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Roger C. Wren » Comments » Single Comment
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Yes I think Alesco would still be a good stock to own. At present Alesco has written off its entire 120 million dollar Kleros investment. All the income from Kleros is diverted to the senior tranches and Alesco receives a big fat zero. If all four default or liquidate there will be no effect on Alesco's actual cash income. Alesco makes enough to pay its current dividend if Kleros is abducted by aliens. Kleros can cause no further losses to Alesco.
Apr 17 11:31 am
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All Comments by Roger C. Wren »Alesco Financial: Gem in the Garbage Pile [View article]
However the income flow from Kleros, even though diverted to the senior tranches, is needed to keep Alesco REIT qualified. Alesco management has stated that liquidation of two or more of the Kleros would force Alesco to take action to maintain REIT status or else consider changing to a PTP or just dropping REIT and becoming a normal plain vanilla corporation.
A 36 percent dividend (down to 32 percent with the stock now at 3.05) is not available risk-free. The question that is a judgement call is whether the risk/reward ratio is favorable. My answer is yes. Time will reveal if I am right or wrong.