# RHG - RHG Limited



## Gundini (14 August 2007)

Hows the timing of this IPO 

Listed on 27 July 2007 at $2.50.

Over 12 days has lost 50% of its share value.

30% today alone on Credit Market woes that may hurt FY08 Earnings.

Yet only yesterday, Credit Suisse upgrades Rams Home Loan business to Outperform? Are they serious?


----------



## nioka (16 August 2007)

*Re: RHG - Rams Home Loans*

Bought a few of these today. My research shows that their high risk loans require mortgage insurance. I think they may turn out to be one of my better buys.


----------



## YOUNG_TRADER (16 August 2007)

*Re: RHG - Rams Home Loans*



Gundini said:


> Hows the timing of this IPO
> 
> Listed on 27 July 2007 at $2.50.
> 
> ...




At one point RHG was down today around 50c that means it was trading at 20% of what it was a few days back


----------



## Mofra (16 August 2007)

*Re: RHG - Rams Home Loans*

Nobody in the mortgage industry will touch them - the forecasts we done on the basis of average profitability margins on their total loan book.

Problem was they spent 18 months writing unprofitable business so when they needed to have the forecasts done (and of course, sell themselves to "sophisticated investors") they were calculated on an inflated book of sub standard quality.

FWIW once a loan is securitised in Australia it generally does not have to be constantly fed by short term bond issues - we operate very differently to the US so only new business at lower credit ratings is being hampered (secured loans are generally done so in Australia over the life of loan).

Which of course brings us back to RAMS writing unprofitable business again, impacting on their ability to raise higher credit bonds & debentures.... so the merry-go-round begins...


----------



## Mofra (16 August 2007)

*Re: RHG - Rams Home Loans*



nioka said:


> Bought a few of these today. My research shows that their high risk loans require mortgage insurance. I think they may turn out to be one of my better buys.




Most securitised lenders in Australia do. FWIW RAMS covers the costs below 80% like most lenders, which really just eats margin as well.


----------



## borat (16 August 2007)

*Re: RHG - Rams Home Loans*

It has to leave those who took up the IPO very dissapointed. I've had a look at their site for any announcements re the recent plummet in thier SP. Anyone heard anything?

Any other Australian mortgage lenders that are as exposed as RAMS to the subprime dilema?

Cheers?


----------



## reece55 (16 August 2007)

*Re: RHG - Rams Home Loans*

Say what you will, the move by David Coe to buy 500 K worth at 1.36 in his super fund yesterday was pretty gutsy.... And I see PPT in on the Company at the closing bell as a substantial shareholder.......

As low as 50 cents today, as YT indicated - could have made money, but picking a bottom with this one is like picking a needle in a haystack.

Fundamentally, it's a geared business and the costs of funding are much higher due to the liquidity crisis. The pro forma forecast indicated a 1.2 Mil drag on EBIT for every 1 basis point compression of margin - god knows what the margin compression has been due to the sub prime mortgage crisis.

Personally, i'm not game to enter. But if it were to solve it's issued, it's worth a lot more than 90 cents.

Cheers


----------



## Captain_Chaza (16 August 2007)

*Re: RHG - Rams Home Loans*



reece55 said:


> Say what you will, the move by David Coe to buy 500 K worth at 1.36 in his super fund yesterday was pretty gutsy.... And I see PPT in on the Company at the closing bell as a substantial shareholder.......
> 
> As low as 50 cents today, as YT indicated - could have made money, but picking a bottom with this one is like picking a needle in a haystack.
> 
> ...




I hear RHG needs $5 Bln ASAP!!!!!!
Crikey!
I am glad I didn't get sucked into this (Titanic style)maiden voyage

Salute


----------



## Alien (18 August 2007)

*Re: RHG - Rams Home Loans*

Not ASAP. 180 days. 6 months is a long time in credit circles and plenty of time for them to finance that. 

I got in at .89c on Friday and think that Monday will see their share price close $1+. Will wait and see.


----------



## Dr-K (21 August 2007)

*Re: RHG - Rams Home Loans*

Hi guys,

I'll give it to you short and sweet. I want to buy $5,000 worth of RHG shares... am I insane? How do I know when is the right time to buy? Can I have a broker buy them for me at a nominated mark.. say 0.50c a share? Further, is $5,000 to smaller amount to start buying shares.

I have never bought shares before, this will be my first transaction  I'm excited!

One more thing, if you buy $5,000 of shares at 0.50c each and they go back up to $2.50 a share, will I have (5 * $5,000) $25,000 worth of shares? 

Regards, Kaydence


----------



## nioka (21 August 2007)

*Re: RHG - Rams Home Loans*



Dr-K said:


> Hi guys,
> 
> I'll give it to you short and sweet. I want to buy $5,000 worth of RHG shares... am I insane? How do I know when is the right time to buy? Can I have a broker buy them for me at a nominated mark.. say 0.50c a share? Further, is $5,000 to smaller amount to start buying shares.
> 
> ...




I'll have some of those RHG at 50c. Where and when can I get them? Seems a good bargain. Too good to miss out on.


----------



## shares (21 August 2007)

*Re: RHG - Rams Home Loans*



Dr-K said:


> Hi guys,
> 
> I'll give it to you short and sweet. I want to buy $5,000 worth of RHG shares... am I insane? How do I know when is the right time to buy? Can I have a broker buy them for me at a nominated mark.. say 0.50c a share? Further, is $5,000 to smaller amount to start buying shares.
> 
> ...





No you are not insane. It is hard to pick the right time to buy Rams because if the crash keeps on going the share price will fall once again, otherwise it will probably keep rising. You can have a broker buy the shares at a nominated mark, but there is no point putting a buy order at too low a price because you'll never get them. $5000 is not too small an amount for buying shares, it all depends on how much money you have and how much you are willing to invest. And yes if you bought Rams for 50 cents and if it goes up to $2.50 you will have $25000 worth of shares.

No one can tell you what price to buy Rams at, you have to do your own research and pick the price yourself.


----------



## Ferret (21 August 2007)

*Re: RHG - Rams Home Loans*

Dr-K,

Why do you want to make RHG your first share investment?  Sure, it could go back up to $2.50 making you that 25k you are dreaming of.  But this is a wounded company and could finish belly up if world credit markets sicken further.  

RHG is a gamble at the moment.  Can you afford and are you prepared to lose your $5000?  If not, look for something a little more conservative for your first investment.  This correction has brought value back to many shares that are a much safer bet.

A few blue chips worth looking at - WPL, AGK, NAB, IAG, ORI, LLC

For a bit more risk/return - PBL, KZL, JBM, OSH


----------



## ROE (22 August 2007)

*Re: RHG - Rams Home Loans*



nioka said:


> I'll have some of those RHG at 50c. Where and when can I get them? Seems a good bargain. Too good to miss out on.




I got 19000 shares at 0.69 cents but there is no way you can get them @ 50 cents unless you have some sort of automatic trigger..when
I come in at around 60 cents it slowly creep up and I cant get them so I said stuff it I buy at the market price and end up with 69 cents  ...

I read the announcement when it shares plummet and damn they all got it wrong and trade on fear so i load it up... if I was to have 100K in my account I would have it all in but happy with what I got..


----------



## ROE (22 August 2007)

*Re: RHG - Rams Home Loans*



Captain_Chaza said:


> I hear RHG needs $5 Bln ASAP!!!!!!
> Crikey!
> I am glad I didn't get sucked into this (Titanic style)maiden voyage
> 
> Salute




read it carefully most poeple see that and FEAR run through them understand it and you would made a killing with the announcement.
even if they cant do it in 180 days their cost of borrowing maybe 0.25 higher and it  only going to cost them 10Mil out of their 43mil profit so ALL good no gloom and doom..


----------



## greggy (23 August 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> read it carefully most poeple see that and FEAR run through them understand it and you would made a killing with the announcement.
> even if they cant do it in 180 days their cost of borrowing maybe 0.25 higher and it  only going to cost them 10Mil out of their 43mil profit so ALL good no gloom and doom..



Good luck ROE. You've done very well indeed.  RAMS was certainly oversold, but I'm worried about the funding issue.
DYOR


----------



## ROE (23 August 2007)

*Re: RHG - Rams Home Loans*



greggy said:


> Good luck ROE. You've done very well indeed.  RAMS was certainly oversold, but I'm worried about the funding issue.
> DYOR




I offload it all today at $1.20  so the luck is now lock in and on my side 
I'm slowly cashing up and wait for another storm.


----------



## godzillaismad (13 September 2007)

*Re: RHG - Rams Home Loans*

Hello,

What is the recent drop in RAMS share price? Do we not know something that the market already does?

Seems like a bargain?


----------



## Ken (20 September 2007)

*Re: RHG - Rams Home Loans*

I have read up on RHG.

If you go on the very buy in gloom sell in boom.

RHG is the perfect buy.

But one gets the impression more rough times ahead. 

At the end of the tunnel. RHG may just escape and make a lot of people very rich, or poor.

I think the day traders are all over it at the moment.

Volume will drop off at some point then we will get a clearer idea of where we go from 75 cents.


----------



## greenfs (20 September 2007)

*Re: RHG - Rams Home Loans*

I suggest due care with this one as Rams is reliant upon mortgage brokers for the bulk of business. 

I have it on good authority that at least one of the main aggregators may be recommending to their mortgage broker members that due care be taken before recommending Ram products to clients.


----------



## Ken (20 September 2007)

*Re: RHG - Rams Home Loans*

The million dollar question.

Is rams worth 75 cents, 30 cents, or $1, or $2?

Iframs is still booking profits and ends up paying dividend of 13 cents your looking at 17% yield.

Might not happen, but no one has given definitive answers on how rams is effected.

Sub-prime???

Money is  going to be more expensive to lend, like oil has gone up, so has the price of money.

Is it going to stop people borrowing through Rams?  Will Rams be able to offer good rates still?  I guess those are the things that first come to mind.

Rams Home loans have a fairly strong name I would have thought... 

12 months time will be interesting.


----------



## Ken (21 September 2007)

*Re: RHG - Rams Home Loans*

Well massive volume and a 10% increase.

There are 1 million share trades going through.

Takeover? Someone is buying a massive stake in this one.


----------



## godzillaismad (22 September 2007)

*Re: RHG - Rams Home Loans*

Yeah, some positive news might be announced shortly... I got some at 81 on friday... I think it's a speculative buy.


----------



## Ken (24 September 2007)

*Re: RHG - Rams Home Loans*

Up to 97 cents


Maybe it was oversold.

Who knows?

But you take the 20+% gains in 2 days anytime. 

Closing on another high on big volume.

Much easier to fall than go up thats for sure.


----------



## godzillaismad (24 September 2007)

*Re: RHG - Rams Home Loans*

Hi Ken,

Still holding it now... I think someone has taken a big stake in RAMS and there might be some news... I'm not sure, it's all speculation at the moment!

Think might still got a fair upside with this rally... we'll see...


----------



## Bullion (24 September 2007)

*Re: RHG - Rams Home Loans*

Interesting indeed. Does anyone know if the last purchase of the day was from one buyer? About 1.4million shares in one hit it looks like.


----------



## shares (27 September 2007)

*Re: RHG - Rams Home Loans*

Jumped on ram's today, rumours of a potential takeover and also  ...

http://uk.reuters.com/article/oilRpt/idUKSYD25668820070927

"RAMS is planning $250 million in a residential mortgage backed securities offer as it tries to overcome its funding problems."


----------



## chansw (2 October 2007)

*Re: RHG - Rams Home Loans*



shares said:


> Jumped on ram's today, rumours of a potential takeover and also  ...
> 
> http://uk.reuters.com/article/oilRpt/idUKSYD25668820070927
> 
> "RAMS is planning $250 million in a residential mortgage backed securities offer as it tries to overcome its funding problems."




*Westpac acquires RAMS franchise for $140m*
October 2, 2007 - 9:23AM
http://www.smh.com.au/news/business/westpac-acquires-rams-franchise-for-140m/2007/10/02/1191091068157.html

Westpac Bank said it has reached agreement to acquire the RAMS Home Loans Group franchise distribution business for $140 million cash.

The business to be acquired includes the RAMS brand, franchise network and associated mortgage origination and servicing systems and contracts needed to run the distribution business.

Westpac is not acquiring the ASX listed RAMS Home Loans Group Ltd or its existing mortgage book.

"Acquiring this business extends our Australian distribution footprint and reach and dove-tails into Westpac's existing growth plans," Westpac's chief executive officer, David Morgan, said.

He said the acquisition will separate out RAMS franchise distribution business from its funding arm.

"The RAMS franchise model has proven to be successful and this transaction will allow it to continue," Mr Morgan said.

"This creates a sustainable future for franchisees and the RAMS brand.

"At the same time, the funding arrangements should provide support for the financing of RAMS existing mortgage book.

Westpac will provide up to $2 billion of financing to fund new business and to refinance a proportion of RAMS outstanding US XCP (extendible commercial paper) program at its expiry in the first quarter, 2008.

The sale of the brand and distribution business is subject to approval at a RAMS shareholder meeting planned for late November.

Westpac said the combination of funding and the agreement on the franchise distribution business for cash, made it attractive to RAMS shareholders.

"The RAMS franchise model has proven to be successful and this transaction will allow it to continue," Mr Morgan said.

RAMS, which listed in July, was a victim of the US sub-prime mortgage crisis that has afflicted global equity markets.

While the non-bank lender had no direct link to the troubled sub-prime sector, it revealed in August that exposure to volatile international credit markets would affect its financial performance in 2008.

It said last month that debt market turbulence could undermine its forecast $58.6 million net profit in fiscal 2008, compared to a 2006/07 pro-forma net profit of $43.5 million.

The 2007 result was up 49 per cent on the previous year and was consistent with prospectus forecast.

As a result of the transaction with Westpac, RAMS will remain a listed entity, continuing to service and amortise its existing loan book and all new business settled up to and including November 15,  2007.

RAMS chief executive officer Greg Kolivos will be retained by Westpac to oversee the transition, and said that existing staff would either move to Westpac with the sale or be retained by the company.

RAMS said that, apart from the change of name, there would be no changes for existing customers arising from the restructuring.


