It's hard for me to understand why anyone would want to own shares of CLR when it can't make money with WTI at $45. CLR is totally hostage to WTI. If WTI doesn't move substantially higher, CLR isn't viable. That's why it's hard to see the investment thesis for CLR.
The October 5 print edition of Barron's states: Corvex Management upped its holdings to 80,608,053 shares (8.9%) after it bought 7,761,524 from Aug. 7 to Sept. 24 at prices from $7.90 to $8.68. Corvex said it acquired the shares because it believes that Vereit stock is an "attractive investment".
Sentiment: Strong Buy
Does anyone think Stilley & Co. are astute enough to repurchase big chunks of the senior bonds? Sure, that's what you or I would do if we were the PGN CEO. So, why doesn't he do it? You tell me!!!!!!!!!!!! I'd not be surprised if Stilley & Co. were asleep at the switch while a distressed debt hedge fund bought up the senior bonds for 17 cents on the dollar with the intention to sell it back to Paragon at a much higher price.
I sent an email to NRF Investor Relations yesterday. My post entitled "Email to NRF Investor Relations" contains the text of the email. So far, no response from IR.
If NRF is a "steal" at $12, why aren't any officers or directors interested in buying the shares?
newguy, I still don't see any direct stock purchases by officers and directors after the stock dived from $19 to $12, which is telling. If NRF is such a steal at $12, then why are no insiders interested in buying a few shares at $12? That's the conundrum.
Agreed. But, for NRF to buy back its own shares way below the asset value is "a bird in the hand" IMO, versus management's opinion that they think they can buy some other assets that might produce an 18% return. Anyway, if NRF buys $17 worth of assets for $12, that produces a 42% return (if one ignores the cost of money). And, since NRF has oodles of cash, and can avail itself of the DB forward sales agreement, I feel that's an appropriate assumption.
cdouprey, I concur that it would be nice to see some insider share purchases. Regarding the $500 million share buyback authorization, it should be fairly straightforward for NRF management to estimate the private market value of most or all of their balance sheet investments, including owned property. If the private market value is above $17, then NRF should definitely be buying back shares at the current $12 market price, because doing so will boost book value and create value for shareholders. Basically, if you can buy $17+ worth of assets for $12 cash, you should do it. NRF directors have a fiduciary duty to NRF shareholders, which means they are legally obligated to act in shareholders' best interests. Clearly, shareholders best interests are served by buying back NRF stock at the currently depressed price, which is well below book value.
newguy, NRF management has a fiduciary duty to shareholders, which is a legal obligation to act in our best interests. Our best interest is served if management buys back shares at the lowest possible price, because that will boost book value the maximum amount. So, in terms of creating the maximum shareholder value, that would not be accomplished if management wades in and spends the $500 million quickly, because that would cause the share price to spike, so NRF would be able to buy back fewer shares with the $500 million allotted. It would serve shareholders better if management moves more slowly, and keeps the market guessing about whether the company is serious about buying back shares. IOW, shareholders are best served if NRF proceeds in a stealthy manner to buy back shares under the radar of "Mr. Market", which will allow them to purchase the maximum number of shares with the $500 million, thereby boosting book value as much as possible.
idjut, the announcement of the buyback authorization is okay, but we don't even know if NRF will buy back a meaningful number of shares, or even if they will buy back a single share. I'd much prefer to see insiders like David Hamamoto and Al Tylis purchase shares on the open market for their own accounts. If Hamamoto and Tylis don't think NRF is a good value at $12, then why should I buy the shares?
jmhayes, I stated that "I believe ONE OF the main causes of the 30%+ plunge in NRF's stock price" is the heavy insider selling that occurred earlier this year combined with the lack of insider buying as the stock price swooned below $12. Certainly there are other reasons, such as the broad-based selloff in stocks over the past two months, and sharp losses in mortgage reit shares. But, I think it's fair to say when a stock drops by over a third as NRF has, and not a single company officer or director steps up to buy shares, that is telling.
Their hesitancy not only creates market uncertainty, it results in missed opportunities. If Paragon management had been willing to make bold moves to buy back their senior debt this month (Sept 2015), they could have retired $350 million worth of their 7.25% senior bonds at 17 cents on the dollar. Why they didn't seize the opportunity to do so is beyond me! After all, a few quarters ago, Stilley was buying those bonds at 85% of face value. Yet, when millions of the same bonds changed hands at 17% of face, he's not interested in buying any. Paragon management isn't just inconsistent, it's dumb, for lack of a better word.
