Rehydrogenated (96.28)

My first real-life 3-bagger: Arbor Realty (ABR)

September 23, 2009 – Comments (2) | RELATED TICKERS: ABR

Yesterday was the second 30% run-up to $3.20 in 3 days for Arbor Realty (ABR) stock. An incredibly risky investment, Arbor Realty is REIT that owns commercial loans focused in New York, Florida, and California. Arbor had a non-GAAP book value of about $23/share in 2007 with a GAAP Book value of $18. After some pretty major writedowns, and dropping their $2/share dividend in 2009, Arbor may have hit bottom at a GAAP Book Value of $11, which leaves the stock price with some serious potential. Over the past two years Arbor has been building liquidity, restructuring the 10% of their portfolio of failing loans (Alstry would be proud) losing as few tenants as possible, and using their "equity kickers" to generate extra liquidity while the write-offs keep them from having to pay any taxes or mandatory divideds (It's rare for a REIT to be able to hoard large amounts of cash). 

Not for the faint of heart. Arbor was one of the Fool's favorite REITs before it's big fall. The management still owns a huge chunk of shares and has been buying large quantities steadily for the past 6 months.