Terra Firma Capital Corp. TFCCF

RE:RE:RE:RE:RE:RE:Director/management compensation

[Northforce13]

Are you making investment decisions based on that metric?

Not directly, when looking at a company I try to figure out if the directors are running the company fairly and conservatively and not running it mainly for their personal benefit.  How much and how they pay themselves can be an indicator. 

If it is relevant, I would think comparing it to book value versus the market cap would have more prediction value but that's just a theory.

What you just said is ambiguous;  "if it is relevant"... would depend to what extent, wouldn't it?  I.E.; If the book value was 10x market cap but the directors paid themselves out all the earnings to themselves, would it still be a good buy?  Not for me.   

There's a U.S. small cap that is interesting in this regard, CPSS, it looks really cheap, until you figure out how much management is paying themselves in salary and stock options.  That one is one of the most egregious case of pigs feeding at the trough I have come across.  

Anyway, management owns a lot of equity,

yes, this is normally a positive, I'd agree

the ROE is trending higher,

Not long ago it was as high as 12-14%, then it plunged.  It is still far below that.  They have dramatically changed their business (loan book composition).

they introduced a new dividend,

Could just be a gimmick to try to juice the stock price.  Doesn't change the earnings picture or value.  I don't think this type of company should pay a dividend, personally, their business is too variable and their capital needs can be highly variable as well... which makes me think it is a gimmick...  They would have been better off creating value by buying back shares at a discount to book.  

they are buying the maximum shares they can under the NCIB,

The company has not bought shares since June.  Some insiders bought some in September, but not the company.  They don't have the capital to buy back shares, they just put all their money into that new loan they just made.  Plus they have to keep money for a dividend.  

it trades at 0.6x book, 7x earnings

Yes, looks cheapish.  Return on equity is low, like I think you pointed out, which is suppressing the share price.

and they have a strategic equity holder on the board.

Who came on board by being allowed to buy millions of shares at a discount to book, which destroyed shareholder value, and was given warrants to boot.  This wasn't a positive. 

I personally don't think this is the right time to be negative but that's just my perspective.

I agree, at this time their results appear to be improving.

I'm long in a small way.  I presented the negative view to your points above.  

Good luck to all!