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New York Mortgage Trust Inc. (NASDAQ:NYMT) is trading at $6.79 as of January 7 close. Shares have slid since announcing a public offering of common stock. Today the company announced the pricing of 10 million shares and an additional option of 1.5 million shares at $6.81. The offering is expected to end January 10th.

Over the past two years, NYMT has completed five different public offerings of common stock. This has allowed the company to increase the market capitalization of the company from $97.15 million to $432.89 million. This is great, but annual earnings per share have decreased:

  • 2011: $1.13
  • 2012: $1.08
  • Estimated 2013: $.98

Also, the book value has increased from $6.12 to $6.32, and their quarterly dividend has increased to $.27 per quarter. Plus, the share price is trading at a similar level.

Date Announced Offering (Million) Option (Million) Outstanding (Million) % Of Outstanding Price Book Value Price to Book
05/24/12 2.75 0.4125 14.175 22.31% $6.32 $6.49 .97
07/11/12 4.5 0.675 17.369 29.79% $6.39 $6.49 .98
08/15/12 10 1.5 22.534 51.03% $6.49 $6.51 1
10/02/12 13.5 2.025 34.044 45.60% $6.70 $6.51 1.03
04/23/13 13.6 2.04 49.966 31.30% $6.95 $6.50 1.07
01/06/14 10 1.5 63.755 18.04% $6.81 $6.32 E 1.08

This is the smallest issuance of common stock in the last two years, relative to outstanding shares. Also it is estimated to be the highest price to book (using the latest announced book value).

(click to enlarge)

Following the last two public offerings, the company has traded down to below .9 price to book. If you owned the company since the last offering was announced on April 29, 2013 then you would have a little over 3% return with reinvested dividends.

If you are like me and was interested in NYMT but didn't want to pay a premium for the shares this is possibly an excellent opportunity. However, don't be too quick to pull the trigger because there is still downside.

My trade:

As I don't trade options and I am not a short seller, I'm going to use a stop limit trade to buy shares. Setting both my Strike and Limit price at $6.00. Given the third quarter book value of $6.32 that is a .95 price to book value. I think the share price can go even lower then that, but I don't feel the need to buy at the exact bottom and miss a good buying opportunity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NYMT, over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. I am also long ANH, CYS, PMT, and ZFC. Information in this article is my opinion only and shouldn't be construed as advice to buy or sell securities. Recommendations don't take into account individual reader's investment risk or return objectives and constraints. The article is for information purposes and you are encouraged to do your own research before making any investment decisions. All information here in this article is accurate to my knowledge.

Source: Possible Trade Created By Public Offering