I started a new thread as the other one regarding RSO on the rise was getting a bit long. I have history in the financial business. I am an attorney who always worked in banking. Was fortunate to do a lot of different things. Anyway, I joined the bank as it was going public and converting from an S&L. To make it a short story things were turning around but the market wouldn't recognize it. The stock languished and actually got down to the price RSO is today. So I bought a bunch. Still even though things were getting better, the stock languished.
I continued to buy as the stock continued to languish. My thought process then was the same as it is now toward RSO. Maybe I won't hit a home run but how bad can I get hurt? If we have reached a point where the dividend bottoms at .64 then even if there is not a nickel of pps appreciation the reinvested dividends doubles your investment every 5.5 years. So 50,000 today is $200,000 in 11 years.
Now, assuming RSO has actually turned the corner then the dividend should go up the yield should come down comparable to firms such as ARI. If this occurs its a double bang. A 1.00 dividend obtained by a .01 centper quarter increase every year puts the div at 1.00 in 9 years. A 9.5% yield on a 1.00 dividend is a $10.50 stock. This results in another double as your initial investment with dividends reinvested is now worth $400,000. Assuming you really get the faith and average up it can be even better.
The key here is the dividend and patience. It's happened for me before in the financial sector and I think it just might happen again. I keep asking the same question as I add to my position. What's the downside. Way back when I went into the investment with 100% of every dollar I had. Here I am at 3.5% considering 7% and if things work out could see myself averaging up to 10%.
I decided to overweight today. Won't know if I'm right for several years. Hoping a little number( share appreciation) X a big number (amount of shares held) + dividends will equal a very big number. I am thinking 5 years from now things should look pretty good. Of course I am going to have to have the patience and guts to reinvest and buy the dips. I'm at 3.5% of portfolio and plan to slowly go higher.
the more I think about it the more I think the div will be .64. The worst thing RSO could do was to cut again after this. The best thing would be .64 with a .01 per quarter next year.
This is a get rich very slowly stock. The way to make a lot of money with it is to have enough confidence that the divy is secure that overweighting is acceptable. The best thing that could happen is a solid dividend reinvested and accumulating on the dips so one day after collecting 13% plus for several years. Somedsy the stock price and a higher dividend will result in a 10% yield. If you had faith and now sell several several thousand shares you will make a lot of money years from now.
Old post by a troll that doesn't have a life. It's comic relief. Can you imagine the dreary existence this guy has when he does this for fun? What a loser.
I think you are correct. This could become a great get rich slowly stock. I am going to add enough to take me up to my lmit and then add on dips and go over my limit. I think the dividend is now safe and will increase very slowly.
I think Sherwin is the or a troll. He certainly isn't funny and has be be slightly off to seemingly enjoy ignorant harassment. Anyway know that those who know you realize when fraudulent posts are made.
i am slowly coming to believe that RSO will outperform the market over the next 3 years. I think the first quarter dividend will be the bottom of the cycle and .64 is as bad as it gets. This is a 13% plus return and when the market realizes there are no more cuts coming and starts looking for an increase the pps will increase. Up until now I didn't believe buying the dips was a rewarding strategy. However, going forward that is what I plan to do. If a person accumulates several and I mean Several more thousands of shares than what I normally like to limit individual concentration too I think 5 to 7 years from now RSO might be one very nice success story. So I am going in for normal concentration limits(2.5%) now, and adding on the dips.
We will see what happens.
Sentiment: Strong Buy
I think this troll is seriously ill or just exceptionally stupid. One this he is not is funny. A loser without a life.
why does this guy/troll think he is at all funny. Every time he posts something like this he looks like a bigger idiot without any semblance of a life. And yet he continues, what a moron.
Didn't Mean to scare anyone. I believe the softness we have seen is because of two reasons. First, the large dividend has gone x and so its a 3 month wait for the next big one. Second, there is concern that the residential mortgage reits sector that includes the likes of Agnc and other leveraged retail agency reits is experiencing yield compression with the 10 year falling below 2% and earnings will suffer. I believe the probability of a collapse and call to be unlikely. However, this is the devil that is hiding in the details.
Personally, I own Morl, Bdcl, and Cefl equally for about 7.5% of total portfolio value. If you are investing for income and define safe sustainable income as being 8% then by owning all 3 notes equally and getting 21% you could have one note get called for $0.00 and still collect $4200 from the remaining 2 notes as opposed to $2400 @ 8% ( assumes a $30,000 investment as an example @ 8%.)
I invest for income so I am comfortable with a 7.5% position split between the 3 notes. GLTA!
I see no issue with UBS. The only thing that is possible, but not probable in my opinion, would be a collapse of the merit sector which with double leverage could drive Morl to 5.00 and result in a call and obviously a loss. If the sector can show decent earnings next month for 4 th quarter this fear should be put to bed for a while and price stability should return to the sector. If bad numbers look for additional fear levels and lower prices.
Current Discount is about 5% more than the 52 week average. Performance hasn't been great but that means they will be trying to turn it around. No leverage, some convertibles and paying a high dividend. With the market fairly valued probably can't get hurt any worse than the general market. The convertibles should cushion somewhat. I just bought quite a bit of Ety. Big discount, good yield and a class outfit. Looking at buying more GAB but they are leveraged and do not sell options. It's a straight stock fund paying 10% of value as a dividend. They used to sell a a premium and now at a discount. Had a bad year and a half. Also a quality outfit with S&P beating historical returns. Probably pick up some Nfj and gab and some Nrz. When rates go up Nrz will be rewarded and it pays 12% dividend to wait which was just increased GLTA
look at all of the BDCs and BDCL the entire sector is selling under book. FSC and KCAP are earning their dividend yet they go down. I truly believe 18 months from now people are going to be scratching their head and saying why didn't I buy? Discount to book, mid teen yield, dividend covered, no recession on the horizon, damage was done by Jan 15th 2015 and I stayed on the sidelines. Why?
Tell me in a market that is considered at best to be "fairly valued" how long do you believe BDCs will remain so "undervalued"? It might take 2 years and you will be forced to collect a mid teen dividend while you wait for a 30% pop in PPS. GLTA
The maturity value seems straight forward. Is there a provision for a call and is the call price defined in the same manner. Obviously, no one would want to get the note called away should prices be extremely low.
Lunco I agree wit everything you summarized. Well said. In a previous post someone speculated that should the price of CEFL drop extremely low then UBS would call the note. I have tried to find the authority on this point but haven't been able to do so. Are you aware if such an action on the part of UBS is possible and if so is there a stated call price. It would seem to me that rather than call the note they would repurchase at market prices if allowed to do so as the issuer. TIA.
Lunco, I was trying to determine the impact of rising rates independent of the effect they would have on the underlying investments. Clumsily put, would rising rates, which would increase UBS borrowing costs result in acting like a variable rate note? IE UBS pays more so our dividend becomes less.Or is the dividend simply and always a function of the underlying portfolio index? I realize I don'r actually own the index but get paid a dividend and experience capital fluctuations(more or less correlated) based on the performance of the securities in the index. Is this the extent of it other than market over reaction similar to when a cef NAV goes up but but market sentiment pushes market price down? I guess what I am curious about is since it's an index it will rise and fall and as long as you like the investments represented by the index and can stomach double volatility just hang on and collect the dividends. Am I missing something bif here? Thanks for answering my previous post.