----------



## adobee (2 October 2007)

*Re: RHG - Rams Home Loans*

Rams is down substanially on this news 18% .. what do people think the effect will be .. I might buy some


----------



## bigdog (2 October 2007)

*Re: RHG - Rams Home Loans*



adobee said:


> Rams is down substanially on this news 18% .. what do people think the effect will be .. I might buy some




I would jump ship!

Rams is not looking great.

RHG   	0.71  	  -0.140   	  -16.47%   	from high of  	0.905  and low of	0.66  	47,566,220  	36,523,916  	02-Oct 11:07:22 AM


----------



## tsunami227 (2 October 2007)

*Re: RHG - Rams Home Loans*

a bit too late now for me..

ha ha .. and i thought Rams gonna go up in the morning when i saw people bidding at 1.1 dollar for its shares..

sigh... luckily i didnt put too much of money in Rams..

C' mon.. go to 0.8 so i can sell


----------



## ROE (2 October 2007)

*Re: RHG - Rams Home Loans*

looks like Westpac took all the good bits and left RHG with a pile of debt 
lot of unhappy shareholders who bought in the float


----------



## MannyB (2 October 2007)

*Re: RHG - Rams Home Loans*

Don't forget its still not a done deal, shareholders need to vote for the Westpac sale to proceed & also, the ASX announcement does stated that the board recommend the sale "subject to a better offer", so hopefully for us that hold RHG shares, other offers do come on the table & create some form of bidding war...  I think $140mil is far too cheap to sell the franchise network & the actual name...  What is left then?  $14billion of loans on the books, but with an unknown name, would they retain their loan book? or would it be chewed up by Westpac?  Too risky, I hope we get to vote, as I'll be definately voting against this...

Cheers,

Manny.


----------



## adobee (2 October 2007)

*Re: RHG - Rams Home Loans*

What always confuses me is if 100 million shares have traded there must be 100million worth of sells who think this is now a dog and 100 million who think that it is worth getting on..

If shareholders dont vote in favour I would expect an easy recovery to its current position..


----------



## SevenFX (2 October 2007)

*Re: RHG - Rams Home Loans*



MannyB said:


> other offers do come on the table & create some form of bidding war...




Are there any other offers on the table or is this the only one since rhs announced their position...???

They are knee deep in ****, and with the US Housing & Market downturn looming, shareholders may opt to take what they can get.... IMO


----------



## brilliantmichael (2 October 2007)

*Re: RHG - Rams Home Loans*



adobee said:


> What always confuses me is if 100 million shares have traded there must be 100million worth of sells who think this is now a dog and 100 million who think that it is worth getting on..




Either that or there's a lot _more_ than a 100 million people (day traders) _trying to pick a bottom/impulsively buying_ and then selling the next minute! :

Lesson: Don't be contrarian for contrarian's sake and perceive it as "value" - or if you're going to arbitrate intraday/week, diversify, keep your eye on the exit, and minimize risk. Personally if I didn't know a thing about the business and I wanted to speculate anyway (BHP, RIO, CSL come to mind), I'd be watching the news about it and betting on an uptrend - not a downtrend.

On a serious and more sombre note though how can RAMS be RAMS without the RAMS brandname? It would be just a hollow shell of its former self, and still laid down with debt.


----------



## blaze87 (2 October 2007)

*Re: RHG - Rams Home Loans*

ahem..
i do not really understand.. what are the options that a shareholder such as myself can do at this point of time?
what are the possible consquences and implications??


----------



## ROE (2 October 2007)

*Re: RHG - Rams Home Loans*

I think Westpac is getting a bargain for it and if I was holding the shares
I would votes against it. 

I said RAMS worth very little once Westpac stripped out the component they want to acquire.

How can it be in shareholder interest when people buy them at float of $2.50
some at $1.00 or $1.50 and now they are selling it for 50cents to Westpac ?

With brand name  gone how can they called themselves RAMS?
they may call it sheep skin


----------



## blaze87 (2 October 2007)

*Re: RHG - Rams Home Loans*

i think if the deal goes thru,
the next important question is 
what is the net present value (NPV) of it's exsisting loan book?
will that amount justify . (ie a price of $0.60) keeping in mind that future growth capabilites is 0

quote from annoucement' 
“The RHG board unanimously believes that in the absence of a superior offer, the Westpac offer represents the best outcome for RHG shareholders,”

does the above statements implies that RAMS is in deeper S*** than current investors' concsenus?

and finally.. 
IF the deal doesn't go thru, what are the chances that RAMS might just close shop and shareholders losing everything they invested in the first place?


----------



## blaze87 (2 October 2007)

*Re: RHG - Rams Home Loans*

at the point of time, i cannot believe that RAMS is in such a debacle...
i reckon management is astute
RAMS has a leading brand name and has been going on for 12 years...

how did it get so messed up so badly, simply beacuse it cannot finance it's current US XCP liabilities.....
Is this fear...??

im looking foward to the Explanatory Memorandum, and pray that my judgement is not wrong..


----------



## saichuen (2 October 2007)

*Re: RHG - Rams Home Loans*



adobee said:


> Rams is down substanially on this news 18% .. what do people think the effect will be .. I might buy some




It all depends on your appetite for risk I guess. At the rate this is going, I would only be buying if I'm prepared to lose all and will be holding for short term position as well. 

Happy trading!


----------



## ROE (3 October 2007)

*Re: RHG - Rams Home Loans*

I think RAMS are in deep sh*t and the management knows it, because if no one is willing to fund their 6.4 Billion short term debt, well investors will want their 6.4  Billion back at some stage. How are they going to repay???


----------



## Rainmaker2000 (3 October 2007)

*Re: RHG - Rams Home Loans*

This is really a situation of specialised knowledge of the 'wholesale' debt and warehouse markets (which I don't have enough of..hehe)......the fact that RAMS would do this deal which effectives ceases RAMS as a business shows that they are indeed in deep sh**....the neglected to inform investors properly however.......in the wholesale market, its not true to say that investors will want their money paid back and RAMS won't be able to pay them......the fact is that the wholesale markets, if you want, can be a revolving door of debt if one needs that facility....even with the liquidity crisis RAMS paper still found a home.......albeit at a much higher interest rate.........that's what this is really about, at what cost will their debt be taken......obviously they think the rate on their new debt and the old stuff cycling around renders their current business model( relying just on wholesale debt) unworkable........that would seem a cautious stance since many lenders work off the wholesale debt markets...why can't they get a banking licence and just start taking retail deposits....surely they have some lead time since the debt can keep cycling round and as they have said, "this financial year remains on prospectus with next years dropping slightly".  That does not sound like a business without options.....


----------



## ROE (3 October 2007)

*Re: RHG - Rams Home Loans*

I went through the prospectus for RAMS again and found it has 136Mil debt on their  book, that mean if Westpac offer them 140Mil, that will cancel out their debt and all they left with is 14bn loan book which I'm unsure how much money they going make if their refinance rate increase.

I come to the conclusion get RAMS if you can tolerate risk and worse case you will lose your capital.


----------



## ta2693 (3 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> I went through the prospectus for RAMS again and found it has 136Mil debt on their  book, that mean if Westpac offer them 140Mil, that will cancel out their debt and all they left with is 14bn loan book which I'm unsure how much money they going make if their refinance rate increase.
> 
> I come to the conclusion get RAMS if you can tolerate risk and worse case you will lose your capital.




I am in. I know it is a falling dragger. But I ask my self who on the hell whould buy RMS from 48c to 54c? Everybody know RHG is in big trouble. Who would want it after two big falling day?  I decide to stand with bold guys this time. 
I am prepared to lose half of my fund in this.


----------



## ta2693 (3 October 2007)

*Re: RHG - Rams Home Loans*

Besides I think if RHG is in so big trouble as everyone on street believe. Why S&P and Moody give AAA rate on RHG's bond? Anyway RHG has 16 years history and should know what they are doing. Do not follow me unless you are as crazy as me.


----------



## Lachlan6 (3 October 2007)

*Re: RHG - Rams Home Loans*

The market obviously was very turned off by the recent news relating WBC. The chart is showing a very bearish descending triangle pattern. I certainly would think that even lower levels will occur here and would expect a possible rise back to the $0.69 level, before another run lower (but may expect even lower levels first, who knows). Regardless, RHG is certainly on my watchlist for a potential reversal in the future, however this would seem like some time away.


----------



## saichuen (3 October 2007)

*Re: RHG - Rams Home Loans*



Rainmaker2000 said:


> ...why can't they get a banking licence and just start taking retail deposits....surely they have some lead time since the debt can keep cycling round and as they have said, "this financial year remains on prospectus with next years dropping slightly".  That does not sound like a business without options.....




Given their current situation, would you open an account and bank your money with them if they do actually provide retail banking facilities? 

That said, what's going to happen to those existing RAM borrowers if RAMS does actually default?  I can't really imagine these borrowers losing their property. It will simply be bad. Perhaps a 'bailout' from the Reserve Bank or even a takeover from another bank instead? I feel the latter is probably more likely.

My 2cents worth.


----------



## krisbarry (3 October 2007)

*Re: RHG - Rams Home Loans*

What a filthy mess this has turned out to be...from the moment RHG listed it has been a complete an utter disaster.  I was even tempted today to buy some shares at 50 cents, but in all honesty the chart says it all.

I might pick some up next year at 5 cents...looks like another LVL or VLL situation.

The housing market is stuffed on every level...ACR went down, Fincorp went down, Westpoint went down...

I say sell and cut your losses!


----------



## Kremmen (3 October 2007)

Lachlan6 said:


> The market obviously was very turned off by the recent news relating WBC. The chart is showing a very bearish descending triangle pattern.




True, but mostly in the 75c-$1 range. And most sharemarket reactions are over-reactions. Yesterday and today's volumes are a herd in panic. It's almost certainly an over-reaction, but the interesting questions are when will the bottom come and what is a realistic value of the shares. ... Neither of which are easy to answer.


----------



## Rainmaker2000 (3 October 2007)

*Re: RHG - Rams Home Loans*

You seem a brave man ta2693.....there is no doubt dramatic trading potential here....you might just want to consider what type of risk you are willing to take.....personally, I don't have any problem with high risk stuff if it stacks up but its important that its the right risk......in this case, RAMS has the obvious business risks which you might take a punt on but consider this.......are you willing to throw cash on the line when its probable that management has lied to the market and to you.....its fine to take risks you know about but would you ever throw money in front of dishonest management........I would very, very rarely, usually only when management also holds a massive part of the company so 'you are in the same boat.'......In this case management is happy to endorse the low ball offer from WBC and shift their offices from the sinking RAM to WBC....they seem pretty content with that.......The low ball offer may actually backfire though as it leaves a lot of value for another player like ANZ or my bet, BOQ to enter the fray.......and the perfect storm scenario is that the market is actually pricing in WBC offer being accepted which means that an offer for the whole RAM could be pitched around $1....


----------



## skating101 (3 October 2007)

*Re: RHG - Rams Home Loans*

how much is the existing loan book worth, that the question. westpac will take the rest of it (its a good franchise) and then the only this your left with is a loan book, and no future development. Rams SP is going to sink before it reaches the SP that the loan book is worth


----------



## wayneL (3 October 2007)

*Re: RHG - Rams Home Loans*



saichuen said:


> That said, what's going to happen to those existing RAM borrowers if RAMS does actually default?  I can't really imagine these borrowers losing their property. It will simply be bad. Perhaps a 'bailout' from the Reserve Bank or even a takeover from another bank instead? I feel the latter is probably more likely.



Another institution(s) will simply purchase the debt (usually at a significant discount). Borrowers will simply be mortgaged to NAB(or whoever) instead of RAMs.


----------



## Judd (3 October 2007)

*Re: RHG - Rams Home Loans*

Basically, if the Westpac scenario goes ahead, then RAMS is a closed fund in run-off mode with no new money going in.  Administration costs get relatively expensive down stream compared with the fees generated on the mortgages.

STC has posted the most sensible thing I have ever seen him write, i.e. "I say sell and cut your losses!"


----------



## krisbarry (3 October 2007)

*Re: RHG - Rams Home Loans*



Judd said:


> .
> 
> STC has posted the most sensible thing I have ever seen him write, i.e. "I say sell and cut your losses!"





lol, I thought that what I had written would get the moderators of ASF all katty and ban me for downramping or fine me 2 points.

Geeez, its amazing how you can downramp and get away with it

I have just been exposed, NOT!

Wouldn't touch this stock in a psychotic fit, I am just so over all these b_ull crappy real estate/home loan/retirement villages/property stocks going under!

Sell the lot of them and pile all your money into resources and keep the Chinese happy


----------



## nioka (3 October 2007)

*Re: RHG - Rams Home Loans*

Interesting speculative opportunity here. At current price the market cap would be around $170m with the Westpac offer of $140m. That leaves a value of $30m. Assuming the debt is offset with existing Rams loans which are mostly covered with property values that seems good value to me. I'm expecting a better offer to be made topping the Westpac one. This could prompt Westpac to increase theirs. If I was a holder, and I'm not, I dont think I would sell yet.


----------



## krisbarry (3 October 2007)

*Re: RHG - Rams Home Loans*

...and following on from that last post I am sick to death of reading all these experts in finance compaines and brokers recommending these garbage stocks. 

Merrly Lynch was the last example and should be shot down for their recommendation for this to run up to $1.20!


----------



## ROE (3 October 2007)

*Re: RHG - Rams Home Loans*



wayneL said:


> Another institution(s) will simply purchase the debt (usually at a significant discount). Borrowers will simply be mortgaged to NAB(or whoever) instead of RAMs.




Who would buy their debt when there is no one willing to lend them the money?  and most bank wouldn't touch that loan book of 14bn.

Mortgage debt is a dirty word right now ... and the US sub-prime, the worse is yet to come.

Westpac is the only interest party right now and even them don't want to touch that loan book


----------



## ta2693 (3 October 2007)

*Re: RHG - Rams Home Loans*

It seems everyone believes RHG has to end its business. I think they stand a chance to keep going. They have operated their business for 16 years by now. Why they have to fail this time? Why S&P and Moody rank this bonds AAA? I am prepared to lose to my stop loss point which is 46c.


