Given the dramatic increase in undeveloped land and developed residential lots over the last few years, time is on UDFI's side. I believe the longer they wait, the better their financials will look.
During the downturn, there were not much effort to get land entitled for residential use. This has created a shortage for the land that UDF IV is loaning against, and thus, significant price increases. I would estimate that undeveloped and developed lots have gone up over 30% in the last few years alone. Plus, they are concentrated in the Texas markets which are even stronger than most.
So, unless there is massive fraud that we are going to find out about, its hard for me to see much downside in buying the stock at $4 or below. The company has no debt and the collateral securing their loans have soared (most likely). Even their second lien loans are probably in good shape.
with all that said, two years without financials is a long time. Given the magnitude of the Bass allegations, all parties involved are going to be careful going forward. If we don't get financials, it would be nice to get at least an update from management giving some disclosure.
In the lawsuit, they disclosed that Shahan Paririe loan was paid in full. That was a significant and positive disclosure. They could repackage the info disclosed in the lawsuit into an investor update letter and would be helpful.
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