I agree, Davis. I was not in RAS when bad things started to happen so I don't have that negative bias. I believe we hit the bottom, and I bought 20,000 shares, a couple of weeks ago at $6.78. GLTA
It is hard to believe that the change in management, and the cut in the divy less than a month later, are not related. I tend to give management the benefit of the doubt just because I was in management most of my working career, and I know it's not always easy. But, this smells bad. I hope the SEC takes a look at this.
I don't understand. You say that the cash would have to stay in the company, but the shareholders get nothing. Who owns the company, and therefore the cash? "The shareholders have to be compensated" is the same thing as what you are saying. You CANNOT sell the assets of the company with the owners of the company getting nothing. Period. If the money goes into the company, the shareholders are still getting it.
Agree with you, Davis; this is the biggest no-brainer I've seen lately. I took the money from PSEC shares sold, and bought a full position of RAS a couple of days ago for $6.78. I think we could see $8.00 by the end of the year with rising dividends to boot.
I think there is a 50 - 50 chance that this is correct. Even if the rates are raised, it might not be more than a single raise of $0.25 later in the year. Bove has had a spotty record making predictions, however, especially with regard to timing [we all have, but we're not on TV].
Always good to see a post which includes specific, factual details to support its harsh statements.
" ... lower monthly dividends and issue special dividends ... "
I believe this is a good approach when volatility is high. You make good points, Hockey. This stock has a future in new hands, and I like the measured, responsible approach I heard today.
I'm pretty sure that you don't understand. EPS is a GAAP measure which includes unrealized gains and loses [loses in this case]. Accordingly, EPS is irrelevant .... taxable income would be the measure to look at.
FSC should not be sued, then it just suing ourselves. Sue the former CEO. He is not protected by the corporate shield if he acted outside the normal course of business [like pursuing his own self-interest to the detriment of other shareholders, plus insider trading].
I would suspect that some law firm will file a class action, if there is something to it, looking for a lead plaintiff.
Aren't the fees and commissions calculated in accordance with the disclosures in the propectus? Frankly, they can charge what they want as long as it's disclosed. I think their fees - while high - are inline with other BDC's which tend to charge like hedge funds and private equity firms [many BDC's service deals put together by private equity firms].
For myself, MCC is yielding 13% after the divy reduction, which appears sustainable, and that's good enough for me.
What I am in at makes no difference [nor does it to anyone]. What you paid is what you paid; the question is: If I sell it now, and reinvest elsewhere, what kind of income can I get with the proceeds?
In Dec. 2013, I had a lot of NRF. They announced a spin, and the two companies are now worth an average of about $22 plus dividends. If PSEC handles this correctly - and I do think they are sharp marketeers - the effect is likely to be at least a double and maybe a triple.
No, I don't think management has to ask the shareholders as long as this is considered to be in the normal course of business. I am saying that the shareholders own all of the assets of PSEC. If PSEC spins off part, the shareholders have to be compensated with stock.
I posted a comment to your post with a link to the registration statement for the first company to be spun: Prospect Yield Corp. I said that your post [and mine] were pulled by Yahoo because they don't allow URL's. The opening paragraph provides a mechanism for allowing your investment in PSEC between the several companies. Maybe you can post some of it .... it's your find.
I suppose that could be true, but I think they've addressed it in another presentation as well. Do I recall correctly? Two mentions would imply more than just an off-the-wall thought.
I agree with you except that I believe we'll see better earnings sooner. Thoughts:
RSO had AFFO of $0.17 in the 4th quarter. I can't think of anything in the 1st quarter that would result in that number going down.
They stated in the CC that they lost $0.04 in the 4th quarter due to unexpected interest rate changes that messed up their hedging in the RMBS unit. I believe that was a big surprise for everyone, but the 1st quarter has behaved much better overall. Maybe we get another $0.04 this quarter.
They consummated another major CLO in February which should be very helpful. Plus, whatever else they have done.
It would be very easy to see an AFFO number north of $0.20 this quarter I like the interest rates climbing a little, just not too fast. I think the divy is back to $0.20 by the second half of the year, and, if everything behaves, we could see $0.25 by the second half of next year. A $1.00 divy = an $8.00 stock ... or, if you're Fred Kane, a $9.00 stock.
And let us not forget that the world is hungry for yield right now. I think that once RSO's operation is perceived the way you describe it, we won't have to wait for everything to have been accomplished. Trust will come back, and the yield will go down. A $1.00 divy and a 10% yield, and I make a small fortune .... not only possible, but likely over the next couple of years IMHO.
I am a big holder of RSO like you, but I see it this way:
There is all of RSO except for the MREIT business, and there is the MREIT business. RSO AFFO will be moving up slowly while the MREIT business will be volatile. Last quarter RSO did $0.20 less $0.04 of hedging losses at the MREIT business.
One problem with MREIT's - and the reason I stopped playing them - is that they are hard to predict because no one knows the hedges in place except management. If they have another tough quarter, AFFO could easily be $0.16, but it could easily be $0.20 as well. I suppose it could even be higher, but I doubt it because of the interest rate volatility early in the year.
The lesson: RSO might experience a little volatility going forward, but the trend is up right now. I think this was signaled by management with the originations update they just released. I think they were telling people that things are looking good ... don't sell now. GLTA