VNQ down 2.3%, SUI down 3.3%. Stinko day for reits except you-know-who.
Just imagine what today might have been if we had some wind at our back instead of a gale into our face.
Nevertheless, we longs had a real good day. Count your blessings and be patient.
Unfortunately, this offering gives the shorts a discount to cover with no pressure on the price.
BUT, the August and February offerings did the same and, for the most part, the shorts did not take advantage.......from dimming memory of an unimportant fact....only 2 million covered on the August offering.
Another 50 million common offered. If you are not at position limit, I suggest you buy the dilution freaks usual selloff. Hamo ain't gunna do a deal which is not accretive to HIS common stock.
The good news is progress on pending deals. From press release:
"The Company intends to use the net proceeds of the offering to:
• fund the cash portion of the purchase price for the acquisition of an approximately $400 million portfolio of manufactured housing communities that it currently has under contract; and
• make other potential investments relating to its business, which may include (i) an approximately $350 million debt and equity investment in a strategic joint venture with a New York tri-state area focused real estate owner and asset manager, (ii) the acquisition of limited partnership interests in real estate private equity funds, (iii) the acquisition of commercial real estate properties and (iv) the origination of commercial real estate loans.
And people who sell their winners so the gain won't "get away from them" are stupid. The same group holds losers waiting to get out even, thus emphasizing their stupidity. For long term investors, greed beats stupidity every time.
May or may not be interesting. If they pick 12/13 as settlement date, it will not include today's trading. If it is the 16th, that's the day today settles and we'll see the net cover from today.
I hope today breaks the determined will to keep shorting more to fight the price increase. The close on 12/31/12 was 7.04 when short interest was 11.2 million to around 10 with 36.9 million short at 11/15.
So we had a nice price increase despite nearly constant pushback from new shorting. Imagine if today breaks the camel's back.
Someday the shorts will realize that when you have dug yourself into a hole, the first thing you have to do to get out is stop digging. Maybe today is stop digging day.
Feb will be 22 cents. Hamo will not get off the penny per quarter without prior warning. All the momo is growth.
Hamo will not break the momo in Feb. May will be 23 if it comes before the spin. The time to get off penny per quarter is the first post spin dividends, the sum of which will at least equal the last pre-spin div.
The cost of maintaining a second public company will be about a dime (25 million). It has to come from somewhere, so the rate of dividend increases will slow over what it otherwise could have been as one company. However, all both companies, especially management, to sell at much higher multiples to cad resulting in a lower % yield. The combined price of the two companies will be so much higher than the market is giving now, nobody will care that the rate of dividend growth will slow.
I have a full house and then some of nrf. Management is going to be a cash cow.....annuity like cash flow and low capital requirements. The fees from nrf under the 20-yr contract are rich but not outrageous. NRF with all it's contacts will be a feeder to mgt.
I probably won't buy either, post spin, except to flip, and that would be nrf which I expect will be a lot more volatile than management. The post about buying management post split was more a wisecrack about the fees from nrf than a serious comment.
They went over the slides.....read them yourself.
In response to a question Hamo said they would consider spinning off the equity reit business if the market price and yield did not recognize equity reit cash flow appropriately.
My thinking on the hypothetical 1.20 cad for the existing structure.......it becomes 80 + 30 when split.....the dime is for extra expenses of maintaining two public companies. Hmmm that they used 1.20, even though a hypothetical.....I suspect it is a lowball of what their real expectations are.. Hamo's is not the type of guy to put out a forward looking number, even a hypothetical for illustration purposes, and then not "make" that number.
It appears the spin ratio is going to be 1:1.....for every share of nrf you own you get one share of management.
Post spin both companies will take a hard look at payout ratios. I detected a slight hint of higher than 75% at post-spin nrf and a stronger hint of NOT 100% at management because they have growth ideas which will take some capital.
I did not read or hear anything about a shareholder vote on the spinoff. If none needed, don't know whether they will have to file a prospectus with the sec. I would look forward to reading such a prospectus because it would give a lot more detail about the management business than we now get.
All in all, a good, enthusiastic CC. They truly believe the combined price of two companies will be substantially higher than what the market is giving for the same cash flow wrapped in one company. So do I. I'm not in any hurry to sell flippers in the high 11s as I expect the sum of the parts, post spin to be somewhere around 15 (14 to 16 range). As another poster said, some of my flip lots are becoming core lots. They ain't going anywhere as long as Hamo keeps growing cad and dividend.
We could see a monster squeeze today. I don't have a clue as to how many shares will be sold to covering shorts at which prices. Will tutes take profits or wait for a much bigger payoff? Don't know and don't even have a feel for it. Uncharted territory for me. Remember, tutes own 79% of the float. There ain't enough retail shares to handle massive short covering.
The point of the above is I want to sell a few flippers......and I suspect I am not alone. I will not enter a limit price before the market opens (as I sometimes do with flippers) because I have no idea what is going to happen today. I may not be at the computer today until about noon and don't want to leave too much on the table with too low a limit price. I thought of a trailing stop, but I suspect it's going to be a volatile day. I don't want to get stopped out too low only to have the price take off with more covering.
Soooo, I'm going to wait until I can watch before I do anything.
For those thinking about selling flippers I suggest you not let greed drive your actions. Don't chase a falling bid to try to beat the other guy out the profit door. IMO, the fast gain today will be much bigger six months from now after a 22 cent div in Feb and 23 in May.
After hours high was 11.25.
Take some flippers, I suppose, but don't even think about selling the core. The growth roll continues. This just splits management fees from the rest of nrf. The spinoff just isolates the annuity cash flow which carries much higher multiples than mreits, a tag applied to nrf.
Maybe now the market will look at the sources of nrf cad. Yeah, after hours has been great, RELATIVELY SPEAKING......BUT, the multiple is still too low relative to peers. Hang tight with your core. Much more to come with patience.
Try.....Stupidity is having my entire home mortgage in the stock market, and using 450k margin from broker on top of that. --- Holding 31% of my stocks in NRF
higher p/e-p/cad multiples
thank you......the contract with nrf (equity and mortgage) made management big enough to stand alone. We eat the cost of a second public company, but the sum of the parts is way more than the price now.
Shares of management will be received tax free (actually deferred). Basis of current nrf must be allocated between the two companies. Company will provide info for that. Brokers will automatically do the split of basis.