This year, NRF has dropped from over $18 to roughly $12, which has been very distressing for NRF investors. I believe one of the main causes of this 30%+ plunge in NRF's stock price is the heavy insider selling by David Hamamoto and Al Tylis. Their large stock sales signal a lack of confidence by management in Northstar Realty Finance, and prospects for shareholder returns. As NRF stock has lost over a third of its value this year, there has been a lack of purchases of NRF stock by directors and officers of the company. Al Tylis has sold his entire holdings of NRF, and currently holds little or no NRF shares. NRF investors are worried and dismayed by the implications of that insider behavior.
During the recent NRF presentation at the JMP Conference, NRF management spoke glowingly of Northstar's value creation strategy, and stated that they feel NRF stock is significantly undervalued. Yet, I observe there have been zero open market purchases of NRF stock by officers and directors as the stock price has plunged by over a third this year. If NRF is really undervalued at $12 as Jonathan Langer stated, and if prospects and fundamentals for the underlying business are favorable, then why are there no insider purchases of NRF stock? NRF management's actions to not align with its words. Please explain to me why Mr. Tylis and other NRF directors and officers are not interested in purchasing NRF shares when they trade at or below $12.
I will post this email on the Yahoo Finance NRF message board for the benefit of NRF investors. If you do me the courtesy of replying to my email, I will post your reply on the NRF message board as well.
I also think that if management is successful in spinning off NRE, and creates shareholder value in doing so, investors will be reassured that management's spinoff strategy works, and the stock price should reflect that. In recent presentations, management emphasizes shareholder value creation based on yield arbitrage via spinoffs. To date, it's all talk, so investors are left to wonder if the strategy will in fact create some shareholder value. In the meantime, we observe a lack of share purchases by management as the stock price has swooned from $19 to under $12. So, what are we to assume? If management's highly touted spinoff strategy is set to create all this shareholder value, then why doesn't management want to buy any NRF shares after a 30%+ share price haircut? It looks to me like management "talks the talk", but they don't "walk the walk".
...and now it's getting hit by tax-loss selling. So, I expect NRZ to continue to droop through the end of the year, and then to rebound into the new year as tax-loss selling abates, and as bargain hunters buy beaten down bargain stocks in January 2016. There's almost no probability that the Yellen Fed will implement a rapid series of rate hikes. The market is handicapping that the Fed Funds rate is 0.73% by the end of 2016. A 0.73% Fed Funds rate is no hurdle at all for NRZ. If you think the outsize dividend is sustainable as I do, NRZ is a bargain at $13 and change.
Sentiment: Strong Buy
But, NRF's equity capitalization is many times that of NSAM, so in absolute dollar terms, the "Big Shots" may have more money invested in NRF than in NSAM, no?
All the reits are down today, especially the mortgage reits. Nobody likes to see their stock investment tank like NRF is tanking today, but there is the consolation of the 13%+ annual dividend yield. Stock investors are a fickle bunch, and mortgage reit investors are even more fickle. But, I feel the worst of the bloodletting is over for this year. It's likely that NRF and other mortgage reits will stage a recovery as the year turns. As tax-loss selling ebbs and investors begin to buy back some of these depressed bargain stocks next year, NRF's stock price will get a boost. There's almost zero probability that the Yellen Fed will implement a rapid series of rate hikes. The market says the Fed Funds rate will be .73% by end of 2016. Slightly higher short rates will prove to be no hurdle at all for Northstar. And, I still think there are more than a few retirees out there who could use an income investment like NRF. September and October tend to be cruel months for stock investors, but NRF will prove irresistible to income investors if it can just maintain that outsize annual dividend.
Sentiment: Strong Buy
Insider, I suspect you are correct. I believe that Paragon management is in a good position to take bold moves to strengthen the balance sheet, but I don't think they want to take the risk to take bold moves. It appears they instead will do what many corporate managements do these days, which is to hire advisors to advise them what they should do. It's probably a good thing for Paragon management to proceed very cautiously, since they don't appear to be able to develop a plan of action to strengthen the balance sheet on their own. Stilley and Co. have lots of experience in the oil biz, but they lack capital markets and legal expertise. There's also a big element of CYA in their cautious behavior. In other words, they are trying to minimize exposure to litigation and protect themselves from liability by hiring outside experts to help them make decisions about restructuring. Can't say I blame them, because lawsuits are inevitable.