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Time is not right for selling LEHMQ banks.
Many banks that have been recapitalized by private equity or those which acquired failed institutions with FDIC loss-sharing agreements are selling at discounts to book value.
Both Aurora FSB and Woodlands Commercial Bank will be sold when it makes better sense.
ok. thanks. looks like i will have to open a new account as fido appears against me buying this one.
You missed "a" move but not "the" move! Worth $25 when Aurora is sold or liquidated. Plus a few dividends along the way.
Did i miss the move here? In DIMEQ and PBSOQ and HEARQ and have seen various folks discussing this position. Just saw http://thediligentinvestor.blogspot.com/2011/12/case-updates-12222011-dime-ltws-eos.html
Is it worth getting involved?
FWIW I bought stock in my Ira at TD ameritrade on 12,7. eom
Just checked and I can add to my position through TD Ameritrade. I was upset with TD Ameritrade a few years back and switched to Think or Swim and now TD Ameritrade bought them. I was planning on moving that it to Interactive Brokers but MF Global has slowed my movement on that. Maybe my Fido account goes to Int Brokers and I keep TD Ameritrade.
Does anyone know of a good platform to get quotes/buy secondary bonds? I know as a private investors I'm going to get screwed but looking for any advice. Zions has been recommmended to me and I have an account there and they have been adequate but not great and looking for other options.
h_man, thanks for all of your efforts.
Thanks for the amazingly fast answer. I own it in a different account that I don't wish to make a larger % of that portfolio and would like to own it in these accounts.
Wonder if I could get a list of other stocks Fido has on the same list and see if there are any other mispricings out there to take advantage of.
MrHolty,
I too have had the same problem with Fido:
"you can check out anytime you like . . . but you can't check back in." Kinda like a reverse "Hotel California."
FWIW, and I don't know if this will help your situation, but I've been buying my EOSPN as of late, through my Wells Fargo Brokerage Account. No problems at all in Buying OR Selling.
Don't know what the deal is with Fidelity, but I don't like this one aspect about them; apart from this problem, they are a very good brokerage firm.
I'm not quite as crazy about the Wells Fargo trading platform, but the flip-side is that I get 100 free equity trades per year.
And thanks to h_man_investor, I've been snapping up some shares on the cheap in the past week or 2.
Thanks, h_man!
And congrats to those holding EOSPN on getting this dividend. I kinda thought that the dividend was in the bag, but given that this is a govt' approval thing for now, you can't be sure until permission's been granted. Any way, I'm glad that they "allowed" the 4th quarter's dividend that we are owed.
d.
Thanks for the amazingly fast answer. I own it in a different account that I don't wish to make a larger % of that portfolio and would like to own it in these accounts.
Wonder if I could get a list of other stocks Fido has on the same list and see if there are any other mispricings out there to take advantage of.
This has been the case since May 5 when the security was placed on the restricted list for liquidating transactions only. Apparently it's because the do nor "know" the security. Which is odd because the transactions are unsolicited.
This is a big reason why the stock has traded down since the summer. I do not think it's a coincidence that the year high was the day before the restriction. Fido has taken a lot of liquidity out of the market.
Frustrating/ed. Tried to buy some in my wife's IRA. Of course since she owns none (what we own is in my accounts) they state:
Form 8-K (12/22/11)
On December 20, 2011, the Office of the Comptroller of the Currency (the “OCC”) provided authorization to Aurora Bank (the “Bank”) permitting its operating subsidiary, EOS Preferred Corporation (“EOS”), to declare and pay a quarterly dividend to its shareholders, provided such dividends be declared no later than December 30, 2011 and be paid no later than January 31, 2012.
Accordingly, the Board of Directors of EOS (the “Board of Directors”) declared on December 21, 2011, a dividend payable on January 12, 2012, for the quarter ended December 31, 2011, to holders of record on January 5, 2012 of each of EOS’s: (1) 8.50% Non-Cumulative Exchangeable Preferred Stock, Series D (the “Series D preferred stock”), in the amount of $0.53125 per share; and (2) 8.00% Cumulative Preferred Stock, Series B, in the amount of $20.00 per share per cumulative quarter for the third and fourth calendar quarters of 2011.
Any future dividends will be payable only when, as and if declared by the Board of Directors. The terms of the Series D preferred stock provide that dividends on the Series D preferred stock are not cumulative and if no dividend is declared for a quarterly period, the holders of the Series D preferred stock will have no right to receive a dividend for that period, and EOS will have no obligation to pay a dividend for that period, whether or not dividends are declared and paid for any future period.