----------



## adobee (3 October 2007)

*Re: RHG - Rams Home Loans*

Lucky I didnt buy any yesterday.. maybe tomorrow maybe not..
The question I think is what is the net present value (NPV) of it's exsisting loan book if the sale clears all there debt and leaves them with some cash or if they are still left with debt on loans on houses not worth the loan amount..

I cant believe rams has copped it so hard but we havent seen other banks and lenders coping it yet.,.. I think there are alot of people hiding there pain..


----------



## Rainmaker2000 (3 October 2007)

*Re: RHG - Rams Home Loans*

It is important to note, as ta2693 does, no one is questioning the quality of the loans written, infact the wholesale market they trade on is devoted to AAA loans.....the question mark is on the cost of funds in these markets and whether these costs preclude RAMS business model..... I actually think management is doing a Qantas on this and is to scared to try to reform the business model to salvage the company and shareholder funds...on this basis, this is a real question of asset value.....how much is the RAMS franchise worth....in this vein, TA2693, would you like to explain how you come to a stop loss of 46 cents.....are the assets good value at 47 cents but too expensive at 46 cents....(you can tell I hate stop lossing)..he


----------



## wayneL (3 October 2007)

*Re: RHG - Rams Home Loans*

"Who would buy their debt when there is no one willing to lend them the money?  and most bank wouldn't touch that loan book of 14bn."


They will if it's cheap enough.

They can afford a lot of defaults at say 60c on the dollar.


----------



## nioka (3 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> Mortgage debt is a dirty word right now ... and the US sub-prime, the worse is yet to come




Mortgage debt in the USA is a different kettle of fish to mortgage debt in Australia. Most mortgage debt here will be paid. Even most forced sales will recoup most of the loan amount unless we have a severe recession. I doubt if that will happen. The home owners with a mortgage do not consider "mortgage" a dirty word.


----------



## wayneL (3 October 2007)

*Re: RHG - Rams Home Loans*



nioka said:


> Mortgage debt in the USA is a different kettle of fish to mortgage debt in Australia. Most mortgage debt here will be paid. Even most forced sales will recoup most of the loan amount unless we have a severe recession. I doubt if that will happen. The home owners with a mortgage do not consider "mortgage" a dirty word.




That was the attitude in the UK & RoI as well... until recently. Once there is some stagnation/falls in house prices, the poo will hit the propeller here too. That reliance on selling themselves out of trouble will disappear.

Have a look at the Northern cRock fiasco in the UK. That was just a marker for further problems... as is RAMS.

... and it is just the beginning.


----------



## jkool (3 October 2007)

*Re: RHG - Rams Home Loans*

Looking at this RHG fiasco got me run through some basic numbers. Now these financial comps are not my favourites so I may have it all wrong or being entirely confused about it but lets say that:

WBC offer gets approved and RHG stays a runoff business with a book of $14bn (or so) mortgages. What is the normal interest spread (ie. interest receivable on the loaned funds less interest payable on the borrowed funds) an average financial company operates on?

Well I have not the fainest idea so say its 0.5% which means that loans in the range of $14bn should make yearly gross profit of (give or take) $70mil. Now say that 50% (playing it safe) of this is some business related expenses, salaries, tax and what have you. That would leave us with a clear after tax profit of $35mil a year.

Now how long does it take for all the mortgages to be paid off? Well who knows. Lets assume that about 10% of all mortgages are paid off yearly so after tax profit will be 10% lower each consecutive year and there will be no more business (mortgages on books) left in year 10.

So that way if my back of the envelope calculation is even remotely correct the potential profits in next 10 years (on the mortgages alone) are about $228mil. If I was to apply amount of RHG issued shares on this than probably value of around 64.2c/share. Now with low ball WBC offer of around 40c/share for the other part (ongoing business franchise), from where I stand I would humbly suggest the total value per one RHG share being around $1 or so.

Now obviously there could still be some more upside to this (ie. the spread on interests is >0.5% and/or the company clears more than 50% of their gross profits and/or less than 10% of all mortgages is paid off every year) in which case the value/share would be still a little higher.

What do you think?


----------



## greenfs (3 October 2007)

*Re: RHG - Rams Home Loans*



jkool said:


> Looking at this RHG fiasco got me run through some basic numbers. Now these financial comps are not my favourites so I may have it all wrong or being entirely confused about it but lets say that:
> 
> WBC offer gets approved and RHG stays a runoff business with a book of $14bn (or so) mortgages. What is the normal interest spread (ie. interest receivable on the loaned funds less interest payable on the borrowed funds) an average financial company operates on?
> 
> ...




When a Valuer values a loan mortgage book for a broker the loan amortisation of the book is completed over a term of 66 months on a progressively discounted basis. I can see no reason to change this formula for Rams loans. 

Others may be able to guess what the expenses might be, but one hopes not as much as you are indicating as when the book runs down in 3+ years there is the potential for a negative result to arise fairly quickly


----------



## jkool (3 October 2007)

*Re: RHG - Rams Home Loans*

Great info mate. I have no idea how is it done the proper "Valuer way" you seem to indicate. All what I stated are just my own conclusions.

So could you elaborate a bit? Ie. what would the numbers be approx. if one was to do it using your 66 months method?

Thanks


----------



## Judd (3 October 2007)

*Re: RHG - Rams Home Loans*

Well, if a firm like Citibank blows $US6 billion (including $2.6 billion in credit card defaults and $1.6 billion in sub-prime mortgage losses) and UBS decides that it has to tell the world that it is down $US4 billion and 1,500 workers are to go and it is all (mainly?) due to the "credit squeeze" as well as focusing on highly illiquid, long-dated investments, allowing balance sheets to grow rapidly and being too free with funding, why does anyone think that RAM with a $AU14 billion mortgage book has a hope?

Even more gloomier news if you want it is that HBOS has indicated that as home loans in the UK are becoming more expensive and less profitable, it will scrap its annual net lending target (the difference between the amount lent to new customers and the value of business lost when customers pay off loans or move to a new lender) and take month-by-month decisions about the trade-off between volume and margins.  Oh dear, bankers speak for rationing loans to only the credit worthy and profitable customers.

The CFO of RAMS may wish to tap dance down George St chanting "Loan book going cheap.  Any takers?"


----------



## greenfs (3 October 2007)

*Re: RHG - Rams Home Loans*



jkool said:


> Great info mate. I have no idea how is it done the proper "Valuer way" you seem to indicate. All what I stated are just my own conclusions.
> 
> So could you elaborate a bit? Ie. what would the numbers be approx. if one was to do it using your 66 months method?
> 
> Thanks




You take the opening estimated monthly profit value and progressively amortise a fixed 1.5% of that amount off that value every month, which means at the end of 66 months there aint nothing left.

Let me know if you need more.


----------



## ROE (3 October 2007)

*Re: RHG - Rams Home Loans*



nioka said:


> Mortgage debt in the USA is a different kettle of fish to mortgage debt in Australia. Most mortgage debt here will be paid. Even most forced sales will recoup most of the loan amount unless we have a severe recession. I doubt if that will happen. The home owners with a mortgage do not consider "mortgage" a dirty word.




It's a different fish but it smell the same to most investors...so when the sub-prime play out in November 2007 we will see how RAMS fair 
and the 300 Mil that RAMS want to raise in recent day announcement, if no one want to buy them, then mortgage debt is a very very dirty word.

Borrow short term debt to fund long term loan is a very bad business model 
it just we have it so good for so long people just ignore all these type of risks and want to make quick bucks.

The probability of RAMS going under is very real and like 2 rules of investing.

1. Never lose your money.
2. Don't forget rule number 1.

I'm a bit of a risk taker but not at any price , maybe if it go to 20 cents or something 

Remember RAMS has 136M debt on their book so 140M Westpac want to pay for the good business pretty much cancel that debt and spread interest of 14B loan left and absolutely no prospect for grow... Why the hell would you invest in it when there are lot of good stocks that could deliver a lot more than 0% growth a year.


----------



## JJP (3 October 2007)

*Re: RHG - Rams Home Loans*

ROE......with regard to your comment re debt.

You could do well to look the balance sheet of Rams.

There cash position matches there outstanding liabilities. Investors long this stock have seen their profits half in 48 hours.....you could do well to learn how to read a balalnce sheet before presenting such incorrect info.

I would ask that you talk to the company tomorrow to clarify that there is NO such debt in relation to the context you present it as ....and return on the board and withdraw your comment.


----------



## Rainmaker2000 (3 October 2007)

*Re: RHG - Rams Home Loans*

So I think ROE was citing the debt according to the prospectus...one would think it has not changed substantially......from the guidance management gave the market, the RAM would appear to not be 'going under' but the desperation in the deal with WBC suggests otherwise.......I thus would not be going to management for information right now.......to be honest, the RAMs business model with its 'warehouses' and subsequent two forms of long term debt placement is actually pretty ingenious but for one risk which was outlined in the prospectus, "what if there were significant liquity problems in the US market".....in this vein its pretty silly to set up a loan provider without taking deposits.....but we must remember that the RAM is not the only one to rely on these wholesale markets......


----------



## ROE (3 October 2007)

*Re: RHG - Rams Home Loans*



JJP said:


> ROE......with regard to your comment re debt.
> 
> You could do well to look the balance sheet of Rams.
> 
> ...




This is out of prospectus.

"Corporate net debt consists of $108.0 million of Corporate debt (included within Debt issued at amortised cost), plus $29.3 million loan from 
a related party (refer Sections 10.2.7 and 10.9.1), less $0.7 million of cash and cash equivalents, totalling $136.6 million."

According to that there is 0.7 Mil of cash? Am I wrong saying it's doesn't have 136M debt on its hand?

If you are a moderator and think my post is inappropriate you can remove it


----------



## ROE (4 October 2007)

*Re: RHG - Rams Home Loans*

A couple of story on lateline on RAMS for those who hold this stock

http://www.abc.net.au/lateline/business/items/200710/s2049325.htm

http://www.abc.net.au/lateline/business/items/200710/s2050438.htm


----------



## jkool (4 October 2007)

*Re: RHG - Rams Home Loans*

Here we go someone seems to acknowledge that there is some dough to be made from that $14bn mortgage book going forward:

http://www.theage.com.au/news/busin...-for-the-taking/2007/10/03/1191091193259.html


----------



## ROE (4 October 2007)

*Re: RHG - Rams Home Loans*

I think there are money to be made from this stock if you prepare to jump in now and accept the risk it could go lower if it cant finance 6.4B short term loan and it has to pay much higher rate and there go part of the profit.

I'm weighting up my risk and reward to see if it worth it, but right now sitting on the sideline to see what's happening in the US next week.


----------



## blaze87 (4 October 2007)

*Re: RHG - Rams Home Loans*

pg 61 of rams prospectus.

RAMS has access to sufficient working capital for the purposes of its stated business objectives for the forecast period

In this case.. rams lied to shareholders??


----------



## Kremmen (5 October 2007)

*Re: RHG - Rams Home Loans*



greenfs said:


> You take the opening estimated monthly profit value and progressively amortise a fixed 1.5% of that amount off that value every month, which means at the end of 66 months there aint nothing left.




With more and more people having more and more debt and with interest-only loans increasing and lengths of loans increasing, I wonder what a realistic figure is? Most people are probably going to take 20-25 years to pay off their loan. Now, they might (if they can) get it refinanced ... but then they will be paying RAMS back, which gives them some needed hard cash.


----------



## ROE (5 October 2007)

*Re: RHG - Rams Home Loans*

and higher cost will force people to move their loan to the banks and banks will welcome them with open arms, pay back time for banks I guess for taking away their customers in the last 10 years.

http://www.news.com.au/business/story/0,23636,22534804-462,00.html 

Very little room for RAMS to move .. pass on rate hike may force people to default or move to another lender
dont pass on the extra cost, they are losing profit...


----------



## nioka (5 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> and higher cost will force people to move their loan to the banks and banks will welcome them with open arms, pay back time for banks I guess for taking away their customers in the last 10 years.
> 
> http://www.news.com.au/business/story/0,23636,22534804-462,00.html
> 
> ...




It has short term benefits for Rams. They get exit fees (profit) and they get sorely needed cash flow as loans are paid out. Whether it is a plus for the SP is another question. Those that don't leave will have to accept higher interest rates, also good for Rams. The question will be the percentage of defaulters and the loss arising if forced sales do not recover the mortgage in total.


----------



## ROE (5 October 2007)

*Re: RHG - Rams Home Loans*

True, what sort of exit cost RAMS charge for exiting? I wouldn't imagine more than $1000 but at a $1000 and they have 45,000 customers that isn't bad


----------



## shaunnell (5 October 2007)

*Re: RHG - Rams Home Loans*

Does not the mortgage insurance punters pay protect the bank if there is a shortfall between the mortgage and selling price of the home?


----------



## adobee (5 October 2007)

*Re: RHG - Rams Home Loans*

My understanding is that is what the mortagage insurance covers. 
Thus why mortgage insurance is more expensive the more you borrow. Any loans with less than 20% equity will usually require mortgage insurance in Sydney I do not know about the u.s  I do not know how much of the position this mortgage insurance covers i.e if someone borrows 90% does it cover the 10% to take it to 20% equity or anything if the property drops by half..

I think you may find a large % of the loans dont have mortgage insurance due to dodgy brokers and morgage brokers.. Many get there clients around it by increasing the purchase price to include the deposit and giving a payment back to the purchaser then cause the equity is high at 20% the bank does not bother to get a valuation.. I know this was rampant in Sydneys boom and thus the reason you see news paper articles saying ohh the property dropped 40% in value the unit in cabramatta went from 200k to 160k etc.. it was dodgy to start with..  ie home 100k purchaser has 5k (5%) needs 20k 20%dep so as to pay no mortgage insurance developer charges buyer 120k for home and gives them 20k  purchaser kicks in 4k bang 20% deposit no valuation and close to 100% finance no morgage insurance for the bank.. and when the owner defaults  the property is probably worth 90k as a premium was paid for new and the bank is left with a debt of 30k..


