Instead of talking about finance institutions that are being diluted like Citigroup (C) and financial institutions that are so hot they’re already above their November lows like Wells Fargo (WFC) and Goldman Sachs (GS), I’m going to introduce you to a better place where it’s bottoms up from here.
After getting the wind knocked out of it, Anthracite Capital (AHR) shows signs of life. Granted that the price has probably exploded higher from $0.74 by the time this article gets published, let us use it at a baseline. What do we know about Anthracite at $0.74?
- Anthracite is trading at a P/E of 0.487 if you knock out the Q4 2008 earnings nightmare and look back 1 year from Q3. The reason I took out Q4 is because the loss claimed appears to be a one-time huge write off, followed by positive earnings the next quarter.
- Anthracite Capital is trading at a book value of 0.1.
- Anthracite Capital is traded on the New York Stock Exchange. Let me repeat. This is a company cheaper than the listing requirements on the New York Stock Exchange. It either increases in price or eventually gets delisted.
All of these figures indicate that Anthracite is priced for bankruptcy. Where’s the good news?
- They have pushed back the disaster twice already and have been in talks to resolve the issue. If I know anything about creditors, the last thing they want to do is run their debtors into the ground.
- Anthracite was profitable in Q1 2009, just not as profitable as it used to be. If you flat line the profit figures from Q1 2009 into the future, your P/E is still 0.685. Note that Q1 of 2008’s Net Income Applicable to Common Shareholders is twice as large of that of any quarter as far back as I can see. So, comparing Q1 2009 to Q1 2008 isn’t fair to begin with. The bottom line here is that comparing the income of Q1 2009 to Anthracite’s history --- things match up but the revenues are weaker.
So, what am I doing about it? I’m buying. I probably already have a sizeable position. I’d say you could add this to my suggestions for 100% in 1 month, but that would be an understatement. I’d be surprised if AHR didn’t see $2 by June 18th.