Sold: Manhattan Bridge Capital Inc.
Manhattan Bridge Capital Inc. ( LOAN ) was the first company that I bought stock in. Thus far I have received a couple of dividend payments from the company but I feel as though I bought the stock at the wrong time. I think that Manhattan Bridge Capital, Inc is a good company and I will continue to keep my eye on the stock in the future.
The company operates as a REIT, a real estate investment trust, but its primary business would be referred to as a “hard money” lender. For instance, someone investing in real estate may be looking for a loan to help finance the remodel of one of their new properties. The Manhattan Bridge Capital, Inc can help this investor, but first they must use that property as collateral to obtain the loan. While I do think this is a very needed alternative to traditional lenders…. I just don’t think that the near future is the best time to own stock in this company.
Earlier this year, the company secured a $14 million revolving line of credit at an interest rate of either LIBOR plus 4.75% or Prime plus $3.25%. With my belief along with a lot of other peoples belief, that the fed will be raising interest rates in September, it just doesn’t seem to be a good fit with my portfolio at the given time. The increase in interest rates will narrow the margin on profits for the company and continue to hurt the bottom line, as interest rates go higher and higher. The company does have a pretty good dividend yield but I do wonder how long it will be sustainable in this future environment.
At the time when I opened the position the stock was overvalued in my opinion. Although I did hold onto it while it made a 20% increase… unfortunately I held it too long. I should have went with my gut and sold when it was around the 52 week high of $4.78 . I believe it will be some time before the company sees those kind of highs again. I originally bought 120 shares but I dripped the first dividend payment before turning off the drip and just received the second payment directly into my brokerage account.
Since I had waited too long what I decided to do was to sell of enough shares to cover my initial investment and leave any extra remaining in stock for the company. I ended up selling 118 shares and having a capital gain of $22 , but the remaining amount I left in stock. If at sometime in the future I feel as though the conditions are right, I would love to acquire some more stock in the company and rebuild my position in the company. Currently I just feel as though the stock is too risky and I could do better by deploying my capital somewhere else.