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Strategies & Market Trends : Value Investing
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To: Carl Worth who wrote (23746)4/19/2006 5:59:07 AM
From: blankmind  Read Replies (1) of 78753
 
- on reits - i'm big right now on IMH - they're focused on the variable rate mortgages & selling off their fixed rates - so they should be well-positioned in the rising rate environment - current yield is about 12% - good luck

- Given that IMH just paid a 1Q06 dividend of .25 and is solidly profitable - arent’ the shorts in big trouble? Per IMH’s 12/31/05 bal sheet - $27.7 bill of assets vs. only $26.6 bill in total liabiliteis. So about $1.1 bill in equity. About 76.3 mill diluted shares outstanding. Book value stands at $14.42 diluted. If the repurchase of shares took place at $10/share - it would only take $763 mill to repurch 100% of the shares outstanding. Heck - the stock is only at $9.40 now. How difficult would it be to come up w/ $763 mill?

Based on IMH’s $1.1 bill in equity - I think IMH’s Board could very easily execute on their open authority to repurchase 5 mill shares. If the stock price didn’t move appreciably after the 5 mill share buy back - then just continue buying up the remaining shares.

With respect to the shorts - short position at a record 10.5 mill shares. Stock is trading at 65% of book value ($9.40/14.42). Shorts just paid a hefty .25/qtrly dividend. They know IMH is solidly profitable and should clean up on their interest rate hedges due to the recent increases in the 10-yr treasuries. Given that IMH’s deliquencies remain very low; and they’ve maintained their focus on holding variable rate mortgages; I have to believe at some point IMH’s shorts are going to want to cover. And IMH should begin trading along with other mreits - and should reach $20+. Good luck.
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