Seeking Alpha

More from Tepper: Appaloosa raises its stake in Chimera Investment (CIM) by 160% to about $27M....

More from Tepper: Appaloosa raises its stake in Chimera Investment (CIM) by 160% to about $27M. The mortgage REIT (managed and partly owned by Annaly) fired its auditor last year and hasn't provided financials since. The shares closed at $2.56 today, and some speculate book value could be in the 3s. With Annaly on the lookout for alternative investments (see CreXus offer), there's also speculation Chimera could get a bid from its parent at a premium to book.
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  • laterre
    , contributor
    Comments (507) | Send Message
     
    I trust that Tepper has done his homework thoroughly, otherwise the Lollapaloosa LPs are going to be pissed. Buying a non-compliant, non-reporting company with completely opaque books is a gutsy move....

     

    It's an interesting question, though, as to why--with all their presumable knowledge of CIM's books--NLY or CIM's mgmt didn't choose to buy more stock or buy it out, as they did for CXS. Size is the obvious difference--CXS is smaller than CIM, and a flea compared to NLY. But still, there have been times this year where the discount on CIM was obscene--if, that is, you accept the GAAP numbers. Why hasn't anyone pulled the trigger this year? I watch what people do, not what they say.

     

    Also, interestingly, CIM's discount to NAV used to be its selling point vis a vis the other (overpriced at the time) mreits. Their hefty discount was a reflections of the greater uncertainty of its books. But now that "clean," i.e. compliant, transparent, and reporting mreits, are selling at 20% discounts, CIM looks overvalued relative to the rest of the space. I'd expect a re-rack once the NLY buyout overhang dissipates.
    15 Nov 2012, 11:13 AM Reply Like
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