Monthly Archives: February 2016

CRA International Issues Tender Offer

CRA-InternationalInc.-logoCRA International (CRAI) joins the ranks of the many companies participating in a tender offer. The company is offering to purchase up to $30 million of its stock, or between 17% and 18.7% of its outstanding shares, depending on the purchase price. It’s offering to buy at a price between $18 and $19.75 per share. With the stock now at $18.96, after jumping 11% on the news, there’s no risk-free profit here, however, unless the stock drops. With the stock in a long-term downtrend, it looks like many investors may be willing to cash out at the low end of the range. So for those investors looking for a quick buck, it’s probably better to move on. But the CRA International tender offer does have my favorite provision for small shareholders, the odd lot priority. Continue reading CRA International Issues Tender Offer

Fortress Investment Ready to Invest in Itself

fortress-logoFortress Investment Group (FIG) joins the ranks of the many companies participating in a tender offer. The company is offering to purchase up to $100 million of its stock, or between 9.5% and 10.6% of its outstanding shares, depending on the purchase price. It’s offering to buy at a price between $4.25 and $4.75 per share. With the stock now at $3.96, there’s some risk-free profit here, but probably not enough to make it worth your while. With the stock in a long-term downtrend, it looks like many investors may be willing to cash out at the low end of the range. So for those investors looking for a quick buck, it’s probably better to move on. But the Fortress Investment tender offer does have my favorite provision for small shareholders, the odd lot priority. Continue reading Fortress Investment Ready to Invest in Itself

Nationstar Mortgage Bets Big on Itself

NSMNationstar Mortgage (NSM) joins the ranks of the many companies participating in a tender offer. The company is offering to purchase up to $100 million of its stock, or between 10.3% and 11.9% of its outstanding shares, depending on the purchase price. It’s offering to buy at a price between $8.20 and $9.40 per share. With the stock now at $8.61 and flat on the news, there’s a little chance of a risk-free profit here, however. With the stock in a long-term downtrend, it looks like many investors may be willing to cash out at the low end of the range, and that’s what’s implied by the tender offer, which straddled the stock price, instead of the usual premium. So for those investors looking for a quick buck and who didn’t already own the stock, it’s probably better to move on. But the Nationstar Mortgage tender offer does have my favorite provision for small shareholders, the odd lot priority. Continue reading Nationstar Mortgage Bets Big on Itself

Finally Some Sense On NorthStar From An Investment Bank

NRF imageWe finally got an investment bank to write up a balanced synopsis of the situation at NorthStar Realty Finance (NRF). UBS came out with a short report on the REIT, and well, let’s just say it wasn’t the ridiculous “sky is falling” hatchet job that appeared yesterday from KBW and that we subsequently skewered for the intellectually dishonest exercise that it was. Here’s the text of that UBS report. Continue reading Finally Some Sense On NorthStar From An Investment Bank

This NorthStar Downgrade is a Joke, Right?

NRF imageThe NorthStar downgrade – where a Keefe Bruyette Woods analyst lowered his price target on NorthStar Realty Finance (NRF) from $23 to $13 per share – must be a joke, right? This downgrade comes from the same analyst we highlighted in November for his arbitrary discount for external management. Now he’s back with more of the twisted logic of that earlier report, except this time, in addition to the lower price target the analyst lowered his rating from outperform to market perform. All this follows after the stock has fallen well below even the revised price target of $13. Cart, meet horse. So what’s so backward about this downgrade? Continue reading This NorthStar Downgrade is a Joke, Right?

NorthStar’s Decline — Insiders Don’t Care?

NRF imageNorthStar’s decline of 74%? Investors have been right to grouse about the stock performance of NorthStar Realty Finance (NRF). The last year has been abysmal, with the stock down a whopping 74% from its 52-week high. Much of the blame has been leveled at management and its self-serving practices, and investors have attributed management’s lack of alignment to the stock’s performance. Certainly some of the blame is warranted, but insiders still do own significant stakes in NorthStar, and have purchased more recently. Moreover, their ownership, often in the millions and worth potentially at least three times its value today, still provides them a lot of incentive to make NorthStar Realty Finance a winner. Let’s look at the numbers. Continue reading NorthStar’s Decline — Insiders Don’t Care?

Amazon Is Caught in Wall Street’s Trap

AmazonAmazon (AMZN) is a fine business. It’s vacuuming up sales and dominating online retail in a truly extraordinary way. In fact, it’s managed to grow sales by more than 25% over the past five years and by nearly 29% over the last decade. With growth last year of 20%, Amazon just racked up $107 billion in sales versus a meager $8.5 billion in 2005. To put it another way, Amazon’s sales growth of $18 billion in 2015 was more than twice as much as the company sold in total in 2005. That’s the power of compounding. Unfortunately, that hasn’t translated into substantial profits, though last year the company recorded its highest operating profit ever. And this is all contributing to a significant dilemma. Continue reading Amazon Is Caught in Wall Street’s Trap