On July 9, 2012, two years ago today, in a small IRA, I bought 1,742 shares of NRF for 9,275 (cause that's all the cash I had at the time) and set the position to drip dividends. 8 drips have been posted. Other than dripping, the original position is untouched.....no trading whatsoever, so this is a theoretically correct total return dripping the Fidelity way.
Today, nrf and nsam combined closed at 37,951, up 309.18% in exactly two years. Thank you, Hamo.
I don't usually teach history, but we need to reflect on it to appreciate where we are today.
NRF stopped doing new business in 2Q, 2008. Hamo saw it coming and went into survival mode. Probably the best thing he has done for NRF is survive the financial crisis and the deep recession which came with it. For 3 years NRF was in caretaker, slow liquidation mode. In 3Q, 2011, they started doing new business with a pivot to equity reit assets and started building an asset management business.
On 9/30/11, before the world knew new business restarted, the price closed at 3.30. Now we are at 17.53 plus 2.02 of dividends, which totals 19.55. Soooo, 3.30 to 19.55 in 2 3/4 years = 492% profit.
At June 30, 2012, NRF closed at 5.22. Now we are at 17.53 plus 1.61 of dividends which totals 19.14. So, in 2 years, 5.22 has grown to 19.14 including dividends, = 267% profit.
On June 30, 2013, NRF closed at 9.10. If we close today at 17.53 plus 91 cents in dividends = 18.44 from 9.10 one year ago, a profit of 102.6%.
None of us (except the shorts) has any legitimate complaint about the performance of this stock over the past 2 3/4 years. And, imo, it ain't over. The rate of total return will probably slow because coming back from a deathbed is pretty spectacular, but as long as the growth ball keeps rolling, NRF and NSAM are keepers.......NSAM for faster price appreciation and NRF for yield plus smaller rate of growth.
My very overweight core position ain't going anywhere soon. Flippers are different. As long as the market gives me opportunities, I'll take 'em. I just have to learn how separate companies trade. May take me a while as the dust of the spin settles.
BTW, this morning's sale puts me over 200,000 shares of nrf sold ytd and I still own a lot more than I did at the beginning of the year. Every single share was sold at a profit. NRF flipping has been good for my belly to grow and my kids at Christmas. Wife says she is falling in love with Hamo for buying us dinner so often.
Some businesses are very asset and equity dependent....a bank for example, or a pure mreit. In these, book value per share is an important indicator of its ability to increase earnings. The markets place limits on how much they can earn on assets, the amount it can borrow and the cost of that borrowing. Thus, once maximum margins are achieved, the name of the growth game is more equity. Thus book value per share is very important compared to its stock price.
On the other hand, service businesses, such as a law firm, are asset light. They only need office and equipment. Profitability depends on the number of lawyers, revenue per hour and salary per hour. Book value is meaningless as an indicator of earning capacity.
Same with NSAM. It does not need to own a bunch of assets to make money. It needs somebody else's assets to manage , the people to do the managing and offices. NRF has said a few times current capacity (people, offices, equipment) can peddle 4 deals simultaneously. Currently, it is peddling two. When a deal is in the selling/growing stage, it requires a lot of work investing the money coming in. Once fully invested, much less work maintaining an asset base. When most revenue is based on assets managed, the key is gathering assets. Book value per share is a meaningless metric.
CAD per share, growth rate, yield and perceived risk will determine the price of nsam stock. Book value per share will not be considered. In fact, the lower the better. Suppose 20 cents of stockholders' equity per share produces 40 cents of earnings per share. That's a 200% roe.
We all know "penny per quarter" went out the window with the 25 cent Mar dividend which exceeded the mantra by 3 cents.
However, consecutive quarterly increases are at stake. March was the 10th quarter in a row of increases. I have the feeling Hamo would like to keep that streak going, even if only by a penny. March showed they increased to payout ratio (because they did not get price credit for a lower ratio). If cad is 25 cents (because of dilution), I think they might go 26 cents to keep the quarterly streak going because they can catch up later.
I cannot imagine Hamo accepting a decrease unless there were no other choice. Thus, I think 25 cents is the minimum. Because of the dilutive effect of the exchangeable note shares and the time lag in investing the December proceeds, I also think 26 cents is the max.
I suspect lots of trading errors will be made Friday. That's because NRF will trade pre reverse split with nsam attached. Let's just say the closing price on Thursday is 17.......and to rational minds that means 9 for nrf post-spin and 8 for nsam. So Friday NRF will start trading around 17.
Then there is NRF without nsam attached (NRF WI). In addition to no nsam, that will trade on a post reverse split basis.....so you have half the shares at double the price. NRF WI, using the example above, will start trading at about 18 (double 9).
NSAM WI will also trade post reverse split. Again, half the shares at double the price. It will start trading at about 16 if my illustration holds true (double 8).
