BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate HOLD HOLD RATING SINCE 06/12/2012 BUSINESS DESCRIPTION No company description available. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change -4.18-16.56-2.54 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues 11.82 17.01 78.27 Net Income -123.44-6.96 67.68 EPS -115.15-43.95-16.44 Sector: Financial Services Sub-Industry: Mortgage REITs Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years 15.00 14.50 14.00 13.50 13.00 12.50 12.00 RETURN ON EQUITY (%) Ind Avg S&P 500 Q1 2013 12.21 8.20 13.11 Q1 2012 20.24 9.12 14.55 Q1 2011 6.63 6.55 13.57 Rating History SELL Volume in Millions HOLD 11.50 50 P/E COMPARISON 25 2011 2012 2013 COMPUSTAT for Price and Volume, TheStreet.com Ratings, Inc. for Rating History 0 5.77 76.32 Ind Avg 19.08 S&P 500 RECOMMENDATION We rate () a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing nesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find nesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity. EPS ANALYSIS¹ ($) Q1 0.74 Q2 1.20 Q3 1.16 Q4 0.53 Q1 0.66 Q2 0.87 Q3 1.46 Q4-0.24 Q1-0.10 HIGHLIGHTS Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. The gross profit margin for is currently very high, coming in at 92.40%. It has increased from the same quarter the previous year. Regardless of the results of the gross profit margin, the net profit margin of -22.16% is in-line with the industry average. 2011 2012 NA = not available NM = not meaningful 2013 1 Compustat fiscal year convention is used for all fundamental data items. has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, INVESTMENTS INC reported lower earnings of $2.75 versus $3.63 in the prior year. For the next year, the market is expecting a contraction of 68.0% in earnings ($0.88 versus $2.75). 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 123.4% when compared to the same quarter one year ago, falling from $69.12 million to -$16.20 million. PAGE 1
PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -20% 180% UNFAVORABLE 65% NCT CLNY EBITDA Margin (TTM) FAVORABLE CIMHTS IVR 95% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $900.1 Million and $2.3 Billion. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -20% 180% UNFAVORABLE SFI -30% NRF Earnings Yield (TTM) CLNY ARR HTS CIM IVR RWT CMO FAVORABLE NCT 50% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -37.7% and 851.8%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The US real estate industry is one of the larger components of the US economy. The industry is cyclical and depends upon economic growth and demographic trends. The level and volatility of interest rates ly affect the industry. Real estate prices skyrocketed during the past decade due to rising demand and low interest rates. Residential construction and sales of existing homes remained during 2000-2005. However, by the end of 2006, the residential market slumped and prices started to decline as a result of the sub-prime mortgage crisis and broader economic slowdown. This culminated in a nationwide crash in real estate values that has since leveled out and begun to slowly reverse course. Tighter credit and declining prices throughout the US have damaged the industry. The market is experiencing an increase in delinquencies and foreclosures, which has resulted from the wide scale price collapse. Many homes are under foreclosure proceedings or are now owned by lenders. Also, the commercial real estate market has witnessed a spill-over impact from the decline in the residential market. The US real estate industry is comprised of real estate investment trusts (REIT) and real estate management and development. A REIT is a corporation or trust that uses pooled capital to issue mortgage loans to builders/developers or directly invests in income-generating property that offers tax benefits with respect to interest and capital gains. The real estate management and development industry includes companies engaged in ownership, management and development. There are three principal types of REITs: equity REITs, mortgage REITs and hybrid REITs. Equity REITs own properties and generate revenue through the rental and sale of property. Roughly 90% of REITs are equity based. The US sub-prime debacle adversely impacted the performance of REITs with access to capital via public debt and equity markets becoming more challenging. Real estate management and development is separate and distinct from the REIT industry. With higher structural flexibility, the trade-off for investors is generally lower dividend yields than are available from REITs. Secular changes such as increased outsourcing of real estate services are propelling the industry forward. After years of performance, the slowdown in the US economy and deterioration in the housing market may continue to adversely impact performance in the coming years. PEER GROUP: Real Estate Investment Trusts (REITs) Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) 11.49 2,284 5.77 301.06 287.47 CIM CHIMERA INVESTMENT CORP 3.20 3,288 24.62 705.02 137.33 HTS HATTERAS FINANCIAL CORP 25.75 2,840 7.62 582.24 347.18 IVR INVESCO MORTGAGE CAPITAL INC 19.42 2,772 6.91 593.10 343.51 NRF NORTHSTAR REALTY FINANCE CP 9.21 2,545 NM 578.10-185.01 ARR ARMOUR RESIDENTIAL REIT INC 5.63 2,306 7.22 510.74 259.37 CLNY COLONY FINANCIAL INC 22.36 1,721 18.79 118.92 68.95 RWT REDWOOD TRUST INC 20.33 1,670 10.64 226.17 161.92 SFI ISTAR FINANCIAL INC 11.86 1,558 NM 492.94-225.92 CMO CAPSTEAD MORTGAGE CORP 12.31 1,537 8.99 249.55 153.37 NCT NEWCASTLE INVESTMENT CORP 5.42 1,436 2.34 594.01 398.65 The peer group comparison is based on Major Mortgage REITs companies of comparable size. PAGE 2
