I would rather own DFR then any of the large banks or regional banks. why? they pay a much higher yield; they have high quality assets in their mortgage portfolio; they are much more undervalued.
Interesting point from the call -- we knew that a lot of their alternative assets came from deals but on the call they reinforced that these are middle market deals -- they never got frothy in terms of interest rates or payment in kind like terms -- terms were getting easier but not to the same extent that the big loans did. middle market deals have less competition and better profitability.
liquidity looks good. they reduced the size of their RMBS -- and rebalanced towards agency so that their non-agency book has dropped as a percentage of the total -- that improves liquidity a lot because its the AAA part that could see rising liquidity issues and is what everyone is concerned about in terms of defaults -- well not their AAA part but others. no one is really worried about agency RMBS.
the stock could easily make its way back up towards $10-11 based on the new book value ratios.
interesting thoughts on the dividend -- they will pay out the undistributed earnings in a dividend either in Q4 or in Q1 of 2008. for 2007 that adds up to an extra 9 cents
more later -- over weekend.......
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment