5-Star Stocks Poised to Pop: RAIT Financial Trust

• Report this Comment On April 14, 2011, at 11:59 AM, dsandman999 wrote:

  The recent senior convertable 7% with a conversion price of $2.50 seems likely to cap any price increase in the stock for some time to come. Offered significantly below the then current market price of the shares, it also chopped a large amount of money from folks who bought it well above $2.50, so I suspect there will be significant selling as it gets near the $2.50 mark again. If conveted, it is also going to be about a 50% increase in the number of shares outstanding, so also a major dilution. You can buy in now, but I will pass.

• Report this Comment On April 18, 2011, at 3:16 PM, openhandedgrouse wrote:

  Shares dropped from about 3.50 to 2.25 (a decrease of 36 percent) as a result of the recent $115 million dollars of senior notes offered. However and this is key, they used 75 of the 115 million to pay off 2027 senior notes. Therefore only 40 million of the 115 million will dilute current shares. 40 million divided by 2.50 per share =16 million new shares of dilution. RAS currently have 111 million shares, so 16 million new shares is an increase of about 14.5 percent.

  The question you have to ask yourself is.....does a 14.5 percent increase in the number of shares for 40 million used to pay down debt and to be used as working capital justify a 36 percent discount from the $3.50 share price, especially if things are getting better for RAS?

• Report this Comment On April 19, 2011, at 6:19 PM, WiseChoice4u2 wrote:

  Thanks to all of you for your analysis. This has been very helpful. I own and am holding, buying on the dips.

• Report this Comment On April 20, 2011, at 5:41 PM, dsandman999 wrote:

  I do not see how your math works. They used 75 million to pay off 2027 notes that were at a lower interest rate. I did not see a conversion factor on them but unless it was significantly less than $2.50 rate, then the treat of conversion is more or less the same. If it was higher than $2.50, the the threat is greater because they are more likely to convert if the price goes over $2.50.

  $115 million of convertable SR bonds gets divided by $2.50, not the 40 million cash they still have on hand for other purposes. Since their capitalizaton is currently about $210 million, 115 would be more than a third again. That is 33% or more.

  I can see it head to $2.50 so about a 10% increase now plus any increase in dividends. But the premise of the artical is a doubling, and that is very unlikely in the near future.

• Report this Comment On April 21, 2011, at 5:25 AM, openhandedgrouse wrote:

  IMO people are shorting because they believe the price will go down because of recent potential dillution.

  But the Fact is fundamentals are improving for RAS. They are likey to make as much or more than last year. Last year they made 98688000/(111 million + 44 million if all new senior notes are converted when the share goes well above 2.560) = 0.64 earnings per share x 90 percent = 0.57 dividend on a stock that is currently 2.27.

• Report this Comment On April 21, 2011, at 5:26 AM, openhandedgrouse wrote:

  1.RAS is undervalued illustrated by a low BV 0f 8.67

  2. $4.36 cash per share

  3.Occupancy rates for RAS's properties have improved dramatically!!

  4.RAS has decreased their debt dramatically!!

  5.Current economic environment is favorable for Multi-family rentals because fewer people are able to get loans and need to live somewhere while they are saving money.

  6.Improving dividend. I like RAS B/c they are benefiting from MB securities but have hard assets as well. IMO this should prevent them from getting hit hard when interest rates begin to increase. That is why I sold my CIM and bought more RAS.

  7.RAS has a trailing PE of 2.

  8.ROE above 13 percent.

  9.Large short position could be a pro, if there is a short squeeze.

• Report this Comment On April 22, 2011, at 4:03 PM, danboy11 wrote:

  all that matters is earning growing and debt falling having cash on hand right now is worth it at nearly any interest rate whith assets so cheap

Add your comment.