Newcastle Investment Corp. (NCT)

UncommonSense (< 20) Submitted: 1/31/08 2:24 PM : Start Price: $10.85 NCT Score: -25.91

Newcastle Investment will continue to pay a dividend in 2008, even if they cut it, it will still be far above average.

According to GAAP, NCT must report the value of their assets mark-to-market, which means they have to value their assets at what they could sell them right now for. The credit crisis has precipitated the decline in value of these assets despite the fact the default rate is still less than 1%. NCT made it clear in their last conference call that they have no intention of selling their assets and that in fact, they have $1 billion dollars they will be investing throughout the next 12 months.

The mortgage holders like countrywide that went belly-up were forced to liquidate positions at highly unattractive market prices due to margin call. NCT will never be on margin call because they are not highly leveraged.


NCT is at the top of my buy list and I recommend you pick up a few shares for yourself too. In five years from now, when the country has more than recovered from the credit crisis and the housing slump, those who had the balls to buy these things on the cheap will be the ones who are laughing their way to the bank.

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