In order to continue to qualify as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended, EOS generally is required each year to distribute to its stockholders at least 90% of its net taxable income, excluding net capital gains. As a REIT, EOS generally is not required to pay federal income tax if it continues to meet this and a number of other requirements.
http://sec.gov/Archives/edgar/data/1072806/000095012311103806/b89627e8vk.htm
8-K out. Pay 4 q div to shareholders of record as of January 5 (x-date 1/3/12). Dropped the OCC non-objection language although doesn't specifically say they are reinstating the dividend.
Time to step back in!
Does not. The only covenant is the dividend restriction agreement and REITs can only pay out income- so if there isn't enough net income to cover the dividend they can't pay it out.
Looks like a great call. Since it has decline from $23.50, is it a now a Buy?
Does anyone know if the EOSPN requires a certain asset coverage ratio ?
Yes I received it. Thanks for reaching out. To answer your questions:
-no
-not interested although I'm happy to share ideas!
H man
hman I sent you a private email did you get it?
All valid points but unlikely. It's unfortunate that this entity is stuck as part of a bank who owner is in bankruptcy. Otherwise this wouldn't be an issue and dividends would have been reinstated long ago.
Dividend payments are going to be hit or miss. The OCC is in complete disarray with the integration of all the banks previously regulated by the OTS. When the OCC looks at EOS it sees a mess- REIT subsidiary of a "problem" bank that's owned by an investment bank in bankruptcy.
Eventually they will get it and allow the resumption of dividends. Or Feb 28 rolls around and they make Aurora liquidate.
In theory EOS could be "spun out" to the Lehman estate. But since this isn't a growing or profitable business and creditors want their $ they would liquidate or sell to another bank (who hopefully is in better shape). Any sale or liquidation will require court approval, so even if the creditors try to "raid" EOS we have a voice and no judge would allow it.
I wish those selling shares would post comments as to why to get a better understanding. At these prices even without any future dividends it seems like a steal.
Thats the wrong prospectus..... He is referring to the super-senior non-agency mortgage prospectus that is 144 offering...i.e. not readily available for ordinaty mortals like us unless we become qualified investors.
EOSPN is a subsidiary of Aurora Bank. Aurora bank owns the common shares of EOSPN REIT structure. Lehman bankruptcy estate owns the common shares of Aurora bank.
My concern with EOSPN is non-cumulative nature. The delay and other lawyer games could be used to justify non-payment of the dividend. For example(and I have no proof) what if Mr. Winnans was told to go slow with the OCC, resulting in no decision on the dividend or non-timely decision from OCC....thus the non-payment benefit accrues to the common and since they have to payout 90% to keep their REIT strucuture, in Dec/Jan , they payout a dividend and and great share of it goes to common because of the 90% rule and the previously missed dividend thats still on the balance sheet.
They could also stuff it with Assets that don't generate sufficient income to make a full annual payment on EOSPN. Mean while the extracted cash is at Aurora. I am concerned that they will lawyer up and play games. Can they liquidate Aurora and not EOSPN? What if they distribute the common shares of EOSPN to the creditors in the Lehman BK case (pro-rata).
The fact that Winnans has gone dark is another concern.
Don't know why there has been selling pressure over the past 6 months. Can only guess that investors are tired of missing dividends.
So it sounds like its just a matter of time before something happens. Why do you think they are trading at a level that is a 50% return to when they are redeemed ( more than that if you include dividends to keep reit status)? It sounds like they are likely to be redeemed in any circumstance. Thanks for your response.
Since Aurora was not part of the bankruptcy they have no claim on the proceeds although the estate holds the common equity in Aurora.
If the bankruptcy court liquidates EOSPN, is it clear that the proceeds go to the holders of EOSPN instead of the Lehman estate? I assume that would be the case but just wanted to make sure.
These are 144a securities so it will be hard for you to get the prospectus'. But they are SSRN re-remics according to the prospectus.
>>> Didn't drop by 5%. $1.954mm of prepayments on the rmbs
Confirmed...I missed adding the prepayments in the quarter.
Are you going by $98-101 alone to determine these were likely re-remic or do you have a link to suggest these were super senior....not sure what prospectus you are talking about...got a reference/link ?
They are re-remic bonds from 06 and 07, ie, were repackaged in 2010 and 2011 with more credit support.
Bottom line, in the asset purchase press release you can see how much they paid ($98-101). If they were sub-prime junk it would have been much, much less.
On a related note, if it did drop by that much you would have seen a large unrealized loss on the income statement.
>>> They are super-senior non-agency RMBS and quality assets as demonstrated in their market value.
Where do you see that they are super-senior ? In the 10-Q it mentions non-agency RMBS of (2006-2007 vintage which is likely to be the worst vintage) that were bought at fair market value for some $45M cash.
Didn't drop by 5%. $1.954mm of prepayments on the rmbs. They are super-senior non-agency RMBS and quality assets as demonstrated in their market value.
