Everybody knows the post that simply asks “what stocks are you looking at?” I kind of feel like these posts don’t make much sense as people just post their tickers with no context or just a sentence on how the current business is doing, basically very low level info.
So I wanted to start a dicussion where people not only mention companies they are researching or confident in (long thesis or short thesis if u prefer), but you also explain your thesis with a good amount of info in order to spark an active discussion.
Basically give your elevator pitch
It only makes sense that I contribute to the conversation with a company:
Man hattan Bridge Ca pital is a hard money lender primarily operating in the NYC metro area, lending for fix-flip/renovation/property acquisition for residential real estate. Loan terms have a term of max 1 year with a 0%-2% origination fee plus any legal/appraisal associated costs along with a 9% to 12% interest rate, with a minimum of prime rate plus 3%. Given their small book (70M loans) and low leverage (60% D/E, much lower than other mREITS like SACH, SEVN, BXMT, they have a very strong operational efficiency with costs being 1.7M annualized and the founder/CEO owning 22% of shares with a reasonable 400k salary and only 4 other employees and a historical 0% default rate (since 2007). As a result of this, over the last decade they have been able to excel above all comps with a 12%-15% ROE not matter the rate environment. Even though just a 55MM company, they have one of strongest and most efficient business models while maintaining low leverage. The timing rn is perfect with P/BV of 1.27x, lowest levels in history (average is 1.6x) as a result of high rate environment, but annualized earning still put them at just lower than 10x earnings with all of it being a dividend. Once rates begin to go down, their cost of debt will go down significantly, but their interest rate on loans shouldn’t go down even close to as much. Not only are they undervalued at current income of 5.6M, but if rates go down just 200B to 3.50% SOFR, then income should grow signficiantly to 6.6M. At current prices of $4.60-$5.00, I believe there is 50%+ upside as rates go down and as the company continues to earn, giving what I predict will be a 2-year IRR of 26% with a minimum return of 11% assuming rates stay the same.
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