This revisit updates my April 25 article, "Five Oaks Investment's Preferred Offering Viewed Through The Eyes Of A Preferred Investor."
Although it is my hope that you will read the entire article, for which I have provided the link above, my bottom line assessment at the time was as follows:
My bottom line decision to invest or not is often determined by my review of the charts of the common and preferred share performance over the past few years. I also want to determine whether or not the company is, over that period of time, prospering or losing market value. Ultimately, I have to decide how safe this company is from an existential standpoint rather than how well its share price will perform over the next quarter or the following year. My bottom line is whether or not I believe in the long-term survivability of OAKS, which might be problematic. The jury is out; this is your decision to make. It's your money. Invest it carefully and wisely. Do as I say, not as I do.
The price per share of OAKS-A at the close of market on April 25, 2016 was $20.07, and had just lost 0.03 on the previous trading day. How has it fared since then. As I write, its price is $22.56, or 2.49 above what it traded for then. During that three-month period, the investor would have received a dividend of .5469 for a gain of 0.5469/share.
This is my eighth revisit and for all you baseball fans, I'm no longer batting 1000. However, to be fair, all the past reviews might not remain perfect as determined by the vagaries of the market, because I haven't checked them of late, but they all were in positive territory when I first reviewed them.
Please note: As I was about to submit this article, news of this latest 8-K filing arrived as an email alert. Might be worth the read.
Now for a little forward guidance:
According the Finviz summary of OAKS' financial highlights, surprisingly, this small cap company valued at $87.73 million has fared much better price-wise than its numbers indicate. It had $108.00 million in sales, yet it lost $14.90 million. However, although it lost 6.76% for the year, of late, it has skyrocketed, being up 54.49% for the half year and 18.17% YTD. Frankly, I don't understand it. It has an 18.43 current debt to equity and a not much reduced 14.47 long-term debt to equity score.
More mystifying, its market value has decreased by $0.37 million from its $88.10 million at the time of the initial report. That's in spite of its increased stock price. At the time, it had lost $3.10 million, which has now expanded to $14.90 million on $108.00 million in sales that had been $114.40 million in sales three short months ago. The final insult to reason is that its D/E in April, 16.13, was lower than it is now, 18.43, and its LT D/E higher now, 14.47, than it was then at 12.44.
What I find really crazy was the tenor and tone of its first quarter 2016 financial report, which I have provided the link for. The only thing positive about this report was the apparent candor of the company.
The only way to explain this is that a rising market, like the tide, lifts all companies and ships. I firmly believe my past assessment of this company was correct and that the rise in share price in no way reflects the reality of this company, which I continue to believe faces an imminent existential threat. All the numbers point to that conclusion in a sane universe, which leads me to the conclusion that we might be living in a rapidly expanding bubble, which as I have reported recently, I am backing out of.
For those of you inclined to follow up on my past reviews, I list them below and provide the links to each review.
- Navios Maritime Holdings (NYSE:NM)
- Costamare (NYSE:CMRE)
- Global Ship Lease (NYSE:GSL) and Safe Bulkers (NYSE:SB)
- Gastar Exploration (NYSEMKT:GST)
- Peregrine Pharmaceuticals (NASDAQ:PPHM)
- Ashford Hospitality (NYSE:AHT)
- NorthStar Realty Finance (NYSE:NRF)
- Adcare Health Systems (NYSEMKT:ADK)
- Five Oaks Investment Corp.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.
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