----------



## ROE (5 October 2007)

*Re: RHG - Rams Home Loans*

oh nasty practice 
It's just plain wrong, I think these brokers are taking advantages of these poor people.  Bring on the regulation and bring these guys in-line


----------



## blaze87 (5 October 2007)

*Re: RHG - Rams Home Loans*

is it me, or
does this sudden drop in price is due to westpac reaching an agreement to buy the rams brand and franchise?
look rhg share price dropped by 50% in 3 days. This sudden drop is due primarily to people selling to fear beause of the fact that 
1) management was dishonest
2) there is a chance of a default

the second reason can be rebuked with the arguement that the credit squeeze has exsisted even before the agreement with westpac as its share price has recovered from a drop of 70cent to close to $1 at one point


----------



## blaze87 (5 October 2007)

*Re: RHG - Rams Home Loans*

hm.. would someone care to explain the effects of a-stronger-than expected employment report in the US on RHG?
i welcome all possible scenarios!....


----------



## vishalt (6 October 2007)

*Re: RHG - Rams Home Loans*



blaze87 said:


> hm.. would someone care to explain the effects of a-stronger-than expected employment report in the US on RHG?
> i welcome all possible scenarios!....




Well it means that the Fed has less reason to cut rates and since RAMS gets its money from the US its not good!


----------



## jkool (6 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> and higher cost will force people to move their loan to the banks and banks will welcome them with open arms, pay back time for banks I guess for taking away their customers in the last 10 years.
> 
> http://www.news.com.au/business/story/0,23636,22534804-462,00.html
> 
> ...




Good article. But I don't understand why would anyone worry about owing money to someone or something going belly up (um I am not saying RAMs is going belly up tho)? Its not like they owe you money which you will struggle to get back (ie. Wesptpoint, Fincorp and the like). Quite contrary. So all things equal and with regular loan agreement in place (ie. not having any special fee/interest surcharges for defaulting case) I don't see that fact alone as a legitimate reason to refinance.  

And as to borrowers leaving RAMs for conventional financial institutions: I would say that lot of borrowers (anyone knows exact  %?) went to RAMS (and agreed to pay premium on prevailing interest rates) because they could not get the mortgage from the big banks in the first place. And does anybody thinks that the banks are now less stringent when approving new / refinanced loans than they were few month or years back? Ie. are the big banks all of sudden willing to offer an average RAMS (presumably low docs) borrower with any mortgage product at all?


----------



## blaze87 (6 October 2007)

*Re: RHG - Rams Home Loans*

As a general background, isn't commerical paper considered as a very low risk form of investment. that is to say, we know that putting our money in a money-fund will generate a higher return than desposits with the bank, but the risk is just marginally greater than putting it in the bank. i looked 'commerical paper' up wikipedia and it too said its a regarded as a very safe investment. seriously, commerical paper has been on for a long-time, maybe 30 years and all major banks are using it too.

not sure if im being right here but here goes,
the problem with RAMS is that, they need to pay a short-term debt and 
this is done by selling commerical paper in the US

So if confidence return to the market, RAMS should be able to fund its debt.  RAMS needs all the big money players like fidelity, vanguard to stop holding cash, and putting it in commerical paper which they have been doing in the first place. i think recession really spooked the cr** of the money players. so in conclusion, the market has to be certain that, there will not be a US recession.


----------



## SevenFX (9 October 2007)

*Re: RHG - Rams Home Loans*

Wow... down today another 9% to 38c..

RHG will imprint in my head, how holding a loosing trade hoping for a bounce, instead of cutting my losses early could lead to this.

Where will this stop.... not much further to hit rock bottom....surely it won't fall below 30c...????

SevenFX


----------



## nioka (9 October 2007)

*Re: RHG - Rams Home Loans*



SevenFX said:


> Wow... down today another 9% to 38c..
> 
> RHG will imprint in my head, how holding a loosing trade hoping for a bounce, instead of cutting my losses early could lead to this.
> 
> ...




It can only fall another 38c so it wont create any new record. Are the directors selling? or buying maybe. That's the thing to watch for now.


----------



## ROE (9 October 2007)

*Re: RHG - Rams Home Loans*



SevenFX said:


> Wow... down today another 9% to 38c..
> 
> RHG will imprint in my head, how holding a loosing trade hoping for a bounce, instead of cutting my losses early could lead to this.
> 
> ...




Look like you wont enjoy your BBQ lambs this summer  .. and when CDR comes out of trading halt I will be losing my appetite for phone calls 
you win some you lose some, dont worry be happy .. I'm cool if CDR folds and I lose my 15K or so  .. it's only money I will make it back sometimes this year


----------



## gussman (10 October 2007)

*RAMS HOME LOANS RHG*

Gday I am new here, I just bought 23000 rams shares at 36.5 cents each, was this a stupid move, I have heard they are valued at more than they are selling for. Dont know much about shares.


----------



## SevenFX (10 October 2007)

*Re: RAMS HOME LOANS RHG*

Welcome Gussman.

You may like to post in the existing RHS thread, as you will get more responses there....

https://www.aussiestockforums.com/forums/showthread.php?p=210358&highlight=rhg#post210358

Also this search link below will find you just about anything stored in ASF
https://www.aussiestockforums.com/forums/search.php


Cheers
SevenFX


----------



## Nyden (10 October 2007)

*Re: RAMS HOME LOANS RHG*



gussman said:


> Gday I am new here, I just bought 23000 rams shares at 36.5 cents each, was this a stupid move, I have heard they are valued at more than they are selling for. Dont know much abnout shares.




Hi, & welcome!

First off, this thread is probably more suited for this - Click here

Second of all; I don't know much about that stock, so I can't tell you if the stock is under/overvalued.

What I can tell you though - is that it wasn't a *wise* move. There is no such thing as a stupid move - only an uneducated move, or a simply a mistake to learn from.
The reason I say this move was unwise, was that you mentioned your reasons for buying were purely being that you _heard_ they were undervalued - buying purely on hearsay is never a wise choice. I suggest you do a little research, read about the forum, - & decide where to go from there.


----------



## dj_420 (10 October 2007)

*Re: RHG - Rams Home Loans*

I dont think even the creditors know what this one is worth.

It has been speculated that it could be worth more or even less than current sp. I have seen valuations from 0-100 cents per share.

I personally would not touch this kind of messy business with a barge pole.


----------



## ROE (10 October 2007)

*Re: RAMS HOME LOANS RHG*



gussman said:


> Gday I am new here, I just bought 23000 rams shares at 36.5 cents each, was this a stupid move, I have heard they are valued at more than they are selling for. Dont know much about shares.




Consider this remark:

"Dr Morgan said RAMS founder John Kinghorn had noted the lender would have closed unless Westpac stepped in."

from this article
http://www.theage.com.au/news/Business/Westpac-confident-on-RAMS-deal/2007/10/10/1191695974328.html


----------



## Rainmaker2000 (10 October 2007)

*Re: RHG - Rams Home Loans*

Hi guys....I only owned RAMS for about 3 minutes a number of weeks ago and that was a happy experience....but I think we can all learn a few years of experiences from this one....I'm a little shocked by the article in The Age to be honest and its a good pickup from ROE............if we ever wanted an example of not trusting management and being a knee jerk contrarian, this was one.........have a read through the public announcements to date, if you believed them you would think RAMS took a little hit but profits would remain just about stable..........instead management just lied through their teeth while running round begging for someone to help them out, a lot of punters got hammered and I bet there will not even be an ASIC investigation.....things like this just get swept under the rug and these white collars get to hook up to the WBC pay roll without a hitch....I've been burned a little on CDR which will be a good lesson but thankfully I will never allocate many funds to situation of this nature....


----------



## blaze87 (11 October 2007)

*Re: RHG - Rams Home Loans*

urm, it's surprising that i see a silver lining,
considered this
US-short-term commercial paper is considered the safest of all debt investment.
and this article
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYYndEwKvsNs


----------



## huntingboy (11 October 2007)

*Re: RHG - Rams Home Loans*

hi,sounds good news. maybe Rams can easily get money at lower rates.
http://www.bloomberg.com/apps/news?pid=20601009&sid=aYMKfdM5DtFk&refer=bond


----------



## blaze87 (14 October 2007)

*Re: RHG - Rams Home Loans*

check this article
....................................
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al1pBplw2gaU


----------



## krisbarry (14 October 2007)

*Re: RHG - Rams Home Loans*

Has their address got anything to do with its current share price?  Note the level...

*Ground Floor* , 44 Bay Street , ULTIMO , NSW, AUSTRALIA, 2007 

I am suprised at the drop, it is very frightening to say the least


----------



## rogue_investor (14 October 2007)

*Re: RHG - Rams Home Loans*



blaze87 said:


> check this article
> ....................................
> http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al1pBplw2gaU




Branson also talking of dragging Northern Rock out of their pickle.  I'm a buyer of RHG on the back of this news.  If they get decent finance some value should get back into them.


----------



## blaze87 (14 October 2007)

*Re: RHG - Rams Home Loans*



rogue_investor said:


> Branson also talking of dragging Northern Rock out of their pickle.  I'm a buyer of RHG on the back of this news.  If they get decent finance some value should get back into them.




lol somehow i managed to convert a guy into buying
weee.. now for 365 million others not to sell at current prices


----------



## rogue_investor (15 October 2007)

*Re: RHG - Rams Home Loans*

Don't give yourself a wrap Blaze... The news was out on Reuters early this morning.  http://www.reuters.com/article/bondsNews/idUSL1468044820071014

I don't consider it a long term investment but happy to take risk on profit chance.  I think RHG will return some losses this week.


----------



## ROE (15 October 2007)

*Re: RHG - Rams Home Loans*

It's getting to a level where I can feel I can take a punt  
Maybe jump in and out by Nov 6 for Melbourne cup


----------



## Pager (15 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> It's getting to a level where I can feel I can take a punt
> Maybe jump in and out by Nov 6 for Melbourne cup




My thoughts as well ROE 

Had my punt this morning and bought 2000 at 32 cents, risk is $640.

wish me luck


----------



## 1750 (15 October 2007)

*Re: RHG - Rams Home Loans*

I took a punt at 38c on RHG..... wish I'd shown a little more patience....

Here's to hoping someone offers Rams a bigger offer than Westpac (come on bank of queensland or the likes)...


----------



## ROE (15 October 2007)

*Re: RHG - Rams Home Loans*



Pager said:


> My thoughts as well ROE
> 
> Had my punt this morning and bought 2000 at 32 cents, risk is $640.
> 
> wish me luck




Sh*t I bought exact same parcel  just 10 times bigger
this must be the omen 
Where is HSBC and NAB and other mob? dont let Westpac take the bargain prize

I will be voting against Westpac  if I still hold by then


----------



## ROE (15 October 2007)

*Re: RHG - Rams Home Loans*

DoH! down another 11% haha I came in too early ...
this is a punishing year for me ...a good start since August and nothing but punishment since September 
I'm betting on SSM to take me out of this dead wood


----------



## SevenFX (15 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> DoH! down another 11% haha I came in too early ...
> this is a punishing year for me ...a good start since August and nothing but punishment since September
> I'm betting on SSM to take me out of this dead wood




ROE,

May I suggest some charting to assist with your trading. As this sucker, cdr, bdg to name a few are all still trending down in most timeframes.

SevenFX


----------



## Pager (15 October 2007)

*Re: RHG - Rams Home Loans*



Pager said:


> My thoughts as well ROE
> 
> Had my punt this morning and bought 2000 at 32 cents, risk is $640.
> 
> wish me luck




Closed at 27 cents today so 5 cents or about 17% down already 

Bugger 

Cheers

Pager


----------



## ROE (15 October 2007)

*Re: RHG - Rams Home Loans*

Have fate .....it's always darkest before dawn 
or it's always darkest before pitch black  

.. I think RAMS is safe at  35 cents down unless they go belly up..

Their business model is flaw in that they borrow short term debt to fund long term .. but there is nothing stopping them from borrow long and lend it long..and that what I'm buying for and it may cost them a little more
even at making 5 cents a share instead of 15 cents in the prospectus
it's still a nice 15% dividend on 32 cents purchase.

Based on those facts  I prepare to wear the risk.


----------



## rogue_investor (15 October 2007)

*Re: RHG - Rams Home Loans*

It's going to take some real news to get this one moving... bit of buying this morning but that didn't last long...  I still think something is around the corner.. Fed rate cut perhaps?


----------



## roland (16 October 2007)

*Re: RHG - Rams Home Loans*

Big shift in RAMS depth, volume just picked up, now up 20% today. Anyone know if any news is iminent?


----------



## SevenFX (16 October 2007)

*Re: RHG - Rams Home Loans*



roland said:


> Big shift in RAMS depth, volume just picked up, now up 20% today. Anyone know if any news is iminent?




You beat me to posting by a few seconds roland.

I think 27c last night was rock bottom, hence the bounce and the change in sentiment, maybe even a gap up
in the morning, but early days yet 4 me.

ROE will be happy wherever he is...?????

SevenFX


----------



## roland (16 October 2007)

*Re: RHG - Rams Home Loans*

Well, got my eyes glued to the screen and gotta look after my huge $1,200 investment. If I pull now I may cover the brokerage


----------



## roland (16 October 2007)

*Re: RHG - Rams Home Loans*

There is certainly no shortage of sellers, but the buyers are pushing it along - may even get to .34 with any luck


----------



## jkool (16 October 2007)

*Re: RHG - Rams Home Loans*

Wow quite a volume today. With this speed the entire ownership base changes within about 2 weeks 

I guess at this point any remotely relevant half decent news is a good news for RHG stock which, at the sub 30c levels / share, seem to be valued quite irrationally indeed. If one considers only the initial WPC offer of $140mil (for the setup franchises and "future business" only) than from my counts we arrive at value of around 40c/share. And that is for only a part of RHG, not the whole shebang 

Now how much would anyone value 14.5bn of OZ home loans? Your guess is as good as mine but by any measurements if a financial institution can't achieve at least 0.5% return on capital it needs to be placed into the "worse than average financial services business" category.


----------



## brilliantmichael (16 October 2007)

*Re: RHG - Rams Home Loans*



> ...at the sub 30c levels / share, seem to be valued quite irrationally indeed. If one considers only the initial WPC offer of $140mil (for the setup franchises and "future business" only) than from my counts we arrive at value of around 40c/share. And that is for only a part of RHG, not the whole shebang...




Don't forget it might still _need_ that 140 million to cover liabilities elsewhere. The question remains: can anybody still place a valuation on RHG's balance sheet?


