I've been in a situation like that before. I took my tax loss and used the loss to offset my ROTH IRA conversion, buying back into the stock I sold in a seperate account.
$90 million DTA activation is based on a $13 million recurring operating earnings amount modeled after 2012 reported results, for 20 years, at a 35% tax rate. (rounded)
As far as the value of the MSRs is concerned, my understanding is a little flawed, but I know that they are discounted more than 10%. Over time, that value will flow to equity.
The $3 million is based on the most recently reported change in fair value when rates rose 100 BP this year. It's a little more than 10% of the MSR value.
The company has about $28 million in stated equity book value and about $50 million in liquidation preference on the preferred stock.
Are they taking losses, or are they breaking even on it? I think the addition of the intangible MSR value is offsetting their losses. This is a cheaper method of acquiring MSRs than bidding in the market.
My estimate puts the non-reported unstated book value per common share somewhere between $7.50 and $11.05. This includes activation of a $90 million DTA, full redemption of preferred stock (or reinstatement of dividends), $27 million future cash flows from MSRs, $3 million fair value gains on MSRS from interest rates rising.
2012 operating earnings were $13 million. If the company can get to that point on a recurring basis without one-time items, the stock could be at $17.72 (12 P/E) with no problem.
The current stock price reflects the uncertainty on how long it will take for this to happen. Notice that the insider purchased shares up to $13.20 per share.
There was a perfect storm in late September to create a shorting opportunity in this stock (I did not short). Taper talk, poor reported earnings, and ownership restrictions of Sec. 382 pushed the price down.
Additionally, it appears management was in a quiet period related to this Amerihome sale. So, nobody was supporting the price.
Now, the good news is going to start pouring in. (might be FY14)
Those MSRs that management is set on acquiring add intangible value each Quarter. This is intangible value is based on three things 1. 10% plus discounted cash flows. 2. Unlocking the value of the Deferred Tax Asset (perhaps as much as 70 cents incrementally on each $1 MSR) 3. Natural hedge on rising interest rates (10% plus fair value sensitivity on 100 BP swing from 2nd Q to 3rd Q.)
The MSR was $27 million at end of the 3rd Q and is increasing about $5 million each Q. The sale of Amerihome provides them more room to acquire MSRs and build up that intangible.
I've been following this board closely and have a few questions.
What are the total assets of Lehman, stated and unstated?
What are the remaining debts to be discharged?
For the NOLs, the common stock must participate in restructuring in order to receive some benefit from the DTA. No stockholder may increase ownership by 50% or more or they violate section 382. Can't dozens of debtholders increase their ownership percentage?
"Impac Mortgage Holdings, Inc. (NYSE MKT:IMH), (the “Company”) today announces the sale of its fully licensed and agency approved seller/servicer subsidiary, AmeriHome Mortgage Corporation (“AmeriHome”). This transaction is expected to close early in the first quarter of 2014 at a significant gain."
How much is a "significant gain"?
"Obamacare has been a resounding success" said no person ever.
Government should not be in the business of doing business.
The FMIC would not replace the GSEs. It would create a guarantee mechanism. Read Jim Millstein's plan printed in the WSJ May 2012.
read the transcript from the earnings call. 2013 is going to be a bust, but 2014 should be profitable. you don't buy stocks based on past performance unless you want to lose money.
Are you all unaware that Cramer holds preferred shares? He is a journalist and protecting his job by covering this from a different angle.
"THE MAIN EVENT: Can Fannie Mae and Freddie Mac do anything right? You would think that after posting strong third quarter earnings and coming close to “paying back” the Treasury Department for all the financial assistance they received during the housing meltdown, that someone might pat them on the head. But it wasn’t happening this week. (One might argue that the only trade groups supporting the two GSEs are the National Association of Realtors and National Association of Home Builders.) Of course, many politicians refuse to even recognize the phrase “pay back.” Rep. Jeb Hensarling, R-TX, and chairman of the House Financial Services Committee, got so sick of hearing about the two coming close to “paying back” Uncle Sam that late this week he put out a blistering press release on the topic, noting that the two cannot “legally” reimburse the Treasury. He also smacked down the two for having a failed business model and causing the financial crisis. Hensarling is right, though: the GSEs cannot, as a technical matter, pay back the Treasury for the $188 billion in cash assistance they received. Still, come March 31 of 2014, Fannie and Freddie will have given the Treasury – via a wire transfer, we assume – more than $188 billion. Maybe it’s not a payback (legally speaking) but it certainly puts their “account balances” in the black. When it comes to financial and regulatory matters, if you control the lexicon, you control the debate. Read George Orwell’s Animal Farm for more information on controlling the language…"
They need to fully reserve for the losses at one time. When that happens they will start showing profits as real estate prices rise. Look at Fannie and Freddie. Look at Goldman Sachs.
Lots of companies take their losses at one time. Here's text from a blog about Goldman Sachs,
April 14, 2009, 6:55 am
The Case of the Missing Month
By FLOYD NORRIS
"Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.
The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million."
Everyone will focus on positive earnings if they can somehow turn things around.
If the Treasury wrote down the value of the Senior Preferred stock, it would likely send the common stock to $10. This would increase the profit to $42.6 billion.