GYRO - Gyrodyne Co. of America

[Sullivcd]

Tariq has a fantastic post on his Street Capitalist blog about this company which is currently trading at a deep discount to its liquidation value.

Here it is:  http://streetcapitalist.com/2010/07/05/gyrodyne-undervalued-and-at-52-week-highs/

Thanks Tariq!

[dcollon]

Thanks for posting the link.  Very nice writeup Tariq. 

[bookie71]

Jumped to 72.73 today.  good call

[Parsad]

Is the $99M settlement after all attorney's fees?  If they worked on contingency, they could get a third of the settlement.  Cheers!

[TariqAli]

Is the $99M settlement after all attorney's fees?  If they worked on contingency, they could get a third of the settlement.  Cheers!

From my understanding, that settlement is after attorney's fees. GYRO is also attempting to get the state to pay for reimbursement of the fees they paid to attorneys, that is supposed to be around $5M.

[Parsad]

Thanks Tariq!  Cheers!

[tiddman]

I wonder if GYRO would have to pay taxes on these proceeds. They are a REIT and so do not have to pay taxes on most income as long as ~90% of it is paid out to shareholders, but that may apply only to operating income, not settlement income.

I read elsewhere that GYRO had been paying their attorney fees out of pocket along the way, so the $99M settlement should be after fees.  I am sure there will be other frictional costs.

I think the most likely risk is an appeal from the state of NY.  I am not sure how long it will take that appeal to be filed, and how long it will take to settle.  Could be months, could be years.  My guess is that this is the main reason that the stock is trading where it is -- discounting the value of the settlement until all hurdles are cleared.

I agree that it is an interesting situation.  The company has an interesting background.  By "interesting" I don't necessarily mean "profitable" .


http://emdo.blogspot.com/2005/05/steamroller-at-flowerfields-newsday.html

...

Originally acquired back in the 1950s as a flight-test facility, the tract stands as the sole asset of Gyrodyne, a thinly traded corporation held by investors speculating that the ultimate sale of the property will yield a tidy windfall on their shares. South of Route 25A and adjacent the Stony Brook campus, the scenic "Flowerfields" has been described by its owners as among the most valuable real estate east of Manhattan.

Not all Gyrodyne shareholders have been happy, filing complaints with the Securities and Exchange Commission, accusing company executives with dragging their feet on potential land sales while pulling down large salaries for managing what amounts to a passive investment. The executives deny such claims, saying over the years they've been stymied trying to develop a $220 million golf course community, which would require a change in zoning.

The stock bumped up last year when the university expressed interest, but talks fell apart, the university accused Gyrodyne of bad faith, invoked its condemnation power, went to court, and won the right to seize the property at "fair market value," ostensibly to build Republican Gov. George Pataki's Center for Excellence in Wireless and Information Technology.

...

[TariqAli]

I wonder if GYRO would have to pay taxes on these proceeds. They are a REIT and so do not have to pay taxes on most income as long as ~90% of it is paid out to shareholders, but that may apply only to operating income, not settlement income.

Right. There is also the potential of them investing in like properties. That's what they did to minimize the tax impact of the Stony Brook advance payment.

[eclecticvalue]

The stock is back around $72 when this stock was talked about in the above posts. Now the NY State has filed an appeal and the decision by the appellate court wont be made until no later than August 9th. So the wait will be awhile but it be worth it as some have commented that the ruling wont be overturned. Any thoughts? As of now I think it represents a good buying point.

Also Parsad could you move this topic to investment ideas?

[eclecticvalue]

This stock has been nosediving as of late. I want to buy more but I fear something is up.