Actually, what they are selling is most likely foreclosed properties from '08-09 they didn't want to own in the first place.
Muck....why do you repeatedly portend that the current dividend is not covered without the sale of property when their recent release clearly revealed that was. Stoner has correctly shown the math as others before him...WHY?
RAS is taking the opportunity to sell certain properties at a gain and then using losses carried forward to offset the gains avoiding taxation. Some of these tax losses may expire this year and next for sure. Would you let tax losses expire on your personal taxes or would sell something that had a gain to offset?
I read that article and it seems to me THEY got their projections wrong. RAS is coming in right about where they projected. Zach's fails to mention the capital gain sales which bolster those numbers. Makes me suspicious of Zach's....
I was keeping my answer simple and within the realm of the thread's original question. Trillion thought borrowers were paying 20% on their loans rather than realizing RAS was making a 20% spread.
Your original answer was correct but I suspected by the nature of the question your answer may not have connected totally the dots for trillion.
However, I think most businesses and investors consider the annual yield on their investments and as the bench mark for comparison and not the cumulative yield over a number of years.
Discount getting higher all the time....I suspect having this amount of cash outflow will result in lower returns going forward. Year end cap gain distribution seems very unlikely and monthly dividend is bound to drop sooner or later.
I think the better phrase is that ras's margin is 20%. If the cost of money is 4% and it is lent at 4.80% that's a 20% gross margin. The net margin would be 16.7% based upon the return from a 4.8% loan that has a cost of 4%.
businessmen always differ on how to view margins. The choice is gross mark-up or net return. Gross mark-up always sounds better. My guess is ras has a 20% gross mark-up. That's not really a huge markup.
next time you are in home depot, the items in your basket are between 30% & 40% marked-up with blind items 50% or more.
at these prices i've changed my sentiment to buy, which i did yesterday.
Davis, as I recall, Taberna was heavily invested in Calif residential real estate and the bubble was bursting there before the rest of the country and finally revealed itself in early '07. At the time RAS, maintained they held no interest in single family homes only to retract it later.
You have always maintained the mortgages Taberna held were properly leveraged and there was no threat of major defaults....How did that work out?
You also claimed RAS would see a majority of their money back in the 2007 American Home Mortage failure. How did that work out?
Why do you continually defend known failed investments by RAS? Since baseball has been used in analogies today, hitters on average, only get a hit 27% of the time and when they reach 30% they become stars! In RAS's case, they hit into a triple play with the bases loaded in the bottom of the 9th with a tied score.
Eth...I think Betsy bailed out her son Daniel in late '06 when they bought out the company he controlled which held the Taberna investments.
Seems that most bond funds are down...Pimcos may be taking the biggest hit overall. Apparently a 1/4 of a point rise by the Fed is going to make a huge difference in the bond market. I was told that if the ten year treasury breaks above 3 percent corporate bonds would drop...so much for that advice!
I think there is definitely a plan to suppress the price. I'm thinking more in line with the convertibles and there is a whole lot of them as well. Isn't it cheaper to pay interest on the bonds than paying dividends?
One time I remember RAS declared a buyback program and only bought back a small amount once, only to see the price continue to drop well below the buyback amount. I don't think they ride that pony again!
Oldso..you have only confused the issue....income is negated once losses are credited against that income. RAS now has the money tax free and it becomes their capital. RAS then chooses to distribute some its capital back to the stockholders. Since there were little or no taxable earnings the ROC label is applied. RAS could have kept all of the money and increased book value and re-invested it. How would that fly with the institutional investors who are counting on the tax free dividends?
I can't imagine you have never filed an income tax return and not applied losses to offset gains...
I'll have to assume the thumbs down voting on this thread and the subsequent replies have been cast in order to reveal a distaste for insightful and serious dialogue, because nothing written here deserves a thumbs down based on it's content.
GTW...a very well thought out and excellent reply...
stones...you validated my current concerns...
eyen....I think ROC directly lowers book value. It is a distribution of the company's assets without matching earnings or capital gains. RAS has had earnings and will have capital gains but they have and will continue to be offset by unused losses carried forward. (at least for another year or two?)
During 2014 it appeared the current dividend was not only sustainable but like to continue growing. The sale of Taberna holdings supposedly earned under a penny/qtr and would not impede dividend growth but would improve GAAP results, which in turn would delight many investors that remained on the RAS sidelines.
Now it seems that without the sale of properties the dividend is not sustainable and GAAP results didn't really improve. While I support the sale of properties for the purpose of utilizing the tax losses carries forward before they expire, I assumed that the vast majority of the proceeds, if not all, would be re-invested in new ventures and not used to fund dividend distributions or bonuses.
Did anyone foresee dumping Taberna would have a deleterious effect on RAS's share price and it's earnings? Did anyone suspect that the dividend may unsustainable based upon earnings alone?
During the past few years the ROC designation associated to the dividend has been the result of losses sustained during 2007 & 2008, that were carried forward for tax purposes and not ROC in the traditional sense. So please don't use that, as a pointer, as to why the dividend was never sustainable.
One last request, let's keep this thread insightful and serious rather than a forum to ridicule each other.
I've been in RAS since late 2001. I know the gory details that transpired beginning with Taberna and RE meltdown in 2007, but this company knew how to make money and I'm really confused, as to how a successful operation loses those skills or has the market changed and RAS has not kept pace with the new environment. Did Scott witness Danny & Betsy line their pockets before exiting and now it's his turn?
Davis....you have made my point...
GTW...just curious...how did you come up with the 20% versus 80% ratio or is that true for all invested money?
Why do you folks keep forgetting about the tax losses carried forward that will expire? The capital gain will be tax free income. Do you folks suggest they let the tax losses expire and then have the contingent liability of taxes due when properties are sold? AND all properties are sold at some point.
How does the problem in Greece REALLY affect the American market or economy? Seems more to me like media hype and a chance to manipulate the market so the big players can make a score off of weak hands..
They have millions in unused tax losses carried forward. Some of which may expire by the end of 2015 and certainly by 2016...They do not need to distribute at the 90% rate until NOL's are either expire or are used.
It appears you are the one that doesn't read...I was referencing the lack of commentary on the message board regarding the divy announcement.
Can't remember the last time RAS declared a dividend and the message board was this quiet..Usually 25 posts as to why it should have been more, less or something...