----------



## ROE (16 October 2007)

*Re: RHG - Rams Home Loans*



brilliantmichael said:


> Don't forget it might still _need_ that 140 million to cover liabilities elsewhere. The question remains: can anybody still place a valuation on RHG's balance sheet?





Well assuming Westpac grab got RHG franchise for $140M .. 
$136M will be wiped off RAMS corporate debt, that leave 4M in the coffer
with the loan book of 14bn and provided they don't go belly up RHG worth at least 40 cents, and you sure to get your money back at 35 cents in dividend
if the company trades well into the future.

that how I got into RHG at 32 cents, it seem crazy to most people at the time but I believe if it trades below 35 cent well in my opinion this stock is under value and the only reason the share price go so low is all the institution are offloading it creating lot down ward pressure on the price.
Now that all the institution is gone, there wont be the same massive effect 

I would said the same for CDR trading below 70 cents and given uncertainty in CDR and no one know what will happen I'm happy to make the same decision in another time in another place.


----------



## BHP (16 October 2007)

*Re: RHG - Rams Home Loans*



brilliantmichael said:


> Don't forget it might still _need_ that 140 million to cover liabilities elsewhere. The question remains: can anybody still place a valuation on RHG's balance sheet?




I am a newbie so not able to value the balance sheet. 

What I do know is a friend who used to work for a mortgate broker that they get 0.5% commission for bringing the lender a customer and 0.2% trailing commission.

So for a Bank or other lender to get $14 Billion in new business they would currently pay:

$14 Billion @ 0.5% = $70 Mill Sign on fee
$14 Billion @ 0.2% = $28 Mill trailing commission.

thats $98 Mill or 27 cents per share. Really though 3 years of trailing commission would be more like it which takes it up to 43 cents per share.

The $140 Mill from Westac would cover their debt so no extra value there unless someone else bids higher (still possible).

The buyer would get alot of new customers they could bundle with the home loan (credit cards, insurance, car loans .....) which is worth something.

Rams could always just increase the rates it charges. People will either pay up or refinance (and pay a juicy break fee).

Anyway thats my attempt to put some numbers to it. 

I bought a small parcel at 30 cents today as it started goin back up.

See how it goes.....


----------



## Awesomandy (16 October 2007)

*Re: RHG - Rams Home Loans*



BHP said:


> I bought a small parcel at 30 cents today as it started goin back up.
> 
> See how it goes.....




It has gone up 25% today, which I think is a little bit surprising given the latest US events. 

Either way, it's an interesting one to watch.


----------



## ROE (16 October 2007)

*Re: RHG - Rams Home Loans*



SevenFX said:


> You beat me to posting by a few seconds roland.
> 
> I think 27c last night was rock bottom, hence the bounce and the change in sentiment, maybe even a gap up
> in the morning, but early days yet 4 me.
> ...




I'm always happy making an inform investment decision and if I make a mistake well at least I gather all the information I can and resign to the fact the market is smarter than I am .... 
I dont go into RHG just for the hell of it I did some calculation and go over and over again and I come up with anything below 35 cents is a good buy

I take a punt because there will be always risk that I cannot account for and there is every possibility it could go under and I face capital lost but that part of risk and reward thing.

I do the same thing over again for any other stocks 

I'm not bailing out of RHG just yet because I think there are value left in it .. .. I have a figure in my head when I will bail


----------



## saichuen (16 October 2007)

*Re: RHG - Rams Home Loans*

I'm still a little confused here perhaps. Let's say if the Westpac deal gone through, that would leave RAMS only with the loan book and no potential of writing any new loans, right?. This essentially means there won't probably be any growth in the future. For this, is there a reason to buy into RAMS now?


----------



## ROE (16 October 2007)

*Re: RHG - Rams Home Loans*



saichuen said:


> I'm still a little confused here perhaps. Let's say if the Westpac deal gone through, that would leave RAMS only with the loan book and no potential of writing any new loans, right?. This essentially means there won't probably be any growth in the future. For this, is there a reason to buy into RAMS now?




Fairly easy calculation but by now mean perfect or 100% correct..
this is a bit of art and science.

with the loan book left, even if there is no prospect for grow it still earn you 
dividends and this may reduce over time when people paid out their loan but you are talking about 25-30 years loan that could potential deliver you a double digit dividends for at least 10-15 years.

so if you buy them cheap for instance 30 cents or 32 or 27 cents even, you get your money back in a no time and then ripped the future dividends. Price is the most important factor buying this stock based on those calculations.

on other bright side someone (a bank?) may buy out the loan book to get those existing clients and then refinance and sell them other products 
like investment loans when they half way paid off their loan etc..

Think outside the square 

that is pretty much my logic to get into it not because I'm a trader or chart readers

PS: I be voting against westpac if I still hold because I think it's a cheap deal and Westpac getting a bargain ....
how much does it cost Westpac to fit out 90 stores with Customers and a decent name ? a lot more than 140M I think

and with Australian Strong economy powering at the back I don't think RHG will have problem with funding and with people like citi want to start buying these mortgages debt to create liquidity it's all good news for RHG ... 
A couple weeks ago I think otherwise because of the subprime stuff but as each week go by a little more information pop out that pain a little brighter future for RHG.


----------



## roland (17 October 2007)

*Re: RHG - Rams Home Loans*

Looks like the market has taken the Westpac deal well. Up 5% already. Any thoughts on the upside value?


----------



## ROE (17 October 2007)

*Re: RHG - Rams Home Loans*

Now is a good time for someone to go in and trump Westpac offer as Westpac done all the hard work and verified RHG books look good


----------



## SevenFX (17 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> Now is a good time for someone to go in and trump Westpac offer as Westpac done all the hard work and verified RHG books look good




Perhaps give someone at McQuarrie a ring.... LOL :

$$$ ROE is in the money... $$$

Looks like she retouching the days highs..touch wood

Good Luck


----------



## Pager (17 October 2007)

*Re: RHG - Rams Home Loans*

Sold my 2000 parcel at 36 cents today bought at 32 cents, made a profit of $80 minus brokerage .

Its anyones bet as to what happens next, good luck to everyone else who still holds, you will either do very nicely or see your hard earned get flushed.


----------



## roland (17 October 2007)

*Re: RHG - Rams Home Loans*

Sold my 4000 at .37. bought at .305 - I'm happy enough with that......but then again, wait until it's .80 and see how happy I'll be


----------



## krisbarry (17 October 2007)

*Re: RHG - Rams Home Loans*

Does the threat of possibly up to 3 more interest rate rises over the coming  to 12 months hinder the share price?

Only specualtion, but the media suggest 0.75 basis point rise is on the cards


----------



## roland (17 October 2007)

*Re: RHG - Rams Home Loans*



Stop_the_clock said:


> Does the threat of possibly up to 3 more interest rate rises over the coming  to 12 months hinder the share price?
> 
> Only specualtion, but the media suggest 0.75 basis point rise is on the cards




Not sure, I suspect it would depend if you were to look at the assets being the loans or the value of the security for the loans. I suspect it is way undervalued right now.


----------



## jkool (17 October 2007)

*Re: RHG - Rams Home Loans*



Stop_the_clock said:


> Does the threat of possibly up to 3 more interest rate rises over the coming  to 12 months hinder the share price?
> 
> Only specualtion, but the media suggest 0.75 basis point rise is on the cards




I do not think OZ interest rises would have much of an impact to RHG profits as I would suspect for them to be passed onto the customers pretty much instantly. As long as RHG keeps its buy / sale interest margin same the outlook for profits (and future of the company) should not change much from where we stand today.

However it seems that most of the finance for RHG loans is sourced from US ie. with US interest rates lower than here I may even see an interest rise in OZ a moderately good news for RHG's profits. 

But than there is this whole "US credit crunch" saga which I do not really comprehend that much. Anyone cares to explain?

Cheers


----------



## ROE (17 October 2007)

*Re: RHG - Rams Home Loans*



Stop_the_clock said:


> Does the threat of possibly up to 3 more interest rate rises over the coming  to 12 months hinder the share price?
> 
> Only specualtion, but the media suggest 0.75 basis point rise is on the cards




This information doesn't bother me as these are all speculations and there is no real evident or concrete information to support a 100% certainty. It can go in any direction.

This information I can take into account but it's not the basis I would use to buy or sell something until such time it became apparent.

This information is just as good as prediction of bull/bear market or correction in the market.


----------



## ROE (17 October 2007)

*Re: RHG - Rams Home Loans*



roland said:


> Sold my 4000 at .37. bought at .305 - I'm happy enough with that......but then again, wait until it's .80 and see how happy I'll be




Still hold I'm not really worry about the share price movement in a short term
but up is always better than down and it give you an option to get out without capital lost but If RAMS can trades well into the future and offer me double digit dividends for many years to come I'm more content with it and if it go too far up to a point where I see a benefit of selling out rather than getting the dividends I will and it not at that point yet 

you nervous punters all sold out *joking*


----------



## ROE (17 October 2007)

*Re: RHG - Rams Home Loans*



jkool said:


> I do not think OZ interest rises would have much of an impact to RHG profits as I would suspect for them to be passed onto the customers pretty much instantly. As long as RHG keeps its buy / sale interest margin same the outlook for profits (and future of the company) should not change much from where we stand today.
> 
> However it seems that most of the finance for RHG loans is sourced from US ie. with US interest rates lower than here I may even see an interest rise in OZ a moderately good news for RHG's profits.
> 
> ...




Do a google on XCP extendible commercial paper, understand that and you understand RAMS 6.4Bn problem and it doesn't sound as scary as people made it out to be 

a quick run down US credit crunch is essentially in the instrument called collateralized debt obligations (CDO) again a google here will be better than myself repeating all the same stuff.

they essential package these mortgages debt and sell it to who ever want it and pass on the debt obligation, so the buyers wear the risk
and it pass around like hot potatoes..no longer my problem, it's your now.
and when people cant afford to pay back their mortgage it could end up
to the dudes some where in Australia/Europe who bought it and they wear the bad debt 

that how Mac Bank Fortress Fund got burned here , they expose to this stuff ..


----------



## BSD (17 October 2007)

*Re: RHG - Rams Home Loans*

Dividends???

The value in this play is its value to a well financed white knight. 

As a going concern under the current business model, the value is positive at best - but to a superior funded company, the loan book (and future) could be worth well in excess of current prices.


----------



## YELNATS (17 October 2007)

*Re: RHG - Rams Home Loans*



jkool said:


> I do not think OZ interest rises would have much of an impact to RHG profits as I would suspect for them to be passed onto the customers pretty much instantly.




This presumably would depend on the extent that existing customers have taken out fixed interest rate loans with RAMS. Do we have any idea what percentage of the RAMS loan book is at fixed interest rates, at what weighted average interest rate and for what remaining weighted average period?

[/QUOTE]
However it seems that most of the finance for RHG loans is sourced from US ie. with US interest rates lower than here I may even see an interest rise in OZ a moderately good news for RHG's profits. 
Cheers[/QUOTE]

This benefit may be moderated by further strengthening of the A$ vis-a-vis the US$ which could result from any increasing difference in interest rates between Australia and the US.


----------



## roland (17 October 2007)

*Re: RHG - Rams Home Loans*

There is no doubt in my mind that RAMS is a great buy at this price. I sold because I have played this on short term percentage target. I think that there is enough volume and daily transients to play short term percentages without much risk of being caught holding a dead stock.

Just my chosen trading style for this stock.

I would agree with sentiment that RAMS is also to be considered for long term gain - hey Westpac thinks so too....


----------



## ROE (18 October 2007)

*Re: RHG - Rams Home Loans*



Pager said:


> Sold my 2000 parcel at 36 cents today bought at 32 cents, made a profit of $80 minus brokerage .
> 
> Its anyones bet as to what happens next, good luck to everyone else who still holds, you will either do very nicely or see your hard earned get flushed.




Not sure why you want to do this but buy a couple hundred bucks of shares is not good move as brokerage takes a large percentage of your capital.
you pay a few percentage point for every trade and that is very very expensive..
that is if the shares is going up, if it go down and you have to sell it a double whamming ...

you may need to reconsider your minimum parcel, just my 2 cents.


----------



## nioka (18 October 2007)

*Re: RHG - Rams Home Loans*



roland said:


> .I would agree with sentiment that RAMS is also to be considered for long term gain - hey Westpac thinks so too....




Are you sure westpac thinks Rams are considered for long term gain. Remember Westpac is buying( or trying to buy) only a portion of the business ( the best part). RHG will be left with the part Westpac obviously do not want. The payment RHG would get from westpac would mostly be used to retire debt. The question is " will RHG be able to profit from the existing mortgage loans."


----------



## brilliantmichael (18 October 2007)

*Re: RHG - Rams Home Loans*

Agreed. And there must be a reason why RAMS had _no choice_ but to accept such a cheap offer. I don't thinkit would have sold its main revenue generators on the cheap if _it didn't have too_.

If the share price goes above the $140 million market-cap level, then for some reason the market thinks RHG can utilize that cash to fix up their balance sheet and become net-profitable again.

Too little information still i.m.o., plus the management, and more importantly, the business, doesn't have a track record.

A punting stock still if you ask me. Just risk your market-speculating money on it.


----------



## roland (18 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> Not sure why you want to do this but buy a couple hundred bucks of shares is not good move as brokerage takes a large percentage of your capital.
> you pay a few percentage point for every trade and that is very very expensive..
> that is if the shares is going up, if it go down and you have to sell it a double whamming ...
> 
> you may need to reconsider your minimum parcel, just my 2 cents.




Yes, I would agree, but in Pager's defence, I would say any trade that results in a gain is a good trade. I would suspect that Pager wasn't entirely committed to the transaction, went in light out of impulse for a quick gain and got out quick with a profit - suggests a bit of inexperience, but a successful (albeit very small) gain.

Having said that, I would agree with Roe, it probably would be better to apply some maths and calculate the return on investment, brokerage is a real bugger and makes a big difference on low value trades.


----------



## roland (18 October 2007)

*Re: RHG - Rams Home Loans*



nioka said:


> Are you sure westpac thinks Rams are considered for long term gain. Remember Westpac is buying( or trying to buy) only a portion of the business ( the best part). RHG will be left with the part Westpac obviously do not want. The payment RHG would get from westpac would mostly be used to retire debt. The question is " will RHG be able to profit from the existing mortgage loans."