Annual Dividend Rate COMPANY DESCRIPTION NA 890 Winter Street, Suite 200 Waltham, MA 02451 USA Phone: 617-639-0440 Fax: 617-507-8423 http://www.cysinv.com STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 2.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 30% of the stocks we rate. Total Return 1.5 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 20% of the companies we cover. Efficiency 4.5 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 80% of the companies we review. Price volatility 1.5 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 20% of the stocks we monitor. Solvency 0.5 out of 5 stars Measures the solvency of the company based on several ratios. The company is less solvent than nearly all of the companies we analyze. Income 5.0 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 90% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3
Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the first quarter of its fiscal year 2013 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. At the same time, stockholders' equity ("net worth") has greatly increased by 52.18% from the same quarter last year. 0.28 Q2 FY13 0.88 E 2013(E) 1.16 E 2014(E) INCOME STATEMENT Net Sales ($mil) 73.10 65.37 EBITDA ($mil) 67.55 60.25 EBIT ($mil) 67.55 60.25 Net Income ($mil) -16.20 69.12 BALANCE SHEET Cash & Equiv. ($mil) 13.46 10.64 Total Assets ($mil) 20,911.13 13,555.91 Total Debt ($mil) 13,760.48 8,234.67 Equity ($mil) 2,322.08 1,525.79 PROFITABILITY Gross Profit Margin 92.40% 92.17% EBITDA Margin 92.40% 92.16% Operating Margin 92.40% 92.17% Sales Turnover 0.01 0.02 Return on Assets 1.37% 2.27% Return on Equity 12.21% 20.24% DEBT Current Ratio NA NA Debt/Capital 0.86 0.84 Interest Expense 15.03 6.85 Interest Coverage 4.49 8.79 SHARE DATA Shares outstanding (mil) 175 116 Div / share 0.32 0.34 EPS -0.10 0.66 Book value / share 13.30 13.14 Institutional Own % NA NA Avg Daily Volume 2,620,925 2,605,723 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4
RATINGS HISTORY Our rating for has not changed since 6/12/2012. As of 5/23/2013, the stock was trading at a price of which is 23.6% below its 52-week high of $15.03 and 2.7% above its 52-week low of $11.19. 2 Year Chart SELL: $12.72 HOLD: $14.05 2011 2012 $15.00 $14.00 $13.00 $12.00 MOST RECENT RATINGS CHANGES Date Price Action From To 6/12/12 $14.05 Upgrade Sell Hold 5/23/11 $12.72 No Change Sell Sell Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET.COM RATINGS (as of 5/23/2013) 49.95% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 28.74% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 21.31% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Research Contact: 212-321-5252 Sales Contact: 866-321-8726 VALUATION HOLD. 's P/E ratio indicates a significant discount compared to an average of 76.32 for the Real Estate Investment Trusts (REITs) industry and a significant discount compared to the S&P 500 average of 19.08. For additional comparison, its price-to-book ratio of 0.86 indicates a significant discount versus the S&P 500 average of 2.44 and a significant discount versus the industry average of 3.10. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings 5.77 Peers 76.32 Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. is trading at a significant discount to its peers. Price/Projected Earnings 9.91 Peers 62.34 Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. is trading at a significant discount to its peers. Price/Book 0.86 Peers 3.10 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a significant discount to its peers. Price/Sales 6.66 Peers 8.36 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a discount to its industry on this measurement. DISCLAIMER: Price/CashFlow NM Peers 21.01 Neutral. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. 's P/CF is negative making the measure meaningless. Price to Earnings/Growth NM Peers 5.38 Neutral. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. 's negative PEG ratio makes this valuation measure meaningless. Earnings Growth lower higher -43.95 Peers 64.49 Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher 17.01 Peers 21.99 Lower. A sales growth rate that trails the industry implies that a company is losing market share. trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. PAGE 5