I am out, but had the stock on a watch list hoping that it would earn the benefit of the doubt. But alas it did not. The stock pays out .80 and will do so until the cut a year from now. It is not so much that it is a bad stock but it never catches fire, turns the corner, breaks out or hits a bottom from which to build from. The div will be cut again after Cohen had to provide guidence through 2014 in the fall of 2013. This was just to keep the rats from jumping ship and is not any kind of a vote of confidence. I wish everyone hanging on the best of luck but just can't buy into the "aint 13% great" mantra. This is a slow boat to no where.
Last quarter we were promised that the dividend would be covered by affo during the last half of the year. well, look for next quarter to be about 3 cents light and when averaged with this quarter they will cover by a penny. Also, there is not going to be a dividend increase for at least 6 quarters. We heard the same old song about how the income which has been and is being lost will be made up , ready for this, in the 1st quarter. So again we are hearing about pipline, backlog and the future when thing will actually start to click. This company is not going to break out. They will not cover the dividend in the 4th oqtr or the 1st qtr. The reason they are providing guidence for the next 5 quarters is it is all they have to offer to keep sharholders from bolting.
This guy and this stock never deliver. It has been continually downhill since they"paid a meaningful dividend duting the meltdown". They will cut the dividend again and claim they have "transformed the company into a middle market lender" and income is now" more secure, predictible" and will project growth going forward and a wonderful future. I have heard all of this before and will not be suckered into owning this stock again.
Sanemann-- I hear you. Before the last crash I held far too many financials and seeing all that red can get you down. Based on my experience, which was a horroble one, I would like to offer the following suggestion. I would lighten up a little bit on WMC. If you are an investor looking for life time income then it is difficult to reasonable expect any individual company to pay out a dividend that exceeds the lifetime (10,20 30 year) performance of the S&P500. It is possible for a year or 2 but eventually it all works out and dividends are cut or stock values fall. Now if you are a trader and good at it it is possible to beat theindex but look at how few professionals do.
After the crash I switched my individual stocks largely to equity option income CEFs.
Purchased at a discount, unleveraged, generating dividends and selling options generates around 9% on market value. If the S&P goes up about 4% your distribution is covered. Any increase in the index beyond 4% provides about a 75% participation so a market that is up 9% on average over a few years should give you your 9% dividend and about 3% capital appreciation. This lets me sleep at night.
I have finally convinced myself to never count any dividend received in excess of 10%. I consider anything above that to be a cushion or reduction of my basis. In the big picture this is what happens and I do better with my cefs. I do own about 1,000 of WMC but will not purchase any more. Good luck to you.
I got out after the last announcement. It's time for RSO to put up or shut up. JC said they would cover so anything less than that says alot about whether he really knows. If they don't cover they will still pay the .20 for 3rd and 4th qtr as per guidance then look for a cut 1st quarter. I may buy in again after what I expect to be a miss now and a div cut in the new year. For years now RSO has been promising ie. pipeline, unused cash on balance sheet, greater origanations on the way etc. etc. etc. . If they don't make it happen now they won't until a regroup (div cut) and new start from a lower price. I hope I am wrong but history is on my side. If they cut the dividend even the most ardent supporters will have a bad taste from it and the stock will then be a bargain. GLTA!
Well, "if" the market falls a lot "and" DNI hasn't invested their RO cash "then" it is a possibility they can buy low and we can recover. However, I don't know why you are referring to this as a down market. The S&P is only down 2.3% from it high and the DNI NAV, as you pointed out, is also down for many reasons, plus it is down an additional 6.5% as a result of the RO. Actually on Friday the dow was up .5 and the S&P up .7 while the NAV from DNI closed down 1.12 or 6.5%. The actual amount down from the RO was thus closer to 7%. So now DNI has this money we are 2.3% from an all time high with the S&P and XDNIX is now down 2.07 or 11.2% from it's high ( kind of the reverse of how it should be).
Eddie, I admire your optimism but I can't help but feel this was a bad move, bad timing and bad for shareholders. We are going to need a lot of luck to make money on our old shares even in the long term, As far as DNI today, It is cheap compared to the S&P about 10% negative to the S&P comparison and would be a good buy today. But seriously, these guys should get sued for selling shares below NAV and then knocking the price down an additional 5% in the process. They should have also waited for a true down market(more than 2.3%) raised new money and took additional positions at cheap prices. They did this backwards and badly. Good luck. I do think it has been a good fund and may buy some more if we get weakness here but let's hope they don't do this again.
Well, all the data is available now and the rights offering caused NAV to decline 6.5% to 16.41. This is not something that is transitional. Our shares owned before the offering are now worth less than they were. It is really a stretch to believe that the offering will be beneficial by making the fund more apealing and closing the discount. I say this because the discount was only 6.7% before the offering and so it would have to regain 6.5% to to simply return us to where we were before which was a 52 week best. One area where management could put money where there reasoning has been is the fees the fund is charged. They are high( because the fund is small) Excluding interest they are 2.68% total expenses. If they fund reduced the expenses by 1/2% ( my bet is that won't happen) it would still take 13 years to make up our NAV loss.