Anybody talk to Mr. Winnans as to why they are putting crap assets of 2006-2007 vintage in to the EOSPN reit. They say they put market valued assets into the REIT but 3 moths later, market value drops by 5%+.
Since the REIT is a subsidiary of Aurora, are these guys gonna play lawyer games by taking cash out of REIT and dumping crap assets into the EOSPN structure.
baziz55903@aol.com
Lortab [at] gmail [dot] com
Send me your email
Send me your email
H man you're insight/instincts are phenominal. It';s like having a Kyle Bass type calibur person on Ihub...do you manage money? or invest solely for your own account?
I don't own EOSPN but I read the board because I learn things on here from you and others. Thanx in advance.
Involved with DIMEQ- waiting patiently.
H are you playing the DIMEQ ??? Keeping my fingers crossed on Eospn .
Most likely unless they spin off the REIT which is very unlikely since the bank owns the REIT equity.
Money good.
Does a liquidation of the bank mean redemption for the PFD's??
They've made only 1 dividend payment this year and that leaves about an estimated $1.75mm to be distributed for 2011 to avoid an excise tax.
It is my opinion that they will declare a dividend for the 4th quarter. History indicates that this will happen- although history was with the OTS and it's a crap show at the OCC.
Time is ticking- they gave until Feb 28th to have a solution or the bank will be liquidated.
Expect things to happen soon.
And it gets smaller and smaller each day!
What's up? Do you mean apart being up at 12:45 am (CST), when the hearing starts in less than 8 hours.
I need to shut it the computer down and get some shut-eye.
Maybe I'll have dreams of Arthur kicking butt and taking names.
Or . . . maybe I should just wait the 8 hours, and listen to the Real Deal
Can't wait!!!
d.
Ps: do you know if Arthur will go last, as we have the burden of tipping the scales (ever so slightly), and since he has the burden, I hope he goes last. Or, if allowed like they do it here, they allow party with burden to close first and last and then wedge the Defendant in the middle so that his stuff he says "blah, blah, blah," is quickly forgotten, and they remember the man who can "hold court" and keep us captivated with that voice, that passion, that emotion . .. I'm telling you, I can't wait to here him give his closing!
Hope that JMW's rules allow for that, but I know that Arthur will do what is best for us.
This was more a question out of curiousity.
I'll ttyl!
Best of luck to us!
I didn't know you were involved in EOSPN. Small world isn't it?
A dividend would be required only if 90% of this year's income has not yet been distributed (in order to retain REIT status).
My guess is that if at least 90% of 2011's income has not yet been distributed, a dividend will be approved.
I also have a hunch (and nothing more than that), that the Board does not really have a fire lighting under its collected posteriors (to declare a dividend on the publicly traded Series "D" shares, as these are non-cumulative, and there is absolutely no penalty to them if the dividends get skipped.
The Series "B" Preferreds continue to receive ALL their dividends (eventually), as those ARE cumulative.
Each quarter's dividends skipped on the D's saves 'em about/only around $800,000.
I seem them trying to redeem these as quickly as possible, but I could flat-out be wrong!
H Do we really need another dividend this year to maintain Reit Status?? We did get one this year already. Why do we have to have another???
There are no buyers of the preferred?
Seriously, nothing has fundamentally changed accept that the OCC is now the regulator instead of the OTS. It's frustrating because the OTS basically said that they don't need approval going forward in their last dividend approval. So you are back to square one with the OCC who can't seem to get their act together. They are too busy denying MetLife's div increase and JPMs stock buyback requests.
IMO, it's all but guaranteed that a 4q div will be declared to maintain the REIT status.
Whether they sell the bank or not is not too important. There are no branches- just brokered CD deposits. So not a ton of value of the bank. They will just liquidate. Aurora Loan Services which is the mortgage servicing arm was just put on the block in August by DB. It was announced on Monday that MS sold their servicer after GA sold theirs. so there is an active market for that asset- although it's likely to be sold for little ($30-60mm).
At the rate things have been going there is the risk that the 5/30/12 sale/liquidation date could be extended. As long as they pay a div it doesn't really bother me!
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SECURITY DESCRIPTION: EOS Preferred Corp., 8.50% Non-Cumulative Exchangeable Preferred Stock, Series D, liquidation preference $25 per share, redeemable at the issuer's option on or after 7/15/2009 at $25 per share plus declared and unpaid dividends, with no stated maturity, and with noncumulative distributions of 8.50% ($2.125) per annum paid quarterly on 1/15, 4/15, 7/15 & 10/15 to holders of record on the last business day of the previous quarter. Dividends paid by preferreds issued by REITs are NOT eligible for the 15% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders. The preferred shares are exchangeable into preferred shares of Aurora Bank FSB if the bank is under capitalized or is in receivership. In regards to payment of dividends and upon liquidation, the preferred shares rank equally with other preferreds and senior to the common shares of the company.
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