Point taken, and obviously you know more about the ins and outs of the details of the Westpac deal than I do. 

I would suggest that market perception of Westpac's confidence would support a medium term SP improvement. In my opinion, there are far more emotional traders than technical traders.


----------



## Pager (18 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> Not sure why you want to do this but buy a couple hundred bucks of shares is not good move as brokerage takes a large percentage of your capital.
> you pay a few percentage point for every trade and that is very very expensive..
> that is if the shares is going up, if it go down and you have to sell it a double whamming ...
> 
> you may need to reconsider your minimum parcel, just my 2 cents.




Im not a stock trader rather investor, bought RHG on the spur of the moment for a bit of excitment, then reality set in, no plan, no idea and i realised WTF am i doing , so i got out .

I trade futures for a living and it doesnt matter if your risking $100 or $10,000 its all money and none of it not even $1 is worth throwing away on a punt.

Good luck to everyone who believes its got plenty of upside, hope your right and you make a few $$$$.


----------



## nioka (18 October 2007)

*Re: RHG - Rams Home Loans*

Consider this senario. Rams directors can not continue to allow the company to trade if they have any doubts that they can meet their commitments if and when they fall due. This would happen if they do not find lenders to refinance loans. The company would then go into recievership and trading in shares would cease. This may not be all bad as the receivers may be able to trade the company through to returned profitability with a moratorium on immediate debt repayments.
 Now I'm not suggesting this will happen because I'm not privy to the state of their finances and this is one of the worse case senarios. However if it was to occur there would be no notice giving a chance to exit and it could be some time before the shares would be traded.
 Those thinking of making a quick buck day trading this stock should take this into consideration.


----------



## jkool (20 October 2007)

*Re: RHG - Rams Home Loans*

It seems that even the smart folk over at Intelligent Investor mag see RHG as a great value at "thirtycents-something" levels. Here is the relevant part of their newsletter I have been subscribed for a while (of course they have not forgotten to plug in their subscription/paid report links  ):



> RAMS share price is down 86% since its $2.50 float just a few months ago. Most people wouldn’t touch it with a barge pole. It’s too risky, right?
> 
> Wrong. This stock was risky at $2.50, but at thirty-something cents we think there’s far less risk. Are we mad calling RAMS a buy when everyone is running scared?
> 
> ...




I wonder if anyone has read that particular RHG report as I think at $99 its pretty costly considering all the known info is already out there.


----------



## Pager (20 October 2007)

*Re: RHG - Rams Home Loans*

$99 for a report on RAM, s , get a couple of hundred takers and that’s nearly $20K, not bad for a few hours work writing the report.

Be interested to know what sort of valuation they have on it and price target, if they get it even half right they will be crowing about it for months/years to come.

It could well double but could well lose another 50%, be interesting to see what Monday brings although I wouldn’t be surprised to see it make new lows before or if it turns around.

 A high risk punt at best, those in it will either kiss goodbye to there hard earned or get a very handsome return.


----------



## krisbarry (20 October 2007)

*Re: RHG - Rams Home Loans*

Well lets just see how Intelligent Investor explain the dump again in the US overnight and more sub-prime woes on thier way, not to mention the possibilty of a further 2 interest rate rises in OZ over the coming months.  Surely RHG will be punished again come Monday.  This is really high risk investing to say the least.

My mum just got a silent half a percentage point increase on her loan, (She is not with RHG but another low doc lender) wonder how many Rams Home Loan morgagtes went up by half a percent too.

The credit cycle is tightening like a vice over my head...

DEFFAULT HOME LOANS DONE DIRT CHEAP....OUCH!:


----------



## jkool (20 October 2007)

*Re: RHG - Rams Home Loans*

I still don't understand the RHG business concept 100% but I could see a reasonable value in holding a book of 14.5bn of quality mortgages + pretty decent franchise looking forward (the part WPC is after) per se.

Surely a well funded financial institution could squeeze at least 0.5%pa return on those existing mortgages for at least couple of years to come + benefit from the existing established mortgage franchises by getting some new mortgages behind their belt. 

0.5% of 14.5bn is about 72mln. a year ie. about 20c/share omitting the future years' earnings (however dismal they may be) and a network of about 90+ established retail locations. 

So I do see where Intel Investor is probably coming from BUT would not fork $99 for it 

Another question nobody seems to raise pops in mind though: How come RHG was even allowed to float at $2.50? I mean don't we have any kind of shareholders protection watchdog/office to oversee the IPO levels? Or can anyone with a fish and chip joint pay seasoned marketeers to create a buzz and than float at whatever level he/she feels like? Surely the levels needs to be somehow tied up to the balance sheet and past performance.

PS. 
In case you wonder I have not participated in this IPO but if I was in shoes of those who did (and perhaps haven't done their due diligence on this stock) I would feel cheated out of my money by greedy RHG management (do they still hold this stock or sold out shortly after float?) and whoever was responsible for this IPO.


----------



## qr2007 (20 October 2007)

*Re: RHG - Rams Home Loans*

Hi All,

Think of positive way, RAMS can always pass its cost to customers by increasing rate. If customers cant repay the loan then they go for default, RAMS would sell the assets/collaterals to recover its money. RAMS can easily force the customers to go default before it goes bankrupcy.

Surely the total assets of RAMS would worth more than 0.40/share
Good luck to all RHG shareholders. What a bargain stock!!!!

cheers


----------



## nioka (20 October 2007)

*Re: RHG - Rams Home Loans*



qr2007 said:


> Hi All,
> 
> Think of positive way, RAMS can always pass its cost to customers by increasing rate. If customers cant repay the loan then they go for default, RAMS would sell the assets/collaterals to recover its money. RAMS can easily force the customers to go default before it goes bankrupcy.
> 
> ...




The big question is whether or not Rams can refinance their short term debt at a rate that can be passed on or even if they can finance it at all. At this stage I suggest that the Rams directors may be stalling for time and hoping to be able to do just that. If they can it is a bargain stock. If they don't then it may be worth zilch. That may not be thinking positive but it is looking at the possibilities. I hate to invest my money where I can not see that a positive outlook is a high probability. I am still watching this one closely.


----------



## Mofra (20 October 2007)

*Re: RHG - Rams Home Loans*



jkool said:


> Now how much would anyone value 14.5bn of OZ home loans? Your guess is as good as mine but by any measurements if a financial institution can't achieve at least 0.5% return on capital it needs to be placed into the "worse than average financial services business" category.



No lender in the country is making 0.5% return of its resi mortgage loan book (excluding reverse mortgages in isolation).
Most major banks write loans at a loss (to later cross sell profitable products) and have large deposit bases to place loans on balance sheet, so funding issues are not as severe as they can be patient and ride out any short term treasury issues. RAMs have neither this luxury, or the real leverage available to many other large financial instiutions to corss sell profitable business off the back end of it's loan book.

It may turn around in a hurry, but there the old TA adage "picking bottoms leads to smelly fingers".


----------



## ROE (21 October 2007)

*Re: RHG - Rams Home Loans*



Mofra said:


> No lender in the country is making 0.5% return of its resi mortgage loan book (excluding reverse mortgages in isolation).
> Most major banks write loans at a loss (to later cross sell profitable products) and have large deposit bases to place loans on balance sheet, so funding issues are not as severe as they can be patient and ride out any short term treasury issues. RAMs have neither this luxury, or the real leverage available to many other large financial instiutions to corss sell profitable business off the back end of it's loan book.
> 
> It may turn around in a hurry, but there the old TA adage "picking bottoms leads to smelly fingers".




I don't think most banks write loan at a lost ... Most major banks make lot of profit on loan book, take CBA for instance

Interest Income:  23 862 Mil
Interest Expense: 16 823 Mil

That is a healthy number if you ask me, it wont be just housing but all form of borrowing... they take cheap deposit from you and I and lend it out at market
rate. but that got nothing to do with RAMS  and RAMS could be worse but for a company that survive a decade long I some how doubt this little trouble could put it in its resting place but then again it just my opinion.

Put the number crunching a side I tell another story from another place that actually fit into this situation pretty well..

I don't know if anyone hold FLT stocks here but I do, I bought in around 11-11.50 when it was trading at 11-13 bucks..the private equity come along and paint a very bad pictures for the company ..increase competition from all
sides, reduce margin from Qantas etc... this is a perfect opportunity for us to buy you out at $17, we pay a nice premium for it.
some how the management convince that FLT is going through a rough time
and need to take it off the market for short term pain for long term gain and recommend everyone take up the offer.. .one thing lead to another and the offer got rejected by the shareholders... they come back with another offer shortly after and again this time the management got independent report and found the offer was way under value and reject the offer once again..it now trading at $24 and the pictures is a very bright sun ray for FLT now, one announcement after another with record profit and increase revenues...all this happen in a space of 12 months 

how is this apply to RAMS?..well Westpac can use the same story and pain a very bad pictures with the credit market and offer all the senior management jobs at westpac...why else the management would not accept the offer?
they have everything to gain and nothing to lose. 

I'm a little more skeptical with Westpac offer and I will surely have my little say and reject it. RAMS may not be a bright star like FLT but I dont think it's that bad as people make it out to be especially at 35 cents stock...
at $2.50 I definitely avoid but at this price I couldn't help but buy 

Amen


----------



## Mofra (21 October 2007)

*Re: RHG - Rams Home Loans*



ROE said:


> I don't think most banks write loan at a lost ... Most major banks make lot of profit on loan book, take CBA for instance
> 
> Interest Income:  23 862 Mil
> Interest Expense: 16 823 Mil



Howdy ROE,

I'm only talking about the mortgage loan book - many other structured lending products have customer margins included on top of the cost of funds - mortgages don't as they are viewed as virtual retail loss leaders. Yes, deposit holding organisations use these deposits to lend, however a surprising level (even of our "4 pillars") actively seek to securitise as much of their loan books as possible.

As far as RHG bouncing, there may well be some bounces along the way, however as we progress into the AIMS reset season funding a securitised lender 100% via CDOs & SD is going to get more difficult, not easier. Industry buzz paints a grim picture for lenders who are not tightening their belts now - and most mortgage industry investers avoided RAMs simply because they had spent 12-18 months, in an obvious fasion, writing unprofitable business to boost their loan book for the IPO.


----------



## jkool (22 October 2007)

*Re: RHG - Rams Home Loans*



Mofra said:


> No lender in the country is making 0.5% return of its resi mortgage loan book (excluding reverse mortgages in isolation).
> Most major banks write loans at a loss....




I find that really hard to believe. Would you pls be able to provide some fact/resources supporting this claim?

From my ingenius consideration I go by the fact that simple re-lending of the credited term deposits and/or (into certain degree) everyday account balances on which the banks pay max. about 7%pa interest these days should produce a gross margin of about 1%+ (counting the current mortgage rates being about 8%+pa). 

Of course you may argue that bank does not have sufficient own "cheap funds" (ie. own term and other deposits) hence may need to fund the mortgages from "outside sources". But even than I see that the interbanking LIBOR rates stand at around 5-5.5% this year. So underwriting a loan for retail rate of 8%+ still leaves some handsome profits on the table doesn't it?

I understand RAMS used shorter term or less than standard processes to finance their loans which is where the troubles start.


----------



## jkool (22 October 2007)

*Re: RHG - Rams Home Loans*

To my last entry (cant edit it now ):

Perhaps more accurately reflect the potential profit margin the 90days bill swap rate should have been used; it is still around 6.90% vs. 8%+ variable interest on retail mortgages. 

Keep in mind though that a large financial institution should have enough of its own "cheaper" deposits to rarely use this more expensive inter-banking market.


----------



## Mofra (22 October 2007)

*Re: RHG - Rams Home Loans*



jkool said:


> I find that really hard to believe. Would you pls be able to provide some fact/resources supporting this claim?
> 
> From my ingenius consideration I go by the fact that simple re-lending of the credited term deposits and/or (into certain degree) everyday account balances on which the banks pay max. about 7%pa interest these days should produce a gross margin of about 1%+ (counting the current mortgage rates being about 8%+pa).



jkool,

I work in the industry (and have done so for a number of years) and it is common knowledge amongst pricing people that major banks write unprofitable business to leverage into other products (which is why discounts are offered with _package_ incentives).
Most profitable securitised lenders (which don't have the luxury of writing non-profitable business) are looking at a 0.3-0.35% margins across their loan books.

Going by your figures, out of the 1% (although source funds are often cheaper) are loan management fees, compliance, default management, loan maintenance (including statements) and often an upfront & trailing commisions to the originators. Profits are wafer thin on massive volume industry wide.


----------



## ROE (22 October 2007)

*Re: RHG - Rams Home Loans*



Mofra said:


> jkool,
> 
> I work in the industry (and have done so for a number of years) and it is common knowledge amongst pricing people that major banks write unprofitable business to leverage into other products (which is why discounts are offered with _package_ incentives).
> Most profitable securitised lenders (which don't have the luxury of writing non-profitable business) are looking at a 0.3-0.35% margins across their loan books.
> ...




It's better if you can provide some hard facts that most bank write home loan at a lost as oppose to I work in the Industry...

I cant seem to find this information any where in any annual reports that said most banks write home loans at a loss ... hmm...
and I cant recall any recent banks announcement/speech that they are writing loans as a loss but make up the profit from elsewhere....if this information is true, it sure need to be disclosed to the market.

Consider Warren Buffett wants to buy into Country Wide which is an American largest residential mortgage company during this crisis time.. I find it hard Warren see these guys writing loan at a lost..


----------



## Rainmaker2000 (23 October 2007)

*Re: RHG - Rams Home Loans*

ROE's scepticism seems warranted on this point....no doubt, like any large business, major banks wear losses on some products to build market share and competency in other products.....for example, BankWest (Owned by Forein Bank) entered the Aussie market with its ING Saver competitor with a deliberate view to making losses on every deposit..........so much so that professional arbitrages moved in hurting BankWest badly and thus BankWest limiting the deal to $1 million or less to each account holder.........ironically, BankWest was loss leading to build up its home loan presence.......my understanding is that homeloans are the bread and butter of banking.....everytime you walk in its, oh you are renting, 'have you ever thought of buying a home' (at 7 X average Aussie income!!!who would be buying houses now, anyway.....)  I would find it very hard to believe banks loss lead on homeloans...of course percentage spreads have narrowed majorly over the last few decades, but have more than been replaced with the rivers of bank fees payed by ignorant Aussie punters.....


