Why Five Oaks Investment Corp (OAKS) Stock Is Down Today

NEW YORK (TheStreet) -- Five Oaks Investment Corp (OAKS) stock is moving 4.8% lower to $11.32 on Thursday after announcing and pricing its public offering of 3.5 million shares of common stock. Estimated net proceeds are expected to be approximately $38.25 million. 

In a statement, the company said it intends to use net proceeds to "purchase non-Agency mortgage assets (including prime jumbo residential whole loans, other mortgage loans and new issue non-agency residential mortgage backed securities, or RMBS), multi-family MBS, legacy non-Agency RMBS and, to a lesser extent, Agency RMBS."

Underwriters have been granted a 30-day overallotment option to purchase up to an additional 15%, or 525,000 shares of common stock. JMP Securities will act as book-running manager, Ladenburg Thalmann is acting as lead manager, and Mitsubishi UFJ Securities is acting as co-manager for the offering. 

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Separately, TheStreet Ratings team rates FIVE OAKS INVESTMENT CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate FIVE OAKS INVESTMENT CORP (OAKS) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been generally deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 266.3% when compared to the same quarter one year ago, falling from $1.53 million to -$2.54 million.
  • FIVE OAKS INVESTMENT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This year, the market expects an improvement in earnings ($0.79 versus $0.43).
  • The share price of FIVE OAKS INVESTMENT CORP has not done very well: it is down 10.08% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, FIVE OAKS INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for FIVE OAKS INVESTMENT CORP is rather high; currently it is at 59.11%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -65.02% is in-line with the industry average.
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