I did buy more of this fund through the RO and I believe the fund has generated better than market returns. But, there is really no excuse for this type of activity. It does not benefit the shareholder and management has a duty to the shareholder. It seems some believe this was a good thing but there is never any data supplied as to why. Only that long term the "new money" will help the fund. This indicates a lack of understanding as to how CEFs actually work. In the future if another rights offering is announced I hope more of us protest. This offering did nothing for us. It lowered NAV by 6.5%. It will definitely increse fees to management and we will see if they actually reduce fees on a per share basis to shareholders. If they do reduce by 1/2% we need 13 years to break even. (longer when the entire math is utilized) Good luck to all DNI holders but let's not let them do this to us again. Why giv away 6.5% of NAv and even more of market value!
I don't think you can apply technical analysis to funds. I don't even know if it works for individual stocks. As far as ROC--- almost all option income cefs come with ROC. This is not a bad thing as long as NAV stays even or goes up.
This fund has had very good performance recently. I am an income investor as well and did exercise some of my rights. I am hoping management continues to garner good returns but, the rights offering will not be helpful to existing shareholders. Because of it the market value has fallen excessively. The market price of DNI is down 12.3% from it's peak, adjusting for dividends, while the S&P is only down 1.7% from it's peak. The NAV wll fall by a factor of the discounted share/dilution ratio when the RO settles. All said it is difficult to believe than 10.6% of market losses attibutible to the rights offering will really be made up. Really, all that will happen with the new cash is that it will be invested in more stocks similiar or identical to what is currently owned by the fund. If you think they will hit a home run with this money there would be nothing stopping them from pursuing these investments with more leverage, asset mix adjustments or selling one thing to buy another. No, I am an income investor and a long term investor but these guys screwed us and there really isn't any way to sugar coat it. Bottom line is 3 years from now NAv and Market value would be higher without the rights offering and this can be supported with mathmatical models. It's only beneficial to management as their fees go up.
You have to be better informed if you want to post. The semi annual report dated June 30th 2013 states thet 65% of the dividend is ROC. You claim it is zero.The NAV will not be 14.34 as this would be lower than the current market price. Before the over subscription the NAv would have declined about 7% to 16.42. Now with the over subscription it will decline about 9% , about 1.55, to around 16.1. You have reported NAV incorrectly and you have mis stated ROC. Better revisit this one.
It seems like I am taking issue with most of your positions but I have to do so again. Why would you believe the timing of the rights offering could not be better. With the S&P trading at 98% of it's all time high I don't believe this is a great time for new investments. I also don't see a "relative down based market" . Flat maybe but this isn't any reason to raise money.
No this rights offering destroyed market price, diluted NAV (which was 17.67 as of Friday not 14.34) and sold new shares at way too much below NAV. Management provided cover for this as beneficial to the shareholder because we would get "efficiencies of scale". This is a smoke screen. The only true beneficiaries of this RO is management who will now receive a larger management fee. I will be curious to see the percent of shares owned by management after the offering. Did they participate and over subscribe.
The rights offering allowed the shorts to make some money, it will increase managements fees but it has been detrimental to existing shareholders. The "new" money which will be invested in "great" underpriced opportunities could have been achieved by selling some dogs and reinvesting, reducing the debt portion of the portfolio and increasing the equity side or increasing leverage. All of these would have been more beneficial to the existing shareholder than the RO.
No my friend, I think you are off the mark here. GL.
The NAV is not 14.34. That was the weighted average market price which was discounted to arrive at the RO selling price. If a dividend cut occurs then you have proof this offering was only for the benefit of management without regard for existing shareholders.
Sloop, the market price has been killed by the rights offering. The offering really does nothing to help anyone except management. Even if it does help in the future new shares are going to be issued at a 23% discount to current NAv and probably a 16% discount to the NAV after the rights offering. Before this nonsense started the discount was 6%. I would say that a 10% decrease in value constitutes damages. while it certainly isn't "illegal" tho do the right offering how does this help the current shareholder? How is this fullfilling managements fiducuciary obligation?
even if current shareholders exercise their rights they will still be hurt in the big picture because the total portfolio market value will be lower than before this thing started. The only reason market value is going down is because of the Ro. No I don't think a lawsuit would be tossed out. As far as selling and investing elsewhere that is my point. I have now been damaged and don't have as much to invest elsewhere. The rights offering is why.
while I plan to exercise my rights and believe the fund has done well I hope they don't pursue this nonsense again. It is done only for their benefits and those who are playing the short game. GLTA!
Also, this fund does not had great volume. I have seen it down big before only to come back up big. Hope that is the case here.