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OAKS Has A Staggering Discount To Book Value And An Expense Problem


  • OAKS needs to provide more regular presentations for shareholders and a simpler portfolio as a small mREIT.
  • The complexity of their portfolio creates further complications to analysis.
  • Even if they match their portfolio with larger peers, they should expect to trade at a relatively larger discount because of their high expenses.
  • Since the mREIT maintains a complex portfolio, is fairly small, and runs at an enormous discount to book value, I may want to keep digging.
  • The company traded at a fairly small discount about 5 months ago. Either the market failed before, or it is failing now.

Five Oaks Investment Corp. (NYSE:OAKS) is trading at a staggering discount to book value. The discount to last reported book value is over a staggering 41%. This discount to book value is absolutely incredible even in an mREIT sector that is trading major mREITs at substantial discounts.

A Theory

I've looked into Five Oaks Investment Corp. a couple times but did not have a desire to provide extensive coverage because the mREIT does very little to make coverage easier. Investors will have to determine whether they believe OAKS deserves to trade at a discount that is closer to the discounts throughout the mREIT sector or if they should maintain an incredibly low share price relative to their NAV.

My theory is that many investors simply choose to avoid buying OAKS because they don't understand the company. That would make a great deal of sense since investors should avoid buying assets they don't understand.

Interesting Things about Five Oaks

The portfolio used by Five Oaks is changing quite dramatically over time as demonstrated by the following slide: