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Real-Time news about Prodesse (London Stock Exchange): 0 recent articles
|simon gordon: Citywire - 11 Apr 2008:
Prodesse announces 2.8 million share placing
Guernsey-domiciled specialist property trust Prodesse Investment has announced a new share placing of up to 2,816,500 new ordinary shares.
The trust, run by US based Fidac Investment, takes positions in agency-backed investment grade mortgage backed securitiesand attempts to limit exposureto sub-prime credit risk.
The new placing will represent around 9.99% of the company's issued ordinary share capital and the company said the net proceeds of the placing will be used to invest in further U.S. agency mortgage backed securities in accordance with its investment policy.
Last year Prodesse managed to raise £11 million of equity in a share placing at the start of the turbulence in the US sub-prime credit markets.
The trust has been well backed by UK retail managers.
Last May, Jupiter's income veteran Anthony Nutt had a 9.4% position in the trust in his Jupiter Income Trust while F&C's Ted Scott held over 900,000 sharesor a 3.2% position in his Stewardship & Income fund.
Prodesse's net asset value per ordinary share was US$6.93 on 10 April while its shares were trading up 1.21% or 4.5p at 375p at 09:40am on Friday.
Indie - 10/5/07:
Our view: Buy for income
Share price: 453.25p
Investors could be forgiven for running a mile upon hearing that any company had any exposure to the US mortgage market. With interest rates high, house prices tumbling and the sub-prime lending sector looking like a tornado has hit it, it is not a pretty site.
However, before diving for cover, it is worth a second look at Prodesse. An investment trust, Prodesse's makes its money by borrowing from banks and using those funds to buy US mortgages through mortgage backed securities. Prodesse makes a profit because it can borrow at cheaper rates than the interest paid out by the securities.
What might reassure investors is that the mortgage backed securities it buys are issued by the giant US Government sponsored or quasi Government companies Freddie Mac, Fannie Mae and Ginnie Mae. There is, therefore, relatively little credit risk because these institutions guarantee the interest and principal will be paid to the holder of the security.
What Prodesse does is by no means risk free. The recent rises in interest rates in the US squeezed its margins because its borrowing costs increased but the yield on the securities it bought lagged behind because many of the mortgages had fixed rates.
But with many predicting US rates will fall, the reverse of this situation should occur. Its shares trade at a premium of about 10 per cent to the value of the securities that back them, but most of the profit the company makes is paid out in a quarterly dividend. Prodesse shares offer a prospective annual yield of 6.5 per cent that is highly attractive. Don't bet the house, but income seekers could do worse than tuck a few of these away.|
|execline: How else would you get the management to work for the company? Any deals that relate their remuneration to the share price don't really seem to be working, do they?|
Prodesse share price data is direct from the London Stock Exchange