Roger C. Wren

Surprise: Bank of America Cuts Dividend By 50%

If these purchases work out over the next three or four years Lewis will be thought of as a brainiac who bought while there was blood in the streets and made a bundle for BAC. If they do not he will probably be appearing before a hostile Congress.

Deep Read: 'New York' on the Future of the 'Times'

It is sad to see a great newspaper run into the ground to further Pinch's social agenda.

Naked Shorting Rule Means Time To Buy Stocks

But are they really going to enforce it? A hedge fund sees a chance to make a 30 million dollar quick profit but realises that the result MAY be a 25,000 dollar fine four years later. What does a typical hedge fund do?

Desperate Times Bring Redesign to NY Times

Let's start an over-and-under pool on how many years until this American icon goes broke and ceases publication. I would pick 14 years but at my age I myself may not last long enough to collect my winnings. Pinch (what a nickname) has destroyed an American institution in pursuit of his social outlook.

Newspaper Stocks: New York Times Company, Gannett and McClatchy

As long as "Pinch" is in charge there is no hope for the NYT. He is more interested in advancing his social agenda than in turning a profit. The company and it's stock suffer as a result.

Forget $100 a Barrel - Oil Will Plummet to $30

Now I understand why academic articles are normally peer reviewed before an academic journal will publish them.

What's Changed on the Seeking Alpha Website?

Add me to the list of those who prefer the old SA.

Fairfax Financial: Anatomy of a Hatchet Job

So the NYT covers your company the same way it covers Republicans in general and the war in Iraq in particular. Surprise surprise. It was a very good article and if I can get a good price I will sell some FFH puts today.

Peak Oil, Crude Price and Equity Correlation

I am totally unable to understand what point you are trying to communicate.

Alesco Financial: Gem in the Garbage Pile

RSO and CSE I know little about. If I was putting new money into REIT's I think I would prefer RAS to Alesco right now. Both look good but RAS seems to have less risk.

Alesco's stock price will be to a great extent news driven for a period of time. If IMB finds a source of capital Alesco may pop 50 percent or more in a day. A couple more bank deferrals and it may be at a dollar a share. The committee looking at strategic directions may find a buyer for the company at double the current stock price. Alesco may become a liquidating trust. There are many possible developments that could make the stock price pop either way.

About the only development I can not see is bankruptcy. With 125 million in cash and no debt due for four years I just don't worry about that. But there are a lot of things, good and bad, that could happen in the next few months.

As far as IRA or regular account goes I would put Alesco in a regular account. Your IRA is for retirement. My preference would be to keep boom or bust stocks like Alesco out of an IRA.

Alesco Financial: Gem in the Garbage Pile

There have been 5 or 6 deferrals so far amoung the 320 plus firms Alesco has bought TruPS from. More would obviously hurt but IMB is the largest one of the 320 plus. The 8 CDO's are set up so that it takes about three percent deferrals or defaults to temporarily stop cash flow to Alesco. The latest from Alesco on Thursday is that it will be 4 of the 8 CDO's which stop payments to Alesco and the period will be 4 to 7 quarters. Remember the banks pay interest on their TruPS to the CDO's not Alesco. The CDO's then split it up amoung the tranche holders. When deferrals get too high payments from the CDO to the junior tranche (Alesco) stop for a period of time and go to the senior tranche. The CDO as a whole is still collecting a lot of interest payments.

Assuming there are a modest number of deferrals in the future Alesco is OK. If a large number of banks flat out default Alesco is in big trouble. So far there have been 5 or 6 (hard to tell) deferrals and no defaults. Ten percent of the TruPS are from insurance companies and none of them have deferred.

Thursday morning's low for Alesco was 2.16. At that point it was selling for less than cash on hand and near unrestricted cash on hand. 125 million unrestricted cash for 59 million shares. You do not see situations like that often.

Alesco Financial: Gem in the Garbage Pile

IMB deferring will cause 5 of 8 TruPS CDO's to stop paying income to Alesco. Alesco will lose about 40 to 50 percent of it's cash flow, an obvious downer. In about a year income from the first of the five CDO's will resume and by about two to two and a half years all five will have resumed paying Alesco. If IMB survives all deferred payments will be made up. The fate of the dividend depends on whether Alesco stays a REIT or not. The next dividend announcement date is about 10 June. We should know something by then about future dividends.

Alesco will not go bankrupt. It has about $2.50 per share in cash, about $2.00 of it unrestricted. No principal on any of it's debt is due until 2012. No one can issue a margin call to Alesco. It will still have cash flow of about 10 to 15 cents a quarter.

This IMB situation came as a surprise. Just two or three weeks ago the IMB CEO assured the street that the preferred would be paid. IMB has about 800 million in cash and total preferred dividends are only about 7 million a quarter. To make a bad situation worse IMB is the largest exposure in Alesco's TruPS portfolios, about 2.4 percent of the total.

As I write this Alesco is 2.54, down another 39 cents. I intend to hold on but I invest on a many year time-frame. Over the next few days and weeks I have no idea what is going to happen. If I was looking at Alesco for a new investment I would buy some now. The risk-reward situation is very good. But the risk is high so I would make only a small investment and only if I was prepared to hold it for several years. The situation will be clearer after the dividend announcement in early June and the annual meeting on 18 June.

Alesco Financial: Gem in the Garbage Pile

Thank you CoverMe. Join us at the AFN Yahoo Finance message board. It's one of the better boards with some knowledgeable posters and we can always use some fresh blood.

Far from Dead: The Case for 3 Newspaper Stocks

At present the main purpose of the NYT is to push the political positions of Mr. Sulzberger not to make money. Investing in a company whose management regards it as their private toy and source of social position is not a formula for financial advancement.

Alesco Financial: Gem in the Garbage Pile

SFAS 159 affects GAAP earnings and book value. It will not affect REIT earnings and thus will not affect dividends. When Q1 earnings come out 6 May the GAAP profit shown will be in the neighborhood of 45 dollars. This will make the balance sheet look a lot prettier but have no impact on REIT earnings or dividends.
There may be a special dividend later this year if Alesco closes out the credit default swaps which currently have a huge profit. How the company is going to handle this situation and the tax/dividend consequences is uncertain. I expect this subject will be covered in the 7 May conference call. In any event, how to deal with the tax consequences of out-sized profits is the kind of problem I like companies I have invested in to have.