Saturday, April 07, 2007

AHM Cuts Quarterly and Annual Forecasts

A funny thing happened on the way to buy some shares in American Home Mortgage - they reduced their quarterly and annual earnings forecasts AND cut their quarterly dividend to $0.70 from $1.12. See here and here (WSJ sub req'd).

AHM is the company that most of the financing for my real estate ventures has been with. They are the company I am looking at structuring my first independent deal with. Along with my partners, we plan to use one of their programs for another house in Baltimore. Now, this may not necessarily be a problem in and of itself, from the RE investor perspective, but it is worth keeping an eye on. As for picking up some shares with the proceeds of my XLP sale, we'll have to see how that goes. Looks like gold may be moving back to the top of the list after all.

The dividend is the really upsetting part, only because of the yield. The yield on AHM has been sick. I'm glad I didn't go rushing into the stock the other day. I see a better entry point on this stock in the future. The entire situation is made even funnier by the fact that XLP has been going up fairly consistently since I sold. Guess I was bit early on that one, but I'd rather have the cash now, as I expect opportunities to deploy that cash in the not-too-distant future.

Until next time...

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