Great Ajax(US:AJX)2021-03-05 03:41Financial Data and Key Metrics Changes - The overall corporate cost of funds decreased by approximately 27 basis points in Q4 2020, continuing a trend from previous quarters [4][13] - Net income attributable to common stockholders was $10.8 million, or $0.47 per share, after accounting for preferred dividends and non-controlling interests [14] - Book value per share was $15.59 as of December 31, 2020, while fair value estimates were materially higher, at approximately $19.54 per share [15][30] Business Line Data and Key Metrics Changes - Net interest income from loans and securities was approximately $21.9 million, including a partial reversal of COVID-19 related loan and credit losses [8] - The loan portfolio saw a significant increase in cash flow velocity, leading to a reversal of previous credit loss provisions [4][11] - Approximately 72% of the loan portfolio made at least 12 of the last 12 payments, compared to only 13% at the time of purchase [10][22] Market Data and Key Metrics Changes - California remains the largest segment of the loan portfolio, with consistent payment and performance patterns observed [18][19] - The company has seen increased demand for homes in target markets, particularly in Florida, Phoenix, Dallas, and Atlanta [22] - The Las Vegas market was removed from target markets due to anticipated negative impacts from COVID-19, although a recovery is expected [20][21] Company Strategy and Development Direction - The company continues to focus on acquiring re-performing loans (RPLs), which represent approximately 96% of the loan portfolio [17] - The strategy includes leveraging analytics and an affiliated servicer to maximize loan performance and resolution timelines [6][7] - The company is well-equipped for volatility and is actively pursuing investment opportunities in its pipeline [4] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of COVID-19 on payment performance has been less than expected, with strong regular payment patterns continuing [11][23] - The company anticipates that the cost of funds will continue to decrease, enhancing profitability [13][27] - Management expressed optimism about the potential for increased prepayments and cash flow velocity in the current environment [35] Other Important Information - The company had approximately $107 million in cash at year-end 2020, increasing to approximately $145 million by March 1, 2021 [16][29] - The company declared a cash dividend of $0.17 per share, expected to increase during 2021 based on taxable income estimates [25] Q&A Session Summary Question: On the RPL purchases since quarter end, are those seasoned loans or newer issues? - Management indicated that about 20% of the loans are scratch and dent from new origination, while the balance consists of seasoned loans [36] Question: What is the expected prepayment rate for re-performing borrowers? - The weighted average coupon for the portfolio is in the mid-fours, with a low weighted average LTV, and borrowers with significant equity are prepaying primarily for sale [34][35] Question: What is the amount of securitized debt callable this year? - Management stated there are about three additional securitizations and four joint venture securitizations callable this year, which could reduce the cost of funds by 120 to 200 basis points [33] Question: What is the current cash number and its implications? - The cash number was $107 million at year-end and $145 million as of March 1, 2021, with prepayments and securitizations contributing to the increase [37][38] Question: How does the recent rise in interest rates affect the company's strategy? - Management believes that loan prices have not yet reacted to the rise in interest rates, but they anticipate significant opportunities as a result [41]