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New Residential Investment Corp. Message Board

deanmortensen 36 posts  |  Last Activity: 1 hour 29 minutes ago Member since: Feb 15, 2009
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  • Reply to

    An Activist Run at NRF....

    by deanmortensen 3 hours ago
    deanmortensen deanmortensen 1 hour 29 minutes ago Flag

    Hahaha! Thanks for the humor to lighten things up. I suppose there's no point in crying as NRF stock spirals lower every day. The interests of NRF shareholders count for zip with NRF management. Even activist hedge fund guys are afraid to take a significant stake in NRF because of the legal entanglement with NSAM. If the NRF board represented shareholders' interests, they'd liquidate NRF, and then distribute the cash proceeds to shareholders.

  • Reply to

    KBW

    by octopusink Feb 8, 2016 5:57 PM
    deanmortensen deanmortensen 1 hour 41 minutes ago Flag

    If NRF management wants to restore investor confidence, they could start by holding onto the free shares they keep awarding themselves, instead of selling most of them. Also, management could take shareholder-friendly actions, such as liquidating some assets, and then using the cash proceeds to buy back NRF shares, which would be immediately accretive to EPS and CAD. However, one must consider the fact that NRF management is conflicted because of the non-terminable management contract between NRF and NSAM, the fact that both boards are nearly identical, and the fact that Hamo and his cronies own more NSAM shares than NRF shares. They are advancing their own selfish interests, not representing the interests of NRF shareholders.

  • ...is what one would expect to see after NRF stock plunged over 15% today, so that the stock now trades for less than half the current market value of the assets. The reason we haven't seen that happen is apparently because of the inherent conflict of interest in the management contract between NRF and NSAM. The remedy for NRF's drooping share price is simple: The NRF Board should direct management to liquidate NRF, and then distribute the cash proceeds to shareholders. There is little probability of that happening, because NRF's Board and NSAM's Board are nearly identical. If NRF were to liquidate, NSAM would lose the benefit of its $200 million annual contract with NRF, and Hamamoto and his cronies would lose the free NRF shares they are constantly awarding to themselves. The board members, who happen to be Hamamoto and his cronies, own far more NSAM shares than NRF shares, and they represent their own selfish interests, not the interests of NRF shareholders.

    This situation illustrates a gross failure of corporate governance principles, in which NRF shareholders may not realize the benefit of NRF's assets, because NRF's board as currently constituted is conflicted. Activists are afraid to take a significant stake in NRF, because it is unlikely that an activist could prevail on NRF's board to liquidate NRF, or to take other shareholder friendly actions to restore shareholder value. Instead, NRF's stock price continues to spiral lower, but NRF shareholders are powerless to terminate NRF's excessively costly management contract with NSAM. Hamamoto and his cronies continue to receive lavish NRF share grants while NRF's share price collapses.

    Sentiment: Strong Sell

  • deanmortensen deanmortensen Dec 31, 2015 5:07 PM Flag

    Hard to know what Resolute Investments' ultimate gameplan is. Resolute sold a chunk of its TK shares on December 3rd for the stated purpose of "asset diversification", but then on December 28 and 29, it bought shares on the open market to bring its share ownership up to 39%. It appears that Resolute wants to diversify its asset base more, but then when TK's share price collapsed late this month, Resolute felt that TK shares represented such a compelling bargain that it had to buy more, even though doing so was at odds with its desire for increased "asset diversification".

    Sentiment: Strong Buy

  • The analyst's consensus long-term growth forecast is 12% annual earnings growth according to Thompson Reuters. TK stock has lost over 80% of its value this year. But, EPS estimates are based on existing long-term contracts with blue chip companies. This isn't potential new business, but rather is already-signed contracts with strong counterparties. TK isn't directly affected by the price of oil, as long as its investment grade clients continue to be able to pay their bills.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 30, 2015 10:51 AM Flag

    Tomorrow is the last day for tax-loss selling to take a write-off on 2015 income tax. Basically, everyone who purchased TK stock since 1999 can benefit by selling their position to take the loss. Starting next week, that selling goes away, and TK will rebound. How much will TK rebound? I'm guessing TK will tack on at least 10% in January, and possibly much more than 10%.

