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Newtek Business Services Corp. (NEWT)
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358 reactions on $NEWT conversation
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Bank conversion or not, it's not a good environment to be growing businesses. The bank presents uncertainty which makes speculative share prices go lower. NEWT will be fine, they're good at what they do. For now waiting for a bottom is the answer. It may be difficult to buy when the price plummets, but doing so should pay off handsomely in share price appreciation and dividends.
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Yeah the conversion OPENS gates fir dividend cut. CEO pr’s are always super positive. I wonder how he can substantially cut dividend while at same times talking about sales and profits up.
ONLY if he offers shareholders something in return like a big buy Back plan?
Sure is a black box right now.
Looks like everybody got their big dividend locked in before the bank conversion takes place and ran for the hills.
I am a shareholder and voted against the conversion I think that the current dividend will be at risk due to regulation of BHCs and New York Hmmm ?
Any thoughts from other shareholders here ?
Down and down after a good earnings report, so sure it's mostly the move from BDC to BHC that's causing this destruction of wealth. NOT A VISIONARY MOVE BY MANAGEMENT!
Newt, what's going on?
Why falling and falling?
Sleeping giant. DO NOT underestimate NEWT future. Once restructured later this year there will be many options open to the management.
Buying on weakness will be seen as brilliant this time next year.
The end of being a bdc will see a steep cut in the dividend. I have no idea why it is up today and in AH as it is a negative event.
Getting hammered today! About 2% more than the market---at least right now. Ouch
NEWT continues dropping at a higher percentage than market. Keep the BDC and dividends to return to shareholders our wealth.
Proposal 1 of the proxy "To approve a proposal authorizing the Company's Board of Directors to discontinue the Company's election to be regulated under the 1940 Act (subject to certain regulatory approvals and other conditions described in the Proxy Statement)."
What happened after hours? Up 1.12
After reading some articles online I am now an expert.
NEWT is transitioning from a Business Development Company (BDC) to a Bank Holding Company (BHC). These are legalise terms of how an organization exists and operates.
As a BHC, NEWT can be more involved in different businesses while spreading their overall risk across the different endeavors.
BDCs like REITs must return a high percentage of their profits to shareholders per the law. Not so with BHCs. So although mgmt said they intend to pay the full 2021 dividend guidance, the dividend will likely get cut starting in 2022.....which is also probably the time their BHC status will be approved the Federal Reserve.
Mgmt will stay the same and it seems these smart people continue to maximize all the avenues to be successful in the highly regulated business world.
So now NEWT in the future will be able to reinvest the money that always goes towards dividends back into developing businesses that they oversee.
NEWT has seen great growth and returns as evidenced by their stock's increase. So to me, this transition to a BHC allows them more potential to develop, grow and have even larger positive returns to the shareholders. The problem is this is likely years down the road and investors want money now. So, will investors sell until NEWT is a successful BHC? Totally stinks bc it seemed what NEWT was doing as a BDC was a good thing and now they are taking a step back to take two steps forward.
So I say all this bc I lost 15% of my portfolio tonight in after hours trading. Will the stock drop more in the days to come or do these business restructuring moves bounce back quickly??
Newtek Business Services Corp. has a differentiated BDC model
Newtek is an internally managed BDC; does not pay a 4% management fee to an external manager
Portfolio companies are wholly owned, most for over 10 years
Portfolio company dividends tend to be less sensitive to credit risk, interest rates and inflation, and could
potentially benefit with such increases
Forecast paying an annual cash dividend of $1.84 per share in 2019
Proven track record; Established in 1998; publically traded since September 2000
Over 15-year lending history through multiple lending cycles; great depth and breadth of experience
NSBF does not purchase repackaged loans; instead, originates on a true retail basis leading to strong
credit quality and loan performance
Small balance, industry and geographically diversified portfolio of 1,844 loans with an average loan size of
approximately $181K of the average unguaranteed retained loan balance
Floating rate notes without a cap, tied to Prime and with a quarterly rate adjust
Management’s interests aligned with shareholders; management and Board combined own approximately
6.3% of outstanding shares as of September 30, 2018
No derivative securities in BDC; No SBIC leverage; Do not invest in CDOs or loans with equity kickers,
No 2nd lien or mezzanine financing as a business line
No direct lending exposure to oil and gas industry
I currently own 52,000 shares and have been a huge supporter of Barry Sloane and have considered him as a genius with the company he has built. What he is thinking now I have no idea. He is turning the Co. into a bank. Banks are very unpopular, they are heveally regulated and restrained by the Fed, politicians are after them all the time and the Fed regulates their Dividend payouts to around 30% to 40% of profits. What this means to me is about a $250,000 stock loss tomorrow and an annual Dividend going from $160,000 to probably $60,000 if I'm lucky. The banks have had trouble since 2008 of meeting Fed. benchmarks, achieving share price appreciation and Dividend increases. I am deeply disappointed but I will wait and see. I'm not selling tomorrow with a $5 drop!
About 10 days ago CEO said loan referrals are up 800%...Gov't stimulus virtually eliminates increase in loan losses for next 2 qtrs. By law, 90% of profits MUST be distributed...unless there is something in stimulus package that changes that. NEWT must pay a dividend. I for 1 cannot see how a company that was and most probably continues to do most of their volume in SBA loans that were 80% government guaranteed, now going to have Gov't paying principal and interest payments for the next 6 months on existing SBA loans and 100% guaranteed for the next 6 months on new loans, have a major decrease in earnings with referrals increasing substantially...I don't think the USGovt will default on their promise to pay principal and interest for the next 6 months..if there is a negative, selling the loans at a greater "margin" might be a minor issue, but should e offset by larger volume with no losses...that's my thoughts...maybe time to buy more?
(NASDAQ: NEWT), an internally managed business development company (“BDC”), today announced that its Board of Directors declared a second quarter 2020 cash dividend of $0.56(1) per share, which is payable on July 31, 2020 to shareholders of record as of July 15, 2020
If you look at the charts, it is not uncommon to drop after earnings. It's the classic, "buy the rumor, sell the news," scenario. Many are here for the dividend, so add shares when there are big drops and keep holding. Increase your income.
The dividend just declared for $0.65 puts the new yield at current prices just under 10%. I know newt has a variable dividend so we might see some quarters they just can't pay out such a large dividend, but the commitment to returning capital to share holders is very reassuring. I believe this is still a buy here. The 3 month and 6 month moving averages are both just under $30. So I see a 10% yield with 10% upside.
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