Deerfield Triarc Revisited
I am basically at breakeven, and above my tough rebalancing buy in August. I bought lower as well. My view is that Deerfield returns to book value ($13) or above, because the market for prime and AAA whole-loan mortgage backed securities is improving.
It would not surprise me to hear that repo margins return to prior levels, which would benefit Deerfield Triarc. The market for low risk mortgage collateral has returned.
There is disagreement over whether the merger with the asset manager is a good thing or not. I favor the merger, because I think CDOs have a future. That said, if it happens or not, I won’t be harmed much.
My view is this: at 73% of book, there is significant value to obtain here. The company is not going broke. I will only sell my full stake when the company trades over book.
Full disclosure: long DFR
October 8th, 20071:28 pm at
In my research I weighed DFR against about
eight other stocks in the sector. I’m totally
convinced this sector is at the bottom and
is headed up from here. Despite I went in with both
feet for Deerfield I feel a little cautious relative
of what’s suppose to happen on 10/9… tomorrow.
A purchase was scheduled for the 9th but I don’t
see or hear any confirmation. As a matter fact, I
came across a news article that says Deerfield
couldn’t raise enough financing for the transaction.
AND it stopped right there. I’m not sure if DFR
is moving up in anticipation of what is suppose to happen
tomorrow on it’s moving along because it’s dividends and
Deerfield’s price target.
November 3rd, 20077:34 am at
Seems like we’re in the fog of war here. Even the fed chief is in the dark (”I would want to know what the damn things are worth” in response to Henry Kaufman’s question re: what Bernake would want to know).
So, DFR doesn’t close the deal. Nobody knows (or is suspicious) of book value across the industry. Funding is tight. [At least that's what I read; I'm on the outside looking in here]
Just curious if you can offer an updated view of DFRs pressure points, things you’re focusing on re: DFR (and other financials) and if you can handicap how things look six months from now. In essence, all I see is smoke on the battlefield — you have better vision in this area.
Also, Cramer is saying the PMI’s of the world go bust and that Countrywide likely goes under. Bill Miller out saying he likes financials and that CFC is worth $40 over the next few years. Where do you stand? Thanks.
November 5th, 20074:32 pm at
I’m looking forward to your thoughts after the conference call November 7th; tahnsk David
November 5th, 200710:57 pm at
I saw the 3rd quarter for RWT; they did a good job explaining some of the GAAP issues wiht regard to the numbers and it apears the market buys the numbers; this is another position that I look forward to reading your comments.