Take a look at this one. It is a value stock, a growth stock and a dividend stock with a clean up hitting in it's enormous short interest. I love this stock. I will be piling in once the bond insurers mess gains some clarity.
1) It is trading at under 70 percent of it's actual book value. Meaning if it was liquidated today, it would be worth 30% more than it is trading at.
2) It has been hammered down from it's high's (not much hasn't been) because it's on the surface exposure to the mortgage industry. Once you look under the sheets you will see that it had only very limited exposure to subprime, mean while, it continues to buy mortagage related assets at dirt cheap prices. These will be substantial gains once this mess clears up within a year.
3) You will love this! 22% dividend yield. If the stock did not gain one penny in share price for the rest of the year, you would earn a 22% return. That means the stock would have to fall 22% for you to only break even. DFR chose to be taked as a REIT (Real Estate Investment Trust) so that it will not have to pay capital gains taxes. This means, by law, that it has to distribute 90% of it's gains to it's shareholders.
4) The short interest on this stock is out of the park. 24% of the stock's float (or common shares outstanding) are sold short! If every short share was covered, it would take 15 days at the average daily volume to clear them out. This means that just about all of the negative sentiment is already in this stock. It will only take one small catalyst to create a wave of short covering and watch this stock jump up.
Let me know your thoughts, positive or negative.