I just know NRF at 17, NRF WI at 18 and NSAM at 16 all at the same time is going to blow a lot of minds.
Lets say you want to overweight NSAM and you bought an extra 1,000 nrf contemplating keeping the nsam portion and selling the nrf portion, post spin. Your brokerage account will show you own those 1,000 nrf shares on Friday and Monday. To sell the NRF portion as soon as you can, sell NRF WI Friday, but you only have 500 to sell.
Get it straight in your mind before trading any "nrf group" on Friday or Monday.
Lemmings believe this junk, just like the Pablo article on seeking alpo. Fine. Those who know this is fecal matter because they know the truth can just make money off the lemmings who don't do the work to know better.
That's the story of my career.....make money off those who are not as well prepared as I am. I win, they lose.
I watch ex-divi trading on several stocks, in part because some of my flip buys are intended to "capture" a dividend with a short hold flip. Tomorrow NRF trades ex the 25 cent div for regular way trading.
Sometimes, there is what I call the ex-divi dump. People (and tutes) hold for one last dividend and sell on the first day they can, the ex-dividend day. Pros know this is coming so the bid gets thin and drops fast. Sellers act like lemmings chasing a falling bid. The dump is more likely to happen when the price is near a 52-week high and/or there is a perception that future growth is done.
Conversely, there is the ex-divi jump. People (and tutes) want in but don't want to buy a taxable dividend, so they buy on the ex-dividend date. The pros among the jumpers usually don't show their hand at the open. Rather, they wait for the dumpers to exhaust themselves and then strong buying begins.
Since NRF is well off its 52-week high and the future looks so bright, my guess is more jumpers than dumpers tomorrow. If so, buy the morning selloff if you are looking to flip.
Before the open I placed an order to sell 5,000 nrf at 16.19 (anticipating an offering tonight or Monday).
Sold 1,000 netting 16,182. Just bought 'em back for 15,548. So I'm in the same share position as before the open with an extra 634 of cash in the account. This in IRA, so tax not an issue.
IMO, market is wrong today. Yeah, yeah, it is what it is....more sellers than buyers. But the market is slow and sometimes lemming stupid. To me, 15.55 is slow and stupid.
Take the 358 million to close the new healthcare properties. Press release says initial yield on leveraged equity = 12%. Subtract 2 percentage points for nsam leaving 10% for nrf which equals 35.8 million annualized. The December offering netted 11.30 per share so 358 million took 31.681 million shares. 35.8 / 31.681 = 1.13 per incremental share. IMO, market is reacting to not earning anything on 358 million of equity in 1Q instead of figuring out the go-forward effect of investing the money. Slow and stupid. Take advantage before they figure it out.
I tuned in about 9 minutes after the presentation was supposed to start, so I missed the beginning. I will listen to archive as soon as available......to get it all and hear it twice.
I cam in on Q&A on nsam buybacks. CFO made clear 100 million starting cash was more than sufficient to fund some buybacks. Next Q= can you start buybacks immediately? A= yes. then something like...."sometimes a short answer is best, so yes."
No question in my mind........if nsam starts trading too low, nsam will be buying shares immediately. Authorization announcement will come before the spin, imo.
I have the feeling nrf expects nsam to trade between 35 and 40 times cad. If cad = 33 cents, I think they expect a price between 11.55 and 13.20. Don't know at what price they start buybacks. Under 10?....maybe. Under 9?....I think yes.
Post spin nrf @ 82 cents x 12 to 15 = 9.84 to 12.30.
Post spin nsam @ 33 x 30 to 40 = 9.90 to 13.20
Combined range, pre reverse split = 19.74 to 25.50. Like I said long ago, I expect a combined 20 to 25 by end of year. I can wait and get paid 50 cants for waiting.
Don't take it personally. I don't suffer any fool (or lazy moocher) lightly, a habit I established many years ago, long before I started stock investing. Staff knew they were going to get beat up when they came into my office. They also knew it was training on how to be an expert witness before they got beat up by an opposing attorney when they were on the witness stand. When they got out of my office without a beating, they knew they had it right.
It's better to get beat up here, on a message board, than get beat up financially by the pros in the market for something you don't understand correctly. Harsh, blunt, brutal, I plead guilty. The other side ain't gunna give you a second chance. Get it right or lose.
No need to apologize. We all make mistakes. Yours happened to be more thick-headed than most, so you got slapped around. That's just me.