----------



## jkool (23 October 2007)

*Re: RHG - Rams Home Loans*

Ok I looked around and actually did find ONE article which seems to somewhat weakly support the "banks underwrite mortgages at loss" claim.

I am not sure how credible is this source (heck I could write my own report on my blog claiming how great the future for RAMS is going to be  ) since no other known major media outlet seemed to catch on this story so far. Anyway you be the judge:

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=B61911F4-17A4-1130-F5FFE198970EE93A

Even than, from what I read, its only put as "some JP Morgan analysts believes that some smaller non banking lenders may...". In my eyes this is still quite a long shot from 100% trustworthy fact. 

But our argument aside, the above is a very informative article with high educational value for the unaware ones.

And above all: Selling a product deliberately long term below cost in order to sink the competition (sounds like something WOW or CGJ would do  ) sounds quite dodgy business practice indeed. I have read few articles in the past (mostly from US as far as I can recall) of this practice being unlawful. Dumping or something? Anyone?


----------



## jkool (23 October 2007)

*Re: RHG - Rams Home Loans*



Mofra said:


> jkool,
> 
> I work in the industry (and have done so for a number of years) and it is common knowledge amongst pricing people that major banks write unprofitable business to leverage into other products (which is why discounts are offered with _package_ incentives).
> Most profitable securitised lenders (which don't have the luxury of writing non-profitable business) are looking at a 0.3-0.35% margins across their loan books.
> ...




Mofra:

I respect your opinion, even more so if you have, as you say, been working in the industry for some years now. But from what you say I fail to understand why would that be the case (constantly subscribing mortgages at loss).

Even my oversimplified number crunching (and imho with large adjustments made to accommodate the inevitable errors) is pointing me to the conclusions I have extensively described in my previous essays here  .

If it is not too much of a hassle pls throw at me some numbers. Show me a real life mortgage example how your (or any of the big banks) exactly goes from sourcing the money for x%, pays commissions and what have you of y%, retails the mortgage at z% and arrives to loss.

Thanks in advance


----------



## jia (23 October 2007)

*Re: RHG - Rams Home Loans*

i searched about RHG at westpac broking size, according to their data, rhg total asset is 13,043 mil, and total liabilities is 12,902. so the net asset is 141 mil, divide by their issued share 354 mil, it works out the RHG share is worth 39.8 cents, which is minium, i think. can anyone tell why their share only trade at about 34 cents?


----------



## Rainmaker2000 (23 October 2007)

*Re: RHG - Rams Home Loans*

Interesting points Jcool......I'll just put my competition lawyer hat on and confirm to you that selling a product below cost is a breach of Section 46 of the Trade Practices act where it amounts to 'predatory pricing'........the courts are of course weak as piss in enforcing the provision cause they don't understand it but suffice to say that the Woolworths of this world have all kind of justification for the conduct...eg. I was just building market share (as if that justfies being anti-competitive).......the reason why its anti-competitive is that the whole point of selling below cost is so that sometime in the future you can charge higher prices than you otherwise would have been able to, without a competitive tension


----------



## waz (23 October 2007)

*Re: RHG - Rams Home Loans*

Wouldnt the liabilities be a fixed number, especially if the company is not doing anything new.

whereas the assets fluctuate on a daily basis, certainly this is the case for finance company, the assets arnt exactly tables/chairs and office equipment.

The problem with financial companies is who determines the value of the assets???

The example you have provided is similar to MIG. Going by your assets - liabilities, shouldn't MIG be worth about $3.70??

No, it is lower than that, thats because not everyone believes everything the read in the MIG annual report.


----------



## nioka (24 October 2007)

*Re: RHG - Rams Home Loans*



waz said:


> Wouldnt the liabilities be a fixed number, especially if the company is not doing anything new..




Have you thought of compounding interest and penalty interest rates if they can't refinance on time?


----------



## jkool (26 October 2007)

*Re: RHG - Rams Home Loans*

Finally some further info from this struggler. 

As I skimmed through its today's releases I noticed few keypoints:
- Delloite (ie. independent valuer) appraises this company (on "AFTER the pending sale to Westpac" basis) at between 60c-77c/share if the short term borrowings are sucessfully refinanced. If not than they still see the value around 35c-44c as far as I can recall. 

- Delloite also advised that the Westpac offer of 140mil for the 90+ franchises, setup brand and future business is in higher range of their evaluation (they put the value on it around 38-165mil from memory) BUT also pointed out that to a strategic partner/purchaser the value would be substantially more!

- To my surprise it appears that the RHG management has not entirely abandoned the ship and today release still states their rather significant shareholdings. They (the managers) also intend to approve the sale to Wespac and recommend the same to all the other shareholders. The future without Westpac (and its, to the sucessfull purchase tied up, promise of large funding) is being painted out fairly bleak. 

- The condition of Westpac transaction states that RHG is not permitted to onsell any new loans for the period of 3 years only (not forever!).

So where to from here? I guess it wont be the easiest task to refinance come 6+bn of loans at profitable margins however once/if that is mastered by the current management than we may yet see some spectacular turnover for this struggling stock.

And yes there still remains a rather big "speculative factor" in this stock in an expectation of a competitive bid from another "strategic financier/savior" in the near future. Exciting ain't it?


----------



## Stan 101 (5 November 2007)

*Re: RHG - Rams Home Loans*

I've just started reading about RAMS and if I'm correct, WBC is offering 140million for branding (essentially) and the shop fronts. This does not include the franchises. This will pay out existing debt and have leave 10 million or so left over.
WBC will also agree to fund partial further 6bn outstanding debt of RAMS.

-There will be no return of capital to the investor 
-There is still no solid guarantee finance for the outstanding 6bn will happen
-What is left of RAMS is to be renamed and marketed yet cannot sell a loan for a period of three years.
- The franchises are left to do what?


Pretty tight odds of it all coming together and painting a rosy picture...

Be interesting to see the outcome


----------



## blaze87 (6 November 2007)

*Re: RHG - Rams Home Loans*

does anyone knows what's stopping the warehouse facilities from pulling the plug on RHG? would really appreciate all comments regarding this


----------



## nioka (6 November 2007)

*Re: RHG - Rams Home Loans*



blaze87 said:


> does anyone knows what's stopping the warehouse facilities from pulling the plug on RHG? would really appreciate all comments regarding this




My guess is that if the plug was pulled the company would be placed under the management of a receiver who would try and trade through the tough period and given a temporary moratorium on loan repayments. Possibly a good thing for shareholders.


----------



## ROE (7 November 2007)

*Re: RHG - Rams Home Loans*



blaze87 said:


> does anyone knows what's stopping the warehouse facilities from pulling the plug on RHG? would really appreciate all comments regarding this




I find it illogical for them to do so .. why would you pull the plug on someone when they can meet their repayment. 

Making such move not only you risk your dividend repayment but your capital as well.

would the bank force you to repay your mortgage if you can meet repayment?
of course not, they only doing after you go into default because they know
making such move there is no winner.


----------



## blaze87 (7 November 2007)

*Re: RHG - Rams Home Loans*

So the general consenus is that the warehouse facilities will most likely be renewed come Nov 15?
If that is so, I see no funding problem in the short-term.


----------



## SevenFX (22 November 2007)

*Re: RHG - Rams Home Loans*

Ouch....RHG down to 21c on morning Selloff

Fallen fair way from $2.50 to 21c in few short months.... who would have thought.

SevenFX


----------



## YOUNG_TRADER (22 November 2007)

*Re: RHG - Rams Home Loans*



SevenFX said:


> Ouch....RHG down to 21c on morning Selloff
> 
> Fallen fair way from $2.50 to 21c in few short months.... who would have thought.
> 
> SevenFX




Crazy!!!!!

I read an article that said the founder could buy back the 75% (or whatever) he sold off to the Insto's with like 15% of the funds he recieved,

Crazy!!!!!!!!!!!!!!


----------



## SevenFX (22 November 2007)

*Re: RHG - Rams Home Loans*

Who is the founder YT and does he take a active role in running the company...???? Is the a link to that article or is it in paper..

Have heads already rolled or will/is there a class action against them...

I also notice there still advertising on the BOX...

SevenFX


----------



## ROE (22 November 2007)

*Re: RHG - Rams Home Loans*

look like written off this stocks for the year 
down a fair bit since 32 cents ... I want my 10 cents dividend next year


----------



## greggy (22 November 2007)

*Re: RHG - Rams Home Loans*



SevenFX said:


> Who is the founder YT and does he take a active role in running the company...???? Is the a link to that article or is it in paper..
> 
> Have heads already rolled or will/is there a class action against them...
> 
> ...



I became wary of this company when I realised that its founder had sold such a large stake into the IPO.  He would have known the company best and extracted an excellent price for the bulk of his holding.
It goes to show that risk works both ways when playing the market.
DYOR


----------



## Rainmaker2000 (22 November 2007)

*Re: RHG - Rams Home Loans*

You guys might remember the struggle the founder had with private equity to get them to pay top dollar............after many months, private equity would not pay what they wanted for RAMS and so opted to float it to ignorant Aussie retirees instead...........

I think we can all learn something from this one and I urge you to go back and read the prospectus to see what a credible case they made for investing..............funny thing is, RAMS was not just floated at market prices.....it was floated at a premium price to almost any other home lender....they did a great job at fleecing Aussies just wanting to go along for the boom ride


----------



## jkool (23 November 2007)

*Re: RHG - Rams Home Loans*



Rainmaker2000 said:


> You guys might remember the struggle the founder had with private equity to get them to pay top dollar............after many months, private equity would not pay what they wanted for RAMS and so opted to float it to ignorant Aussie retirees instead...........
> 
> I think we can all learn something from this one and I urge you to go back and read the prospectus to see what a credible case they made for investing..............funny thing is, RAMS was not just floated at market prices.....it was floated at a premium price to almost any other home lender....they did a great job at fleecing Aussies just wanting to go along for the boom ride




I tend to agree. IMHO to float at such a level should have never been allowed. 

Looking forward though there seems to be again some positive news poppin up here and there, for instance http://online.wsj.com/article/SB119568559791401058.html?mod=googlenews_wsj 
suggests bigger NAB's involvement which could sort things out once and for all perhaps. NAB does have some of the deepest pockets around if I am not mistaken.

RHG also ending 6.8% higher for the day. I think Monday meeting will give much stronger lead as far as long(ish) term future is concerned.


----------



## Gurgler (27 November 2007)

*Re: RHG - Rams Home Loans*

A 25% recovery yesterday - but will it hold? One can only hope that those shareholders do.

This from today's Age:

*Small flock OKs Rams' final fleecing
Email Print Normal font Large font AdvertisementAdvertisementDanny John 
November 27, 2007 

THEY arrived and left as gentle as lambs. Herded into a Sydney conference room and shorn of almost all value, Rams shareholders handed over the best-known part of the briefly listed mortgage lender without a bleat of anger or protest.

Resigned to the inevitable that nobody but Westpac wanted a business that had been crunched so hard by the global liquidity crisis, investors voted by almost 12-1 to sell the brand and its franchise operations.

Of the four resolutions put to the 100 or so shareholders who bothered to turn up, chairman and founder John Kinghorn said the saddest was that authorising a change in the company's name from Rams to RHG Group.

As the company's biggest shareholder with 20%, even after selling down $650 million worth of stock before listing just four months ago, he was duty bound to vote in favour given the lock-in terms to which he and Rams' directors had agreed as part of the deal with Westpac.

Neither did he nor his band of small and institutional investors have any choice but to say yes to Westpac's offer of $140 million for the main business given his own startling admission to the meeting that Rams was "no longer a going concern". It was the closest Rams came in three months of trying but failing to refinance $6 billion of loans from global credit markets to accepting publicly that it was a business in name only. Now it doesn't even have that.

Mr Kinghorn remained hopeful that its attempts to replace its once-cheap sources of borrowings with new debt would eventually succeed, albeit at a much higher cost, which would eat into what profits it had left.

"It is inconceivable that the (credit) markets will be closed forever," he said.

Rams shareholders at this point will get virtually nothing from Westpac's $140 million and only a promise of a full distribution of any surplus cash from the run-down of Rams' remaining $14 billion mortgage book.

They, of course, can sell their shares. However, at yesterday's closing price of 29.5 ¢, those investors who bought in at $2.50 at the end of July face an 88% loss on their investment.

But not even that was enough to prompt a despairing question or comment about shareholder value from the floor.

Mercifully, for Mr Kinghorn and his fellow directors, it was all over in half an hour flat. And flat basically summed up the mood and RHG's immediate prospects.*

(Disclosure - holding long term as highly speculative)


----------



## KevyK (6 December 2007)

*Re: RHG - Rams Home Loans*

Looks to me like the day traders have moved in on this one. High risk IMO. Could see a sharp reversal back to about 30ish when the next bit of bad news to do with the subprime mess surfaces. I think that RHG are still in the process of tying up the $6billion credit facility, which is not guaranteed either, on top of that, they extended a $500mil warehouse facility which now matures Dec31. Still a rocky road to go for this IMHO.


----------



## ROE (7 December 2007)

*Re: RHG - Rams Home Loans*

sold out yesterday  second time lucky with RHG 
Come back in if it hit 30 or below and looking for third time lucky


----------



## Treloarasaurus (7 December 2007)

*Re: RHG - Rams Home Loans*

I bought in at .35 a month ago. Was a nervous month so got out at .375 yesterday. Was pretty stoked with that after touching .215 a couple of weeks ago.


----------



## ROE (7 December 2007)

*Re: RHG - Rams Home Loans*

This stock has real value but it will never trade no where near the level most people value it for like 45-60 cents due to there is no prospect of increase earning... they just run down the loan book so you have to factor in some fats
and buy them at 30 cents or below so if **** happen you can break even from first few dividend payment ..

