I'm sorry, Hasselmeyer. Just about everything I wrote has been in various quarterly reports. There is nothing profound about the facts I've assembled. It simply suggests (strongly in my view) that Daniel Cohen made a $21 million error that eventually cost other people their jobs when he inserted "investment advistor" into RAS' SEC filings. If he hadn't done that nobody would have blinked about the restructuring charges that RAS assessed borrowers when the borrowers asked for loan restructurings.
But now its over. I feel bad for Frappier and Licht. If you were human, you would too.
You'll have to explain to me how other management would be less expensive sometime. When I compare their pay to management of other REITs they don't look expensive.
I didn't anybody take a career hit that deserved one, and I frankly don't think you can say why they deserved one.
I see the logic that the SEC used, but it is twisted beyond any reasonable recognition. The facts, as I see them, are:
1 - Cohen and Cohen created TruPS bond offerings on behalf of several real estate companies. In doing so Cohen and Cohen acted as Investment Advisors.
2 - RAS bought TruPS bonds from Cohen and Cohen and securitized them in various Taberna offerings. In doing so RAS did not act as an Investment Advisor, but as a customer.
3 - At some point in 2008/2009 added a statement that it might act as an investment advisor. There is no evidence that I see that it actually did so.
4 - At about that same time Mr. Licht and Mr. Frappier, who had been employed by Cohen and Cohen, ended their relationship with with Cohen and Company and became full time executives of RAS.
5 - At some point before early a few TruPS debtors sought to restructure and/or pay off their loans. In at least one case, Crystal River/Brookfield, they sought to do this with assets rather than cash. Loan restructuring was a commonplace between late 2008 and 2011, especially when it prevented a loan from failing outright. RAS, acting in the best interests of bondholders in the Taberna securitizations, including itself, traded the relevant loans in the Tabernas with high interest bonds backed by higher value bonds. In doing so it improved the interest coverage in the Tabernas.
6 - There were no losers in these transactions. Senior bondholders in the Tabernas saw lower quality unsecured assets replaced by higher quality secured assets. Borrowers were provided a way to restructure debts, and RAS wound up with properties that were likely to appreciate in value over time and received the normal fees that would be associated with any such restructuring transaction.
7 - RAS was acting as an investment advisor. It was acting as a lender.
There was no crime. Only punishment.
I can't tell you how to arbitrage IRT and TSRE. Making money on an arbitrage depends terms of the deal, the prices the prevailed before the deal was announced (that may not matter as much right now), and the prices that prevail now. For a while the price of TSRE rose as the price of IRT fell (a fairly standard arbitrage bet on another bidder emerging). Since then both are down, mostly because the market is down, and there isn't much difference in their decline between the end of June and now, the middle of July and now, or the beginning of the sharp drop in the market (about August 19) and now). In the end TRSE isn't down as much (11%) as IRT is (14%) going back to the announcement of the deal.
I think that means that whatever arbitrage could be done with TRSE against IRT has already been done and that it has stayed intact in terms of relative valuations. I don't think that is going to change any votes on either side of the deal.
Ethison said that the break up fee is $12 million. To find it look at the documents IRT filed with the SEC at the time the deal was announced.
That said, the deal isn't going to be called off.
I suspect it ends here. I still think the SEC overstepped on this one and doubt they will have any continuing interest in the people whose careers they have already destroyed. I'm sure you'll disagree. Who cares?
Well, "guaranteed to make money" can't hurt, can it. Perhaps there's a lesson for our Montana short order cook impersonator in that.
Prices change, but as I write this RAS is even (even a little ahead of) the markets from its close on earnings, even after the secondary. And it paid a dividend on top of that.
LOL. And what conclusion should you draw from that article except that that aren't summarized by such arcane sayings as "don't shoot the messenger".
That said, you could learn something from that arcane saying.
Actually the downtrend was for about 20 months. It was preceded by a four month rally that pushed the price up 50%. That said, that we saw recently could have easily been a "dead short drop" as any other ridiculous name that is aimed at inflamming emotions rather than dealing with reality.
That said, you are entirely correct. There is a time to take profits and move on. I strongly suspect we're past that time on RAS already.
As I think about it this is a real show of confidence by RAS management. They bought into Jupiter Communities (now RAIT Residential) for its expertise as it prepared to foreclose on a tidal waves of properties. They've now digested those properties, turned them into winners, developed new expertise in operating multi-family, and have fully integrated Rait Residential into the normal operations of their business.
Fiction. Discussion can be "just for fun". Orders require discipline; not fictional conditions.
You were correct to call my entry in the contest a "guess". I said so at the time. You might have usefully added that it was "for fun", as I said at the time. It explicitly was not a forward projection. And remember, while I missed 2014 (for good reasons), I got the resumption of the dividend right in 2010 (it happened in 2011), the rise to $6 right in 2011 (it happened within days of the end of 2012) and the rise to $9 right in 2012 (it happened in 2013). I'm not making any time specific projections right now, but I'm not worried about RAS rising to $8, $9, $11, and even $13. So long as it continues to show improvement (as it has been doing) all of those prices will happen.
You'd do better betting that way.
The problem is that its NOT an objective approach. It has the appearance of an objective approach (you have some real numbers in there), but it really doesn't try to understand how CAD can be up while operating income is down. It's not that hard to get to an answer, but you don't even try.
Operating income is down largely because of the effects of two things that RAS consolidated in 2Q2014, only one of which is consolidated in 2Q 2015: the Tabernas, which RAS was forced to divest, and IRT, which is an equity REIT. Growth in IRT has increased amortization and depreciation by about $4 million a quarter and increased RE operating expense by about $6 million a quarter. Disposal of IRT has decreased Investment Interest Income by about $6 million. That's about $16 million of the $12 difference in operating income. I could get more complicated than that (some of that difference of offset by increases in rental income; there have been loan repayments in the higher margin legacy RAIT portfolios), but the items I've mentioned are the primary things that have drive the year over year change in operating income. You don't mention any of them or the fact that operating income was UP from 1Q.
I would have rather RAS was able to keep managing the Tabernas, even if had meant continuing GAAP losses, but that's not what happened. In the meantime I'm pleased that IRT is growing and that RAS is seeing both income and cost savings (on management of its own RE portfolio) on that. As for your reason for buying (the follow on offering), it doesn't seem any better than your reasons for buying at higher prices. It's all about fundamentals and you don't seem to be capable of understanding them.