The Best Vote Of Confidence Is Having ‘Skin In The Game’

 In Free Articles

Summary

  • I am pleased to see this puppy bounce as I knew a long time ago that this company had all of the ingredients of something special.
  • It took a while for the big money players to get serious with Ladder, but it appears that the pre-IPO shareholders have moved on, and trading volume has picked up.
  • We believe that based on the latest earnings results and strong “skin in the game,” there’s more room to run.

My first research article on Ladder Capital (LADR) was over three years ago, and since that time I have maintained optimism regarding this uniquely-positioned commercial mortgage REIT. In November 2016 I explained,

We like LADR for all of the obvious reasons – internal management, low dividend payout ratio, diversified sources of income, and experienced management team. We would like to see LADR take a few steps to get more visibility in the marketplace – like issuing preferred shares. Also, we would like to see a more diversified ownership base, reducing concentration with some of the heavy hitters.”

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Boo-yah back at ya’. Yup, I am pleased to see this puppy bounce as I knew a long time ago that this company had all of the ingredients of something special. It took a while for the big money players to get serious with Ladder, but it appears that the pre-IPO shareholders have moved on, and the average daily trading volume has picked up quite a bit.

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In addition to being internally-managed, Ladder has a few more distinct differentiators, including:

  • A robust origination team with 20 originators in 2 offices, including 7 Managing Directors
  • Long-standing direct borrower and key broker relationships nationwide
  • Loyal client base – more than 50% of balance sheet loans to repeat borrowers
  • Certainty of execution and ability to act quickly with key decision makers in the same building
  • Flexibility to originate and manage multiple CRE products
  • Leveraging deep CRE credit expertise through the capital stack

Additionally, one of the best things I like about Ladder is the fact that management and directors own over $185 million of stock (that represents over 12% of total equity market cap). That goes without saying, senior executives can talk all they want, but the best vote of confidence is putting one’s own money on the line just like outside investors. It makes a big difference when there’s plenty of “skin in the game.

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Inside Ladder

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