Have you ever come across a mortgage lender that has been in business for over a decade, and never foreclosed on a property? Well, now you have. Due to the conservative lending policies of Manhattan Bridge Capital (LOAN), the company has never foreclosed on a property in its over 15 year history.
Manhattan Bridge is what is known as a “Hard Money Lender”. The company provides capital to those who need it quickly, AND have the means to provide high quality collateral for the short term loan.
Classified as a REIT, the company is a mortgage lender, lending to a mix of borrowers in the fix and flip market, single family (or small number of units) new construction, and those owning income producing properties.
Manhattan Bridge operates in NYC, NJ, CT and FL, and is searching for “unique and time sensitive opportunities that are underserved by existing lenders”. The company increased revenue 13% YoY in its latest quarter, due to, you guessed it, higher interest rates.
As CEO Assaf Ran pointed out in the earnings release, “[T]he balance between paying a higher interest to our bank and charging a higher interest to our borrowers is working in our favor, due to the fact that our debt to equity ratio is extraordinarily low.”
LOAN is actually the number 1 rated stock in our POWR Ratings in the Financial Services - Enterprise industry. With an overall rating of B, the company has high marks in both Stability and Sentiment, where it outperforms over 90% of the stocks in our database.
LOAN trades at just 10.4x earnings, and has a generous dividend of close to 10%. Its PE ratio is just over 10, and it has operating margins of over right at 82%. (In general, for a REIT passing through income, operating margins should be very high.)
In a hard money lender I’m looking for extreme discipline, and a higher dividend yield than from a traditional mortgage lender. Manhattan Bridge, with its history of very solid financial management and conservative approach to hard money lending, fits the bill perfectly.
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LOAN shares were trading at $4.51 per share on Tuesday afternoon, down $0.01 (-0.22%). Year-to-date, LOAN has declined -11.58%, versus a 12.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Jay Soloff
Jay is a former professional market maker who cut his teeth trading on the floor of the CBOE. With more than 20 years of experience trading and investing, his focus is on making professional strategies accessible to everyone, which is exactly what does in his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.
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