Dan Wieman

CapitalSource: Tremendous Opportunity or Value Trap?

I honestly haven't gotten that far yet. I hope to take another look at them soon and post my findings.

In general, I hate to see the dilution, but it seems it was likely required to meet debt requirements. It's difficult to tell about the losses. Loan loss reserves may be swinging the other direction. It's possible that loan losses at banks in general are now more backward looking than forward looking if you know what I mean.


On Aug 19 02:27 PM chchchch33 wrote:

> Thanks for the excellent work Dan. What do you make of CSE after
> their recent equity and debt offerings and the large loss they posted
> in their most recent quarter? I thought they were reasonably clear
> in their last conference call--you felt they were still shady?

CapitalSource: Tremendous Opportunity or Value Trap?

Writing about Capital Source is very much like assembling a puzzle. Management gives you the pieces but it seems like they make their best efforts to scatter them around really good to obscure what's going on. Maybe it's intentional, maybe not. It makes me a bit nervous, though.

In 2-3 years there may be clarity, but investors will pay a higher price for that potentially cheery consensus.


On Aug 18 06:16 PM H.J. Huneycutt wrote:

> Great analysis, Dan.
>
> I've looked at CapitalSource a few times, but have never felt I understood
> the banking aspect well enough to give it much of a write-up. I've
> been kinda loosely following it in order to try to understand the
> industry a bit better.

CapitalSource: Tremendous Opportunity or Value Trap?

It's good to be skeptical of bank assets. They could be much worse or much better than reported. When I wrote this analysis, Capital Source was about $2 per share. I ended up not investing more for the same reasons you stated, even though it may have made sense to put some money into it because at that price, you may just earn 5x your money in the next three years.


On Aug 18 05:27 PM stink726 wrote:

> After being burned by so many different types of financial stocks
> in the past 2 years, I don't see how anyone can believe any financial
> company's financials. Who knows what the next thing to blow up will
> be?

CapitalSource: Tremendous Opportunity or Value Trap?

As part of their bank requirements, they have to retain their earnings for 2.5 years. Even if they could distribute their earnings to the parent, they would be much better served to pay down debt as quickly as possible.


On Mar 31 10:31 PM dreamer67 wrote:

> Also key question, if they have (the potential) of 80,000,000.00
> a year in income in only one of 4 legs of the company with a value
> of 4 billion, why is the dividend so skimpy. It would seem that
> a modest dividend would change the game for this stock in a huge
> way

CapitalSource: Tremendous Opportunity or Value Trap?

I was looking at that last night. This analysis will be part of Part IV of my analysis. Obviously, this is the biggest concern with capitalsource. If I had to guess, this situation likely was part of the resignation of their CFO.


On Mar 31 10:22 AM James Beam wrote:

> What about liquidity? If you look at the non-bank business you will
> see that they don't have cash to payback all of their debt.