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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (38289)9/14/2010 6:28:16 PM
From: E_K_S  Read Replies (1) of 78741
 
RE: Apollo Commercial Real Estate Finance, Inc. (ARI)

4:13PM Apollo Commercial Real Estate Finance announces proposed common stock offering of 6 mln shares (ARI) 17.40 -0.13 : Net proceeds from the offering will be used for general corporate purposes, including the repayment of debt and investment in target assets, with a focus on performing commercial first mortgage loans, commercial mortgage-backed securities, mezzanine financings and other real-estate related debt investments.

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I noticed that this was one you owned earlier this year. Their proposed stock offering would increase the outstanding shares by 60% from 10.65 million to 16.65 million. Not too sure what happens to their dividend but just based on the increased shares it would fall down to a 6% yield which would be at the low end for the industry.

If the stock falls into the low teens based on dilution, there may be a "buy on the sell off" buying opportunity. I suppose you could write a short term in-the-money call on any bounce to lock in the st gain.

Stock already down 4% in after hours trading.

What's your take of their portfolio of loans. Assuming no double-dip and a very slow domestic economic recovery, their secondary equity offering could generate a good chunk of capital so that they can acquire more distressed real estate and/or sure up any sour loans in their portfolio.

Company already selling below BV.

EKS
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