Wall Financial Corp T.WFC

wynner: RE $97mm dividend being DUMB

[malx1]

wynner, think rationally for 15mins.

Why would they spend $97mm on a one-time discretionary dividend rather than reducing that equivalent in mortgage debt currently floating at 7.8%???

Seriously, man, think about it.

Paying out that dividend is now going to cost them $7.5mm/yr in interest charges at 7.8% rates.    Gross!!


That dividend was a costly decision, it shows they have no CFO and no common sense. 

All this while RE values are teetering on the edge of a double-digit selloff and costs to carry them have rocketed north of 7%.


Common sense, think about it!!

Maybe they go private but that's no reason to buy a business.   

I could see a privatization here if the company gets into Financial distress after overborrowing to buy overvalued development properties.

Won't be fun if the takeover is at $10/sh.

That's a Fakeover, bro.

Not good.

[wynner]

Hi sis. I didn't buy this for the takeout by the company. That little option just dawned on me AFTER I bought a boatload. Histoically (not hysterically) they pay a dividend since they went public in the sixties. Except during Covid. They will sell 48 homes in March and then they will pay anothe dividend. Think about that. Why no spell check on here? Think about the 80% insider ownership

[malx1]

I remember lessons from our Kindergarten handler.     She would tell us not to count our chickens until they've all hatched.      So why would these guys borrow $100mm to pay a $97mm dividend?    We don't wave a magic wand, pay a $97mm dividend and then attempt to sell 48 homes during a recession while carrying them at 7% cost.     

[wynner]

The float is 6.7 million. My pre-kindergarten math says they could buy those chickens for $140 million + . That is if they keep buying in the market at $20. Like semi-semi private already fam.

[malx1]

I'll see that math and raise you two birds in a bush.     Best use of capital here was either SUB, $100mm buyback at $21/sh, or pay down debt.      Yes, wonderful assets but poor judgement in part of BOD to pay out dividend right before borrowing costs tripled.     

[wynner]

$25 now . Where does it go ? Who needs to buy? Too high for me to buy now.

[malx1]

Well that's a big kick in the wallet. I exited at $19. This could be value investors scooping up shares but my guess would be WFC is preparing for a raise of capital. $25 shares gonna be issued to cover the debts created from the $3 dividend? Time will tell. Wynner, good call.  You nailed this. 

[wynner]

They never issue shares as far as I know. More likely to be someone getting in ahead of a dividend announcement. I doubt if it is $3 this time. But IDK.

[malx1]

Ya, you're right. Good call either way. Wynner ain't no whiner, they are a winner here. Personally, I don't see a dividend in the works. Something else going on.

[wynner]

Going private?

[malx1]

It's possible. But volumes are muted, very little money behind the rally. So that's why it looked more like a few guys running up share price prior an equity offering.

[wynner]

All the sellers have gone. If they want to buy there are no asks.

[malx1]

I don't see any reason for buyers to get excited as we approach $100mm market cap. Enough reasons for this co to trade at discount to NAV. Time will tell. You stuck around for the fireworks, good for you. I got mad with their $3 dividend strategy. Might just be people speculating that Interest rates going to fall 1% over next 12mo. We'll see!

[wynner]

Sorry dad RE in Van city is going UP still. Just not as fast.  Dividends are when they have the money. Better than paying extra tax . Now there may be a 2% tax on share buybacks. Notice the tax writeoffs for Hotels. 72% of their income. Carry on.