Seeking Alpha
Editor's notes: A complicated REIT structure obscures a simple thesis: operating leverage will drive margin and earnings expansion at REXI, leading to 40%+ upside over the next year.


Resource America (REXI) is a specialized alternative asset manager that focuses on real estate and credit investments managing a gross aggregate of more than $16 billion. The company recently restated their financial statements for 2012 and their 10-Qs for 2013 to incorporate their unconsolidated variable interest entity, Resource Capital Corp. (RSO). There is an opportunity to get into the name before the non-cash charge-offs in the commercial side of the business, which have suppressed their reported earnings, run off and will help show stronger results going forward. But the underlying thesis rests in the firm reaching an inflection point where the incremental margins on the real estate side of the business are over 50% boosting...

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