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More on Newcastle Investment (NCT): The company plans to spin-off all of its Excess MSRs in Q1...

More on Newcastle Investment (NCT): The company plans to spin-off all of its Excess MSRs in Q1 by distributing shares of subsidiary New Residential Investment Corp. Even more, Newcastle launches a secondary offering of 40M shares to help finance its purchase of $215B in Excess MSRs from Nationstar. Shares +3.3% premarket.
Comments (9)
  • I have been a supporter of NCT for several months now. It represents 7% of my holdings but I have to be honest with you all. I do not understand at all what is going on with NCT and these recent announcements and why as a stock holder I should be happy.

     

    Anyone care to explain to me in simple terms what is going on?
    7 Jan 2013, 10:12 AM Reply Like
  • pink.....

     

    I'm in the same boat. I've followed and admired the company for a while now, but never invested because I don't fully understand their activities. They are part REIT, part BDC.

     

    The best info I got on them was from their own website. You might try that.
    7 Jan 2013, 10:27 AM Reply Like
  • They are a REIT, but according to their website, they do not own traditional land and buildings. They own mortgage-backed securities and loans. You can see why no one wanted to touch it a year or two ago.

     

    If you want land assets, look into (TCI).
    7 Jan 2013, 11:45 AM Reply Like
  • They also make loans, ala BDCs. Check their website.
    8 Jan 2013, 03:28 PM Reply Like
  • So glad I sold (ELLI) for (NCT) just before the December 26th ex-dividend date. I am looking forward to my check on January 30th. Meanwhile, (NCT) is up about 10% since then. Not bad for a start for the new year. I am aiming on 100% yield in 12 months. I have 90% more to go.
    7 Jan 2013, 11:41 AM Reply Like
  • I bought a few shares of NCT in 2007 when they were paying dividends. When the dividends stopped, it did not seem worthwhile to sell. Dividends resumed in 2011 and I figured at that point they knew the pitfalls and how to avoid them in the future. So I started buying and do not regret it.
    7 Jan 2013, 01:31 PM Reply Like
  • Still looking for an explanation about these securities they are buying and then are going to package with some other residential assets and spin off into a new company. I assume another REIT. I understand they are not an "equity" REIT. The big dividend players are generally not.

     

    Not happy to see new, offered share price of $9.35 while trading at $9.85. They must have come up with that number before yesterday's bump.
    8 Jan 2013, 11:59 AM Reply Like
  • Keep reading, it might eventually make sense.

     

    This is what I think, but I'm no expert.

     

    Months ago, I read that the "mortgage servicing rights" (MSRs) were going to be a big deal. The holder of the MSR gets paid a fee for doing the leg work associated with holding a mortgage.

     

    Mortgage holders sell the servicing rights to institutions that collect a fee and then do the dirty work like making sure the payments are made.

     

    The REITs were in position to see this coming and so started taking advantage of it by buying the MSRs.

     

    A separate MSR entity makes sense because the ROI may be higher or lower than what the REIT normally achieves.

     

    Spinning it off means that the separated endeavors will be easier to analyze and compare to peers.

     

    So, it looks like we will gain a few shares in a MSR company. Obviously the market thinks that is a good thing.
    8 Jan 2013, 02:00 PM Reply Like
  • That helps. I assume that we will be getting some shares because the action will reduce the earnings of NCT with the spin off. I did not read anything specific regarding shares in the spin off. My wife says I never read instructions or recipes thoroughly so I may have missed it. This morning I failed to drain the can of blueberries before I dumped them in the muffen batter. We had very blue muffens this AM.
    9 Jan 2013, 09:31 AM Reply Like
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