    Sentiment: Strong Buy

  • deanmortensen by deanmortensen Dec 24, 2015 10:55 AM Flag

    The dividend payout was $2.20 annually prior to the recent redirection of cash flows from the dividend to internally fund committed growth initiatives and debt maturities. CEO Evensen stated on the dividend conference call that the only reason for the change in dividend policy was "a dislocation in capital markets" which makes equity and debt sales to meet funding needs too expensive and dilutive to existing shareholders. He also explained that the dividend policy change is temporary, and if capital markets were to become more hospitable to energy sector companies, the dividend will be reinstated. Evensen emphasized that the dividend reduction doesn't reflect any operational change or change in business prospects, but rather solely reflects the current capital markets environment, and that cash flows at the daughter companies are stable and growing.

    From the foregoing, it is clear that TK is a growth company with stable and growing cash flows. The redirection of free cash flow from the dividend to internally fund committed growth projects and debt maturities simply means that more shareholder returns will be shifted to the future, but total investor returns (over time) will be greater than if the dividend rate had been maintained. Pretty much any growth stock is worth at least 10X free cash flow, so I peg TK stock valuation (conservatively) at 10X the $2.20 annual dividend prior to the dividend reduction. That results in a "fair value" stock price of $22. IMO, TK is worth roughly $22 today, but I'm applying a 10% haircut to reflect management's gross misjudgement of the current state of capital markets which led to the abrupt dividend reduction.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 20, 2015 5:12 PM Flag

    I suppose if I had to make stock price predictions, I'd predict at least $15 by April next year, and $27 in 3-5 years.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 20, 2015 5:08 PM Flag

    I got it reversed. Actually, "distributable cash flow" is growing at a 25% rate at TOO and a 10% rate at TGP over the next 3 years. (Except that the "distributable cash flow" mostly won't be distributed as dividends, but will instead by plowed back into the business.)

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 19, 2015 10:51 PM Flag

    : Yeah. I think, maybe, maybe just you have a pretty good idea of what the new projects are delivering over the next say three years. When I look at, just in rough terms for TGP, our distributable cash flow is probably increasing roughly about 10% per annum on average, and for TK Offshore, given that we had a lot of near-term growth, that's probably, we're estimating that they increase roughly about 25% per annum on average. So, that's rough parameters over the next three years.

    : So, other than the cutting the dividend, I mean, based on everything, you guys have said, in the past, has anything changed on the earnings and cash flow of the daughters, are you just deciding to retain more capital, because it's too expensive to pay it out?

    : No, nothing material has changed on our operating model, it's really a question of the financing model becoming more expensive.

    : All right. So if we just valued it as a real company and not on dividend yield, then nothing really would have changed?

    : That's correct. And in fact, as Vince just said, if you want to measure it in EBITDA or cash flow from vessel operations, that will continue to increase.

    Sentiment: Strong Buy

  • In the Q&A on the Teekay 3Q conference call, CEO Evensen said he expects average annual growth in free cash flow over the next 3 years to be 10% for TOO and 25% for TGP. On last week's conference call to discuss the TK dividend reduction, Evensen confirmed prior guidance for 4Q and full year 2016. He explained that the redirection of cash flow from dividend payouts to internally fund debt maturities and committed growth initiatives simply reflects the current dislocation in the capital markets, and doesn't reflect any change in business prospects.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 19, 2015 10:41 PM Flag

    Basically, CEO Evensen confirmed during the CC to discuss the dividend reduction that it doesn't affect the revenue, earnings or cash flow of TOO and TGP. He explained that all management is doing is to redirect free cash flow from dividends to internally fund committed growth initiatives and debt maturities. Evensen explained the reason for doing it is simply that capital markets have become inhospitable of late, and the stock price is so low that issuing equity at this level would dilute existing shareholders excessively. Likewise, the current state of capital markets is such that issuing new debt to fund bond maturities and commitments to growth initiatives would be too expensive. Evensen went on to say that the dividend reduction is temporary, and if the current dislocation in capital markets subsides, allowing external funding of capital commitments, then the dividend policy will be reinstated.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Dec 18, 2015 10:52 PM Flag

    Well, let me qualify that. John Buckingham's exact words were: "The valuation remains one of the most attractive in the energy sector, based on revenue, book value and prospective earnings." So, he stated that he thinks TK's valuation is "one of the most attractive in the energy sector", so I probably misstated in my previous post when I said he stated TK is the most undervalued stock in the whole energy space. On the other hand, in my recollection as a subscriber to "The Prudent Speculator" for over 10 years, John Buckingham has never sent out a "Special Update" devoted solely to profiling and recommending a single stock before today. So, I infer that John really believes that TK is exceptionally and extraordinarily undervalued at its current market price. As many of you may know, John Buckingham, editor of "The Prudent Speculator" investment newsletter, is a well-regarded "value maven" who is a frequent guest on CNN and Bloomberg, and is frequently quoted in the financial press.

