complex tax problem between spinnor and spinee, then I expect a special dividend to nrf shareholders just before the spin to eliminate the problem. No shareholder vote is necessary and will not be requested.
I also expect a 1:1 spin ratio. They already know what NAM's initial profit will be within very little wiggle room for a range of collections peddling Healthcare and Income 2. If nontraded #4 is announced in march, or a joint fund with rxr, I doubt much, if any, will be collected prior to 7/1. The real wildcard is how fast and how much NAM grows assets under management, especially possible deals jointly peddled and run with rxr.
NRF will be the same post spin but without management duties or fees. Its growth rate will depend on capital and available deals. One big difference----a clean balance sheet. Once the equity domination can easily be seen, I expect the price/cad multiple will increase, but don't have a feel for how much.
So really, there is not much more to tell except date of spin and the balance sheet items going to NAM.
Just sit back, collect dividends and wait. It's gunna be a good year, imo.
All whose position in NRF is way too big a percentage of the portfolio, me included, should take a look at BWP this morning.
Can you take a 35% hit overnight, financially and psychologically?
I viewed your post to this thread while leaving you on the iggy list.
And if one dies holding reduced basis stock, income tax deferred dividends become income tax free dividends due to the step up in basis.
Plus, one can pick the time and amount to sell and recognize income, unlike taxable dividends.
Plus, NRF's dividends do not qualify for lower tax rates. Ordinary dividends can be taxed at 43.4%. ROC reduces basis which, if held more than a year, results in a bigger long term capital gain which is subject to a maximum rate of 23.8%.
Plus, somebody in a high tax state like RI (6% on adjusted gross income with no deductions) can move to a no income tax state like Florida or Texas before selling reduced basis stock, thus beating the high tax state completely
There is nothing not to like about roc dividends for a high bracket taxpayer.