I skimmed it last night and early this morning. Saw nothing negative to the growth roll continuing. Saw no negatives to operating results understanding there are market limits to leverage ratios, cap rates and rates on loans. Will study in more detail soon.
The only negative to nrf now is stock market image, imo. It's still a mortgage reit. Deconsolidating the remaining vies, imo, is important to shedding the image even though I know that will be confusing to the market. Confusion = uncertainty, which the market hates.
I'm comfortable with the growth fundamentals and am willing to collect above market yields while I wait for a slow market to understand.
The discount drip price is 95% of the average of the daily highs and lows for the five trading days immediately preceding the pay date which is 11/14. Thus the computation begins with 11/7 and ends with 11/13.
I will post the results here after the close on 11/13.
Lotsa detail in there. All who have significant money at risk in nrf should read.
As to rising interest rate fears, yes, if long Treasury rates rise, the risk premium ratio must change, resulting in a proportionate decrease in price for the same dividend. HOWEVER, a 100 basis point increase from here will have a negligible effect on nrf profit. In fact, over the next 9 months, it would increase profit by a little better than a penny per share. Longer term, a decrease of less than a penny. See interest sensitivity toward the end of 10-Q.
Obviously, dividend didn't scare them into covering. Yeah, they will take a cash hit on the 15th, but the price was down more than the div on ex div date. Possibly some ex-divi dumpers, but also reits were weak as they have been lately.
It's going to take fundamentals to break them. I'm confident it will happen, but don't know when. Not worried, but feeling frustration that market has not recognized sources of nrf's dividend cash flow. Hamo cannot reduce the cost of capital until the yield goes down by the price going up. Just gotta wait it out while collecting above market yield vs asset category. I'm cool with 22 cents in Feb, then 23 cents in May......and so on for as far as I can see, which is thru 2014.
Sentiment: Strong Buy
Learn the rule: If they do not pay out 100%, they pay some tax on the undistributed, say, for example, 5%.
If they do not pay out at least 90%, they lose reit status, a horror show of epic proportions.
Also understand that the first 3 dividends of a fiscal (calendar) year, say 2014, CAN be considered distributions of the prior year's (2013) income.
NRF is under no tax rule pressure to pay any extra dividend, imo.
Usual chart pattern but a little later than 10 am. Little spike on steady buying followed by a sharp smackdown,
Shorts keep at it. Will pay 21 cents for doing do. Of course price will drop 21 cents at Wed open, but that will soon be forgotten as the march to 10 continues, imo. Sooner or later the shorts will run out of ammo or the will to lose more trying to save already underwater positions.
Sentiment: Strong Buy
It's not #2. They have no pressure from the tax rule.
#1 is not a problem with equity reit investors. It's welcome. The depreciation shelters current cash flow from taxation. Gladstone (GOOD) brags about it on conference calls.
I was upset at SUI's big decrease in roc percentage because I was counting on a bigger percentage of not currently taxable.
3Q D&A = 33.6 million vs 10.5 million 3Q 2012. YTD = 69.9 vs 32.9. Add another 25 million in 4Q and the increase is 62 million over 2012. Moreover, preferred dividends carry out taxable income first, meaning preferred dividends are 100% taxable BEFORE any taxable income is left over for common.
I'm actually hopeful that the combination of increased depreciation plus increased preferred dividends results in some roc for common dividends for 2013. On the other hand, they are still reporting deferred cod income from 2009 and 2010.....phantom taxable income.
Put another way, if nrf announced they expected between 40% and 50% of common dividends to be tax deferred roc, I'd buy more stock. If all other things were equal (which they are not), I'd rather have 8% tax deferred from GOOD than 8.5% nonqualified fully taxable from NRF.
Can be read at sec and nrf websites.
"As of November 1, 2013, we received and accepted subscriptions in our offering for 5.7 million shares, or $56.3 million, including 0.2 million shares, or $2.0 million, sold to NorthStar Realty Finance Corp., our sponsor."
So, 18.2 as of 10/2 and 56.3 as of 11/1 for 38.1 million in 30 days. Plus earnings press release said recent was over 2 million per day. Snowball is starting to pick up speed.
Also, Healthcare bought several senior properties, thus paying over 600K in fees to nrf.
I have twice asked NRF for an advance estimate of taxable income. Twice refused. Question was not ignored.
Something like, "We do not release that information".
AGNC publishes with each quarterly report an estimate of undistributed taxable income per share.
Others, like SUI, when asked about taxability (vs roc) of dividend, will give broad estimate of possible percentage range. NRF refuses to give estimate of taxability of dividend. I've asked. Been refused.
New presentation slides still not on nrf website and no announcement of common offering. IMO, an offering would have been announced after close today if it were coming so trade date could be tomorrow so Hamo could play the dividend give-back trick. Besides, price too low for Hamo who must be grinding his teeth over no respect for sources of cad.
Shorts getting the silent treatment so far with one trading day to go before the ex-div hit attaches to the short account. Was certainly no panic covering today. We'll see about tomorrow.
Yeah, so now about 2 million short shares have a worst case of cover at 10.00 plus the call premium by Dec 20. That leaves over 33 million with unlimited exposure.
Open interest shown is before today's volume. If all of today's volume is opening transactions, tomorrow's open interest will be about 20,000 calls which means 2 million shares.
I only sell covered calls when I am willing to sell the underlying stock at the strike plus the premium. I have an order in to sell some calls on nrf only because I have so many flippers. I bought another 5,000 this morning at 9.7316 including commission. BUT, like another poster said, flippers are turning into core shares.
Why sell when you are convinced this growth in cad and dividend will continue through 2014 at the least? The ONLY thing in earnings and CC which can remotely be considered negative, is confusion over deconsolidating the vies, which has nothing to do with cad which pays the dividend. Junk gaap on the vies just mucks up the financial statements, but does not affect cad.