    Sentiment: Strong Buy

  • John Buckingham stated in a "Special Update" sent to TPS subscribers today (Friday) after the close of trading that he considers the plunge in the price of Teekay which occurred on Thursday to be "unprecedented". He says in his 27 years working at TPS he has rarely seen a stock as undervalued as Teekay based on fundamental valuation criteria. The "Special Update" is solely devoted to his discussion of Teekay, its extraordinary stock price plunge on 12/17, it's eye-popping undervaluation, and why he thinks it's the most undervalued stock in the whole energy space. John's discussion of TK's fundamental undervaluation based on its business prospects, cash flow, and other criteria confirms my sense that TK is one of the most undervalued stocks I have ever come across during my 30 years as an individual investor. That's the reason why yesterday I sold stock in my Fidelity accounts to raise cash to buy shares of TK, which is now my single largest stock position. I'm guessing that TK investors are still smarting from the 95% dividend cut, and are still angry at TK management, and that the stock is still being heavily sold by investors for a tax-loss, so my guess is that it will likely rebound strongly into 2016. Good luck to all longs!

    Sentiment: Strong Buy

  • Clearly, the market is pricing in suspension of the preferred dividends, and eventual bankruptcy for NM.

  • Reply to

    Call me a Fool

    by mizesaw Dec 11, 2015 4:13 PM
    deanmortensen deanmortensen Dec 14, 2015 12:54 PM Flag

    Mizesaw, your basic premise that "as long as they are buying back stock they have to pay (the preferred dividends)" is incorrect. The Certificate of Declaration for the NM-H preferred shares, which can be found in the "SEC Filings" section of Navios's website, does not prohibit Navios from cancelling the preferred dividends and continuing to buy back its common stock. It only states that Navios can't pay a common dividend until it has paid back all preferred dividends which are in arrears.

  • Reply to

    MIZESAW

    by h5n1eric Dec 12, 2015 8:13 PM
    deanmortensen deanmortensen Dec 13, 2015 4:33 PM Flag

    According to the Certificate of Designation for Series H Preferred Shares, which can be found on Navios's website, there isn't anything that prevents the company from suspending the preferred dividends and concurrently buying back its common shares.

  • Reply to

    Question For The Board

    by tthemainman38 Nov 26, 2015 1:31 PM
    deanmortensen deanmortensen Nov 27, 2015 8:03 PM Flag

    I think it's a positive for NM investors that Angeliki Frangou is a former Goldman Sachs banker, and also that her family has a history in the Greek shipping biz.

  • deanmortensen by deanmortensen Nov 26, 2015 10:51 AM Flag

    My rationale is that almost any stock is worth at least 10X free cash flow. Iconix management has provided guidance that it will generate over $3 in free cash flow per share in 2015, and next year as well. So, that would peg the stock valuation at $30 in normal circumstances. However, the current situation isn't "normal" in my view. Reflecting the recent accounting blowup which is now (apparently) fixed, and with recent management turnover, and the looming $300 million debt maturity, I'm imposing a 50% discount on ICON. So, my share price target is $15. I believe ICON will trade at $15 by April 2016.

    Sentiment: Strong Buy

  • deanmortensen deanmortensen Nov 23, 2015 6:33 PM Flag

    The two outside investors - both hedge funds - hold a combined 39.2 percent of Walter’s outstanding shares. Birch Run controls 19.8 percent of the stock and Baker Street controls 19.4 percent of the stock, according to the most recent regulatory filings.

    Outside investors can be activists pushing for changes, including a sale of a company or management shifts, such as Carl Icahn’s recent moves at Hertz Global Holdings (NYSE: HTZ). After Icahn took a big stake in the car rental firm in Naples, the CEO and three members of the board resigned; they later were replaced by three board members associated with Icahn who helped pick a new CEO.

    The impact of the two hedge fund managers on Walter is unclear at this point. The company recently named a new CEO and agreed to a $30 million mortgage fraud settlement with federal authorities.

NRZ
10.03-0.20(-1.96%)Feb 9 4:01 PMEST