To get to this point I have written 4 long posts on CIM covering just about every aspect of this investment and company in great detail. I can probably summarize all this verbiage by simply saying that CIM represents a pool of capital that will be invested by some of the smartest minds in the business at a time where they will be one of the very few buyers in the market and should be able to produce above average returns on invested capital over a 3 to 5 year period.
At this point there is not much to CIM other than cash and the investments the company has made since going public 2 months ago. For this, investors buying the stock today have to pay more than $4 per share premium to book value or 1.3x book value.
While CIM certainly deserves to trade at a premium to book, I think many investors are overlooking the fact that CIM’s earnings are going to be very volatile and in this kind of market environment I believe the stock is going to move hard and fast around these data points.
I think CIM is going to be a long term winner and I will be adding it to the “Best Ideas” portfolio, however at current prices I am only willing to initiate a very small position in the stock.
* DISCLOSURE: I or accounts I manage may be long or short any and/or all stocks mentioned in this post. This is not a recommendation to buy or sell any security. For informational and educational purposes only.
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