Sentiment: Strong Buy
This from my June 28 post:
"As to options, a day or two ago somebody bought 5,000 Dec 10 calls for between 50 and 55 cents. Could be a short limiting the downside (short at 9 with a guaranteed worst case of cover at 10.53) or an optimistic wannabe long maximizing leverage.....pay 53 cents to control 500,000 shares. A price of 11.53 means monster profit vs the premium risk. Either is a very bullish bet. I 11.53 be the 3rd Friday in Dec out of the question? I don't think so as the 21 cent Nov div, 3Q earnings and final projection of 2013 cad will be known by 11/10."
I think you are right about a short hedging. The worst that short will do is cover at 10.00 plus .50 to .55 call premium. The third Friday in December is the 20th. A good estimate of 2013 cad soon with the slides and a couple of announcements of closing pending deals at nice return on equity percentages and these calls may be a prudent buy for the short.
Of course, the macro forces will have an effect. Who knows what they may be as it has been a lousy year for reits since Ben's taper talk began in May.
First attack before 10:00 am. Took about 30,000 shares, but good for a dime.
Gotta give them "A" for effort (or stubbornness or stupidity). Shake the tree works, at least for a while.
Typical 10 am smackdown/shakeout. Smart buyers just hold back until sellers are done, then start picking away at the result. Last half hour shows the strength of the buy if it is there.
No new presentation materials on nrf website as of a few minutes ago. They trying to pin closing date of pending deals?? Or maybe a tactic against shorts? Let them guess?
Shorts have two trading days to cover before 21 cent hit attaches. Post tonight to compress impact to one day to cover?
Don't have a clue on timing. I just know the number will be higher than 1.06 midpoint. I expect between 1.10 and 1.12. Have 76 cents thru 9/30, so only need 34 to 36 cents in 4Q. I expect already in hand with investments to 11/1. Pending 1.3 billion of new investments, even if all closed this year, will not add much to 2013 due to short earning time. However, if all closed this year with existing liquidity and borrowing capacity, these will add significantly to 2014 cad per share.
Hope the shorts have a real bad day today. I want to watch stop-outs.
Go to shortvolume (with the usual commercial website extension). It shows gross short sale volume from only the 3 exchanges required to report to FINRA. It does not net out buys to cover.
I consider the percentage short more significant than the number of shares.
Sentiment: Strong Buy
1.552 million short out of 2.794 reported or 55.5% of the volume on these three exchanges.
Shorts still working hard, especially when price is going up. Even bigger percentage last Fri (10/25) when price went up.
Shoveling sand against an incoming tide, imo. Sooner or later they run out of sand or the will to shovel more.
Don't know when, but convinced it's coming.
First, understand that a price at which I may sell flippers, is not necessarily a price which is right for you to sell flippers or core holdings. I am retired and pay my bills with dividends which are way, way more than we spend.
I really don't care what the value of the portfolio is (except ego-wise) as long as dividends keep rising. I expect to hold core positions until death or something bad happens to a company or its industry.
I flip for fun and entertainment and give the after-tax proceeds to the kids and into 529 plans for the grandkids.
I borrow on margin from Fidelity at 1.77% to buy much higher yielding stocks not because I need the spread but because I can.
I bought some nrf yesterday at 9.36. Ordinarily I'd take a 5% next-day gain, but I'm holding these because:
1. I believe nrf is way underpriced at 9.65 ex dividend.
2. I want the 21 cents and I expect the ex-dividend effect will soon be forgotten by the market.
3. I'm 90% confident that penny per quarter will continue, at a minimum, thru 2014.
That said, more than 10.50 ex dividend would tempt me. A fast 11.00 would probably get me out of flippers, especially if I had some other place to go with the proceeds. That would be in the hope for an irrational selloff before the next dividend so I could get back in. Plus, I already have more than my 100 grand flip goal for 2013, so I'm under no pressure for this Christmas for the kids.
I am so comfortable with nrf's growth prospects, I'm content to hold. Nevertheless, if I smell overbought, I'll sell flippers, not any of the core.
Last minute....high 9.91 then smack to 9.85 low on 219,000 shares. Yeah, day traders get out, but I suspect some help from desperate shorts throwing good money after bad to try to keep a lid on it.
I suspect some covering today. The smart ones got out early. Only two trading days left to cover before the 21 cent hit attaches.
No common offering next week to give the shorts a cheap out, imo. Enough liquidity and borrowing power to close pending 1.3 billion deals. Besides, I think another preferred comes before next common as cost increment (9.25% vs 8.5%) is small and never goes up. Another slug of cheap debt may also come before next common. In any event, only a million or so covered out of Aug offering. Perhaps now they want the opportunity, but it ain't gunna be there, imo
New slides with est 2013 cad not on website yet. If those come out before Monday morning, imo, they will put more pressure on. I still think 1.10 to 1.12 midpoint. In sum, I'd rather be long than short right now. Sooner or later the facts will break the shorts back. I can't wait to watch.
While it is nice to see a pop near 5%, remember, nrf closed at 9.68 last Friday. Since then, nothing bad happened to nrf. To the contrary, another dividend increase was confirmed, a strong quarter was reported, they had a great CC and they have 1.3 billion of new deals in process.
So we're up a dime or so from 9.68.......about 1%. Whoop-dee-doo. Ain't got no respect. I'll wait for respect even if that takes another year.
No hint of anything different with dividend. No mention of a change in policy. Market now expects a penny per quarter. Hamo cannot get off that horse without prior notice. Count on 94 cents in calendar 2014 as a minimum until Hamo gives prior warning of a change.