I wouldn't touch it above 35 cents


----------



## ROE (8 February 2008)

*Re: RHG - Rams Home Loans*

Awesome announcement by RHG today, the management doing a good job and all the hard work has been paid off and current holder may get some double digit dividends soon


----------



## SevenFX (7 June 2008)

*Re: RHG - Rams Home Loans*



ROE said:


> This stock has real value but it will never trade no where near the level most people value it for like 45-60 cents
> 
> buy them at 30 cents or below so if **** happen you can break even from first few dividend payment ..
> 
> I wouldn't touch it above 35 cents




Wow haven't looked at this one for months and to see it trade below 8c is a real shock....considering it floated at around $2.50.


----------



## YELNATS (23 July 2008)

*Re: RHG - Rams Home Loans*

Massive 86% price rise today on a massive volume of 22 million in response to last evening's full year unaudited profit result.

Quote
RHG Limited (previously known as RAMS Home Loans Group Limited) has today announced an unaudited consolidated profit after tax for the year ended 30 June 2008 of $124 million.
Unquote

Plus they will be buying back 10% of issued capital over the next 12 months.

Could we looking at some sort of a comeback for the old RAMS to previous levels?


----------



## Kremmen (19 May 2009)

*Re: RHG - Rams Home Loans*



SevenFX said:


> Wow haven't looked at this one for months and to see it trade below 8c is a real shock....considering it floated at around $2.50.




The real shock to me is that  nobody here has been following its massive rise since that time. Trading over 40c now. Massive opportunity over the last 12 months.


----------



## persistentone (19 June 2009)

*Re: RHG - Rams Home Loans*



Kremmen said:


> The real shock to me is that  nobody here has been following its massive rise since that time. Trading over 40c now. Massive opportunity over the last 12 months.




I agree this is pretty strange no one has been tracking this in discussions.

It looks to me like a substantial part of the rise of RHG is attributable to the company's own share buybacks, combined with the fact that no one would short them at these levels.    Can someone tell me how many shares are remaining in the buyback?


----------



## persistentone (22 June 2009)

*Re: RHG - Rams Home Loans*

Has anyone done a worst case calculation of what the impact will be to RHG if it loses the legal battle it has with a noteholder of one of its securitization vehicles?


----------



## persistentone (22 June 2009)

*Re: RHG Ltd*

Maybe it is time to remove Rams Home Loans from the title of this thread, because RHG sold that entity a while ago and the remaining entity RHG Ltd is NOT affiliated with Rams Home Loans at this point.


----------



## So_Cynical (14 January 2010)

*Re: RHG - Rams Home Loans*

Trading at around 55 cents now, the market didn't like the court action...call me nuts but i can see some potential here...they have cash, there very profitable, all the debts secured in a round about way.

I mean i cant see them just shrinking away to nothing, eventually debt will be available again and RHG would be in a great position to go forward...the bastard banks cant get it all there own way forever, RHG could be a great turn around story.

Can some one comment on there cash at hand because i thought i must be seeing things?


----------



## MartinB (22 June 2011)

*What happened to RHG today?*

Hi All,

As a newbie to the world of trading I was hoping that someone might help explain what I observed today (22/6/11) whilst watching the closing trades on RHG. Total volumes for the day were 2.68M.

For most of the day stock was trading @ 0.47 then at 15:34 over half a million shares were purchased at 0.475. 

Then after close the price was pushed down to 0.465 

As a newbie this makes no sense to me. It also caused a bearish candle on the chart for what was otherwise a bullish sort of day so I have no idea what will likely happen tomorrow.

To enable me to better understand the market dynamic, I was hoping one of you seasoned traders might be able to explain "what happened, and why?"

Thanks in advance.

Martin.


----------



## Country Lad (22 June 2011)

*Re: What happened to RHG today?*

Martin, there is really nothing unusual in these trades.  The matchout at 4:10 is simply an auction and the bids were such that the final price was 46.5.  

If you are not sure how the closing auction works, have a look at this link

http://www.asx.com.au/products/calculate-open-close-prices.htm

Cheers
Country Lad


----------



## princeplanet (8 March 2013)

No one's talking about this stock, but has div yield coming up of 35.5% !  What's the catch?


----------



## princeplanet (9 March 2013)

So Cynical? ... anyone?......


----------



## Country Lad (9 March 2013)

princeplanet said:


> No one's talking about this stock, but has div yield coming up of 35.5% !  What's the catch?




I am trying not to be rude pp, but why do you want us to do your research for you?  Wouldn't it be more appropriate for for you to read the profit guidance announcement of 14 Feb rather than have us look it up and spoon feed you?

Simple for you to look it up, read it and lo and behold there is the answerr to the question you need not have asked.

Cheers
Country Lad


----------



## McLovin (9 March 2013)

princeplanet said:


> So Cynical? ... anyone?......




Didn't you ask this in another thread? The business is in runoff. Check the last few years accounts and you'll understand.


----------



## princeplanet (9 March 2013)

OK, thanks. Being a newbie, despite reading the reports, I can't say I know what to predict, but I imagine the S/P will drop more than the div on the ex div date, and maybe stay down....


----------



## McLovin (9 March 2013)

princeplanet said:


> OK, thanks. Being a newbie, despite reading the reports, I can't say I know what to predict, but I imagine the S/P will drop more than the div on the ex div date, and maybe stay down....




Appreciate you're a newbie and I'm not trying to be rude but even if you glance at the NPAT numbers for the last few years you'd at least get an inkling that something is up and you could have investigated further.

NPAT from 2008-2012



> Net Profit	124.80,	120.00.	94.00,  	74.00,	    40.70




And then from page 4 of the interim report...



> The Group’s mortgage book is closed and in run-off. The Group will continue to manage and service its mortgage book. It is important to note that the revenue of the business will reduce over time in line with the rundown of the Group’s mortgage book.The directors expect the profit for future years to be materially lower.




If you read the reports then you wouldn't need to predict anything. It's all in plain English.


----------



## princeplanet (10 March 2013)

Sure, I get that it is not a wise long term buy, but was mainly interested in the short term, say 45 days from just prior to going ex div. Barchart.com have all 13 analytics giving it a 100% buy for short and even mid term. Could they know something that the rest of us don't?


----------



## McLovin (10 March 2013)

princeplanet said:


> Sure, I get that it is not a wise long term buy, but was mainly interested in the short term, say 45 days from just prior to going ex div. Barchart.com have all 13 analytics giving it a 100% buy for short and even mid term. Could they know something that the rest of us don't?




If you're taking cues from a free website based in the US, then expect results commensurate with that.


----------



## princeplanet (11 March 2013)

McLovin said:


> If you're taking cues from a free website based in the US, then expect results commensurate with that.




Fair point! Hmmm, ok, so I can't be asking advice on these kinds of forums without the inevitable "DYOR" response, but if I'm honest I have to say I'm not confident that I can decode company reports well enough to know what I'm doing. To this you will say "Then get the hell out of the stock market kid!"  But I'm not a kid, I probably come across like one because I have been a musician most of my life (hence blithely ignorant of all things financial). I got bad financial advice in 2007 and lost over half of my life savings, I now see that the markets are offering a once in 10 years bull run and like many others, I'm sensing this may be a last chance (for a while?) to drag back some of those losses. Yup, I'm ignorant _and _desperate, a fatal combination , but damned if I'm gonna sit this bull run out on the sidelines and patiently learn to be a finance wizard only to finally enter the market as it turns downward....  

Could you suggest a _paid_ local website that is worth investing in?


----------



## So_Cynical (11 March 2013)

princeplanet said:


> * I now see that the markets are offering a once in 10 years bull run* and like many others, I'm sensing this may be a last chance (for a while?) to drag back some of those losses. Yup, I'm ignorant _and _desperate, a fatal combination , but damned if I'm gonna sit this bull run out on the sidelines and patiently learn to be a finance wizard only to finally enter the market as it turns downward....




Once in 10 years bull run hey....well at least your sure of something.


----------



## princeplanet (11 March 2013)

So_Cynical said:


> Once in 10 years bull run hey....well at least your sure of something.




Hehe, was hoping someone would pull me up on that, only with historical charts back to 1910 proving there's actually a bull run on average every 5.7 years, or somethin'..... 

But if this run lasts a little longer, and then the world goes bearish for a few more years (kinda plausible, yeah?), you could say that between 2008 and 2018 there was only one bull run, the one we're having now.... ?  

Maybe I should just stick to the newbie forum, at least they're a little less smarmy there!


----------



## Country Lad (11 March 2013)

princeplanet said:


> ...........ok, so I can't be asking advice on these kinds of forums without the inevitable "DYOR" response, but if I'm honest I have to say I'm not confident that I can decode company reports well enough to know what I'm doing.




pp, I was the first to respond by saying you should do your own research first and not expect us to do it for you.  My reason for this was that had you even just glanced through the announcement of 14 February…. 



> Directors wish to remind shareholders that the mortgage book is a closed book, and in line with expected paydown, future profits are expected to be materially lower.




…..common sense would tell you that future dividend payments are at risk.  In fact the directors are clearly saying that….



> The business continues to operate in an uncertain environment and therefore future cashflows of the business may be needed to support the business and various warehouse facilities. Therefore the size and timing of any future dividends are uncertain.




….and



> Directors wish to remind shareholders that the mortgage book is a closed book, and in line with expected paydown, future profits are expected to be materially lower.




There may be some thinking that a takeover may hold the price up and this is possibly why it has not fallen further.  However, from the same announcement even that seems uncertain:



> We note ongoing speculation about a confidential proposal being considered by the Board in relation to the possible acquisition of the assets of the company. We reiterate that the proposal remains incomplete and subject to resolution of a range of commercial and technical issues, including value. However, the Board currently has no expectation that, if the current asset-level proposal is finalised, it would involve an offer that reflects a value to shareholders at or above the trading price of RHG shares, even after taking into account any franking credits that may be generated.




Had you read that announcement which doesn't need rocket science background to reach a conclusion it could very well be a high risk dud, you would have no reasons to ask the question you did......... 



princeplanet said:


> No one's talking about this stock, but has div yield coming up of 35.5% !  What's the catch?




.....and that would be the reason for the comments in response to your rather superfluous question.  That is why I commented on your apparent lack of doing the research first.



princeplanet said:


> To this you will say "Then get the hell out of the stock market kid!"




Yes, well if you could not assess the risk inherent in the 14 Feb announcement then your lack of understanding of the market will make further loss of your capital assured.  Expecting others to advise you on what to buy is fraught with danger.

This is not your normal bull market where the rising tide is lifting all boats.  It is still a stock picking market and you need to understand the stock you are picking.

Cheers
Country Lad


----------



## burglar (11 March 2013)

princeplanet said:


> ... Maybe I should just stick to the newbie forum, ...



Seems you've got the best opinions in the forum.
Agree with CountryLad, but I can see where you are coming from.

If you buy and lose, you'll learn.
If you research, you'll learn.

You said earlier that 10 anal ysts had it at buy. What's the catch?
They want to sell to you!


----------



## princeplanet (11 March 2013)

Many thanks all! I am indeed humbled and can see now that I needed a good kicking. As plain as that warning now seems in the report, I obviously took it as much less threatening which goes to show I'm not any good at understanding the language, nor the implications set out in these reports. I acknowledge I will need to pay others for advice, but obviously can't trust professional FA's. If anyone would care to recommend a reasonably priced web based advisory, It'd be much appreciated.


----------



## skc (11 March 2013)

princeplanet said:


> Many thanks all! I am indeed humbled and can see now that I needed a good kicking. As plain as that warning now seems in the report, I obviously took it as much less threatening which goes to show I'm not any good at understanding the language, nor the implications set out in these reports. I acknowledge I will need to pay others for advice, but obviously can't trust professional FA's. If anyone would care to recommend a reasonably priced web based advisory, It'd be much appreciated.




The Chartist has a decent reputation as a technical analysis trading / alert service and quite reasonably priced. Depending on market condition you may or may not make a lot of money, but you will learn and be guided through what makes you a disciplined trader and good risk manager.

P.S. One thing to note about RHG is that when it sold its business to ANZ (I think) it had a 5 year standstill non-compete agreement. That agreement is due to expire soon so in theory RHG can start originating new loans soon. They have however sold the RAMS brand as well as the distribution branches, so if they go back into the mortgage market they pretty much have to start from scratch... so it's questionable whether the business has any value beyond the loan book run-off.


----------



## Gringotts Bank (11 March 2013)

pavillion will be all over this.  He loves this type of chart set up.


----------



## McLovin (11 March 2013)

princeplanet said:


> Many thanks all! I am indeed humbled and can see now that I needed a good kicking. As plain as that warning now seems in the report, I obviously took it as much less threatening which goes to show I'm not any good at understanding the language, nor the implications set out in these reports. I acknowledge I will need to pay others for advice, but obviously can't trust professional FA's. If anyone would care to recommend a reasonably priced web based advisory, It'd be much appreciated.




If you can read and write music, I'll wager it wouldn't take you too long to get some understanding of how to read reports.

I never got past playing the recorder, but I do a great version of Mary had a Little Lamb.

The problem I've had with those web based subscription services is that they have to give you something for your money and "nothing looks good this week" is not considered acceptable by most subscribers. So the fundamental ones I have seen, tend to end up having an opinion about every stock on the market. Even after you are subscribed you still need to exercise some judgement.



			
				skc said:
			
		

> That agreement is due to expire soon so in theory RHG can start originating new loans soon.




I could be wrong but wasn't that idea shot down by shareholders when the board raised it?


----------



## So_Cynical (11 March 2013)

princeplanet said:


> But if this run lasts a little longer, and then the world goes bearish for a few more years (kinda plausible, yeah?), you could say that between 2008 and 2018 there was only one bull run, the one we're having now.... ?




Plausible...who knows really, i don't.

I do know that i have been expecting a big leg up for the last 2 years now...and bingo here it is, also know i got caught buying into the 2010 top and got stuck in a heap of positions that took 2 years + (last month) to come good.

2 years is a long time.


----------



## lclfze (22 November 2013)

Anybody know what is happening with the RHG takeover?

I am looking at the announcements but it seems like I'll need to read about a year's worth to figure it out.


----------



## System (15 January 2014)

On January 13th, 2014, RHG Limited (RHG) was removed from the ASX's official list following the implementation of Scheme of Arrangement with Australian Mortgage Acquisition Company Pty Limited, backed by Resimac Limited.


----------

