Business Context and Reporting Period
This Form 8-K was filed by Five Oaks Investment Corp. on February 10, 2014. The filing serves as a Current Report to disclose preliminary, unaudited financial estimates for the quarter and year ended December 31, 2013, in connection with an Amendment No. 1 to a Registration Statement on Form S-11. The company notes that audited financial statements are expected to be available in March 2014.
Key Financial Metrics
- Estimated Book Value per Common Share (Dec 31, 2013): $12.92 to $13.02.
- Book Value per Common Share (Sep 30, 2013): $12.38.
- Estimated Net Income (Year Ended Dec 31, 2013): $3.1 million to $3.3 million.
- Net Loss (Nine Months Ended Sep 30, 2013): $7.5 million.
- Primary Value Drivers: Increases in the fair value of Non-Agency RMBS and interest rate derivatives due to higher long-term interest rates.
Material Changes Versus Prior Period
The company expects a significant turnaround in profitability for the full year 2013 compared to the nine-month period ended September 30, 2013. While the company reported a net loss of $7.5 million for the first nine months, it anticipates net income between $3.1 million and $3.3 million for the full year. This shift is primarily attributed to unrealized gains on Non-Agency RMBS and interest rate derivatives in the fourth quarter, which are expected to offset unrealized losses on Agency RMBS and the payment of fourth-quarter common stock dividends.
Guidance, Outlook, and Risks
Management has provided preliminary estimates rather than finalized guidance, explicitly stating that these figures are unaudited and subject to revision. The filing includes standard forward-looking statement disclaimers, noting that actual results may differ due to:
- Additional adjustments in financial calculations or portfolio valuations.
- Discovery of new information impacting valuation methodologies.
- Potential errors in portfolio value assessment.
- Changes in GAAP accounting requirements.
The company states it is not obligated to update these forward-looking statements.
Important Facts for Investor Verification
- Verify the final audited book value per share and net income figures when the March 2014 financial statements are released.
- Confirm the specific composition of unrealized gains on Non-Agency RMBS versus losses on Agency RMBS in the final report.
- Review the final impact of fourth-quarter dividend payments on stockholders' equity.
- Note that the registrant name in the filing header is Five Oaks Investment Corp., despite the request metadata referencing Lument Finance Trust, Inc.