Since they have to pay out 90% of AFFO as dividends, the only way to grow the business is through stock offerings. You know that don't you?
I think that there is a group of law firms that are interested in these class action suits, and they act in concert to pile onto the next "opportunity." They don't have to discuss the situation - that would be illegal - but they don't need to ... they know what is going on.
Sometimes a stock will go down because there are better investments available. Like people might sell RSO preferred to free up money to buy the common at nearly twice the yield.
There is nothing wrong with reporting a loan loss. Even banks take bad debts, and these guys are in a relatively high risk business. The suit is suggesting that the status of the loan should have been revealed sooner. That's probably the weakest complaint I can possibly imagine. I think I could beat it in court. If this actually goes to trial [doubtful], I'm thinking of serving as a witness for RSO.
It makes you wrong in my book because it's misleading. I don't remember $10.63, but assuming that is correct, that's a 24% return using $0.64 divy. Do you believe that 24% is a rational market evaluation .... that's the risk you see in RSO common?
Fine, but your statements are still not true and are misleading. The $0.15 AFFO is stated in pre-RS terms, and the $064 is stated in post-RS terms. Comparable figures would be $0.60 actual, and $0.64 dividend. Management states the loan write-off was worth $0.06 .... make what you want of that.
Is the amount $41M per the suit? I don't know why they think a bad loan needs to be paid back ... what kind of business is RSO in anyway?
After a preliminary hearing, a defendant can [and always do] make a request for summary judgment. That means, that even if the judge accepts the facts of the case as the plaintiff presents them without dispute, that the case still fails because the law does not provide relief. If the case progresses, to demonstrate fraud, the plaintiff has to show intent to defraud ... one of the hardest things to do in court.
If you ask me, if RSO is doing well by court time, it will be hard to demonstrate that anyone owning the stock has actually been damaged ... something the plaintiff has to show.
I really think that the re-pricing of high-yield - resulting in higher rates - is just what RSO needed. We don't have to wait for rates to go up, they already have in RSO's world. The next ER will surprise, and the one after that will be crazy.
... and that's why Morgan Stanley gave them the big money to securitize. They have $650M for this according to the press release about the Morgan deal. It may look bleak, but this could be very interesting. Added a little more today.
.... and you didn't think there was any.
The price of high-yield [HY] is going down and the yield is going up. So, HY stocks and bonds are all going down now. But, companies and funds that buy HY now will be getting significantly higher yields than they were getting before. This will increase the NII, probably increase the divies over time, and also increase the PPS over time. It just may take a few years to replace legacy loans and bonds with new ones earning the higher yields. A company like RSO does not lead money for 30 years, the duration is relatively short, so the increases will become apparent starting maybe next year, then increasing. If you can't wait then there is bitter medicine, but if you can then this is a big opportunity.
Sentiment: Strong Buy