Newcastle Investment Corp. (NCT)

Can this beaten up REIT maintain the dividend? Maybe not:

"We increased cash on hand to approximately $120 million currently, up from $29 million at year-end; reduced recourse borrowings from $1.8 billion to just over $900 million, about half of which is repo against agency securities. So the actual recourse level of debt on the balance sheet is down dramatically."

- Decreasing resources debt means that they're less likely to be subject to a sort of margin call. Remaining recourse debt is set against liquid agency securities, so this number is not that bad

"The core operating results for the company are good, but those are likely to come down in the near term as a result of the cash build-up that we’ve had. Overall, we’ve increased liquidity by about $100 million. In simple terms, for a fully-invested equity was earning around 15%, and cash on hand earns a lofty 3% or so, our run-rate until we invest the excess cash will come down.

Obviously, we’re in the process of reviewing what impact this will have on the dividend prior to our next announced dividend date of March 14. But, again, our focus, my focus is what to do in terms of the investments in the balance sheet on a go-forward basis. "

- So returns should recover modestly since firm is not in a position to deploy all its cash

" Our total CDO debt is about $4.5 billion today.

Just to review and so you could understand what these are, these liabilities are non-recourse to the company which means that we are not required to post additional cash or sell assets as the market value of the underlying securities change. "

"Our average funding spread is very attractive at LIBOR plus 40 basis points. And the average life is relatively long at 6.3 years. Our CDO financings provide a lot of opportunity and flexibility to the company as well as stability to our cash flows."

- This debt is a strength to this firm because it's cheap and stable (they couldn't go out and get these same terms now), and dwarfs the dodgier recourse debt, so the overall profile is healthy.

And they took their appropriate write-downs.

Not the pick of the litter among (that's AFN), but the upside exceeds the downside right now.