I have no intention of selling either company because both will continue growing as long as Hamo has profitable deals to invest in. NSAM will grow cad per share at a faster rate than nrf will, a factor for which the market pays a premium. NRF will yield more than NSAM.
post spin nrf will not be as profitable per dollar of invested equity as it is now because nsam will be skimming the cream off the top, and the low cost nontraded reit management fees will no longer be in nrf. NRF's cad growth is equity dependent because markets limit its yield on cost, leverage ratios and cost of borrowing. So, nrf used to be able to make between 14 and 19% on leveraged equity. With the same market constraints, it will make between 11 and 15%. Instead of growing cad per share at 20% to 30% per year, with the same new equity it will grow cad at 14% to 22%. Likewise, the rate of dividend growth will decrease. All of the preceding are caused by shifting bottom line cad from nrf to nsam minus the cost of maintaining a second public company and income taxes at nsam's level. NONE of the preceding mean post spin nrf is not a good investment. It just won't be as good as it used to be. However, those who hold the nsam they get are not disadvantaged by the cad shift because nsam will trade at a much higher multiple than nrf will. To the contrary, I'll give 10 to 1 odds that the combined post spin prices will total more than the pre "when issued" price.
Post spin, a bigger percentage of nrf's taxable income will come from tax sheltered (with depreciation) equity reit income. Plus preferred will initially be a bigger percentage of total equity. Preferred carries out taxable income first. Thus, the change in income composition and preferred percentage means it is much more likely common will get tax deferred return of capital dividends, an attribute which is important to me. NSAM will pay qualified dividends. That's nice but I'd rather have roc dividends which do not increase AGI.
About the only good thing Yahoo changed with this new MB format is no limit on the iggy list. Thank goodness. These trolls and spammers make a mess of the board. The iggy button gets lots of use.
NRF ex nsam midpoint cad ex spin = 1.64 and they will pay out at least 90% = 1.476 which is 8.68% of 17.
NRF-WI at any price under 17 means a yield of more than 8.68% and most, if not all, will be tax deferred return of capital.
A yield investor's dream.
It's really very simple. Hamo is not going to reduce the dividend.
NSAM was included in nrf consolidated for all of 1Q and 2Q. NRF paid a split-adjusted 50 cent dividend in May. Why anyone could imagine a reduction in August is beyond me. It ain't gunna happen.
The principal byproducts of burning natural gas are CO2 and water vapor, the same things humans exhale. Cows produce lots of methane per fart. Feed a bunch of them in a closed room with a vacuum vent to a power plant and harness free BTUs. The greenies would love that while PETA would cry cruelty to cows.
My apartment bedroom has a common wall with the NRF boardroom and the wall is thin.
Just look at my track record of calling nrf dividends, by amount, well in advance of the announcement. In over 2 years, I only missed one.....March 2014 I called for 22 cents, a continuation of penny per quarter with perhaps a small special dividend. Hamo surprised me with 25 cents, but that was the price he paid to get off the galloping horse of a penny per quarter without getting hurt.
I look at the numbers then inside Hamo's head and I just know. Listening to the board talk about it just reinforces my crystal ball.
They admitted having 360 million of cash idle all quarter until early this week. That was from the December offering which netted about 11.30 per share. So, 31.858 million (360 / 11.30) December shares earned next to nothing for the entire quarter.
Cad for Q was 91,456 / 329.599 million average shares = 27.75 cents per share which rounds to 28 reported.
Now subtract the Dec shares which were outstanding all Q and which earned next to nothing. 329.599 - 31.858 =
297.741 had those shares not been issued. 91.456 / 297.741 = 30.72 cents per share. Thus the extra shares caused 2.97 cents per share of dilution.
All is well in CAD land. This was just timing of issuing shares vs putting money to work. For 2Q the idle cash will be about 38% of the 1Q dilution (5 of 13 weeks = 38%).
I suspect this prompted Hamo to say new capital raise will be closer to closings.
The road to 17 before the spin will all be in territory not passed through since 2007. In the last two years or so over 200 million shares were issued, many of which carry big or huge unrealized gains, and most of which are held by tutes.
Yeah, we had the prior spike to 16.44 but that was needle thin and the takeover spike which was over in a day.
In other words, we have not had a lot of volume change hands at over 16.40. My point is every penny increase may find a tute willing to cash in some chips. If so, large volumes will be sold. What is does to the price depends on the volume on the buy side and how much of a hurry the seller is to sell.
So, if price increases trigger tute profit taking, the climb upward may be choppy. However, nrf presents (spoonfeeds) to analysts 6/3 and 4 with 4 being the big one. Then the analysts push their pencils and write reports for their clients who take some time to read and act. It may take until 6/11 for second hand info to be absorbed. But that is plenty of time for buyers to jump before the spin, which is targeted for 6/30.
I intend to wait and watch it unfold.
Wrong. Read the sec filing with more than kindergarten comprehension. It expressly says those who buy the offering will get the dividend if they do not sell before the ex date.
Learn the difference between trade date and settlement date. The offering was sold to the underwriters on 5/13. That sale closed (settled) today.