SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
Form
8-K/A
Amendment
No. 1
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of earliest event reported): May
18, 2006
Opteum
Inc.
(Exact
Name of Registrant as Specified in Charter)
|
Maryland
|
001-32171
|
72-1571637
|
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
3305
Flamingo Drive, Vero Beach, Florida 32963
(Address
of Principal Executive Offices) (Zip Code)
Registrant’s
telephone number, including area code
(772) 231-1400
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Explanatory
Note:
This Form 8-K/A is being filed to correct certain typographical errors that
were contained in Exhibit 99.1 to the Form 8-K that was filed on
May 17, 2006. The affected pages are entitled “REIT Current Portfolio
Holdings” and “REIT Current Portfolio Holdings in More Detail.”
|
ITEM
7.01.
|
REGULATION
FD DISCLOSURE
|
On
May
18, 2006, Opteum Inc. (the “Company”) made available to investors a
presentation. A copy of this information is attached hereto as Exhibit
99.1.
The
Company believes that certain statements in the information attached may
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are made on the
basis
of management’s views and assumptions regarding future events and business
performance as of the time the statements are made. Actual results may differ
materially from those expressed or implied. Information concerning factors
that
could cause actual results to differ materially from those in forward-looking
statements is contained from time to time in the Company’s filings with the U.S.
Securities and Exchange Commission.
This
information furnished under this “Item 7.01 Regulation FD Disclosure,” including
the exhibit related hereto, shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated
by reference in any disclosure document of the Company, except as shall be
expressly set forth by specific reference in such document.
|
ITEM
9.01.
|
EXHIBITS
|
|
(c)
|
Exhibit
|
The
following exhibit is filed pursuant to Item 601 of Regulation S-K:
99.1
-
Investor Presentation of Opteum Inc.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Date:
May 18, 2006
|
OPTEUM
INC.
|
||
|
By:
|
/s/
Jeffrey J. Zimmer
|
||
|
Jeffrey
J. Zimmer
|
|||
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Chairman,
Chief Executive Officer and
President
|
|||
|
Exhibit
No.
|
|
|
|
|
|
|
|
99.1
|
-
|
Investor
Presentation of Opteum
Inc.
|
May
2006
This
presentation contains forward-looking statements. Such
forward-looking
statements are based on information
available at the time of the preparation of this presentation
and on management's good faith belief with respect to future
events, and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from
those expressed herein. Important factors that could cause
such differences are described in the Company’s periodic
filings with the Securities and Exchange Commission,
including the Company’s Registration Statement on Form
S-3, Form 10-K and quarterly reports on Form 10-Q. The
Company assumes no obligation to update forward looking
information to reflect actual results, changes in assumptions
or changes in other factors affecting forward-looking
information.
available at the time of the preparation of this presentation
and on management's good faith belief with respect to future
events, and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from
those expressed herein. Important factors that could cause
such differences are described in the Company’s periodic
filings with the Securities and Exchange Commission,
including the Company’s Registration Statement on Form
S-3, Form 10-K and quarterly reports on Form 10-Q. The
Company assumes no obligation to update forward looking
information to reflect actual results, changes in assumptions
or changes in other factors affecting forward-looking
information.
Safe
Harbor
Statement
1.
Strengths
and Weaknesses of the Mortgage REIT Business Model (Page
4)
2.
Making the Mortgage REIT Business Model Better (Page
12)
»
Corporate
Mission and
Long Term Goal
»
Diversity,
Diversity,
Diversity
»
Board
and Management
are Large Shareholders
»
The
Strategic
Thinking Behind the OFS Acquisition
3.
Capital Structure
(Page
18)
4.
Capital Allocation and the Relationship Between the REIT and the Taxable
REIT
Subsidiary
(“TRS”)
(Page
19)
5.
Opteum Financial Services (Page
20)
6.
The REIT Portfolio (Page
27)
»
8K
Released
5/8/2006
7.
Analyst Estimates for OPX (Page
37)
Table
of
Contents
Strengths
and Weaknesses of the
Mortgage
REIT
Business Model
§
Biggest
Strength
»
Permanent
Equity to Invest in Fixed Income Instruments and
Expand
an
Origination Platform through Various Business Cycles
§
Stock
Price can go
Down, but that does not Force the Investment Manager to Sell
Assets
and take
Permanent Losses to Book Value.
§
Hedge
Fund Investors
often times Withdraw their Funds at Precisely the Moment when
they
should be
Buying, Forcing the Hedge Fund Manager to Sell at the Wrong Time.
§
Biggest
Weaknesses
»
Lack
of
Diversity
§
Assets,
Sources of
Income, Sources of Funds, Channels of Origination.
§
Many
Mortgage
Companies and REITs are Founded by Originators who Lack Financial
Expertise
nor are
they Asset Managers.
»
Event
Risk
§
Margin
Calls
Data
Provided By Bloomberg
Strengths
and Weaknesses of the Mortgage REIT
Business
Model: Fed
Funds Target Rate
Data
Provided By Bloomberg
Strengths
and Weaknesses of the Mortgage REIT
Business
Model:
Interest Rates
Data
Provided By Bloomberg
Strengths
and Weaknesses of the Mortgage REIT
Business
Model: Swap
Spreads
Strengths
and Weaknesses of the Mortgage REIT
Business
Model: Net
Interest Spread
Data
Provided By Bloomberg
Strengths
and Weaknesses of the Mortgage REIT
Business
Model:
Stock Prices Reflect Fed Funds
Data
Provided By Bloomberg
Strengths
and Weaknesses of the Mortgage REIT Business Model:
Origination
REITs
Maintain Dividends Longer than RMBS REITs
Data
Provided By Bloomberg and FlagStone Securities
Annualized
Q3 2004 - Q1 2006 Average
Active
Originator Peer Group = 13.4%
RMBS
Peer
Group = 9.2%
Opteum
=
12.4%
Return
on
Equity defined as annualized dividends divided by average book
value.
Strengths
and Weaknesses of the Mortgage REIT Business Model:
Despite
Rising
Rates, ROEs Have Been Relatively Stable
Making
the
Mortgage REIT Business Model Better:
Corporate
Mission
and Long Term Goal
Clearly
Defined Corporate Mission
§
“Provide
Superior Returns to our Shareholders.”
»
Protect
Ultimate
Book Value.
»
Stable
Returns over
Time.
If
we achieve our
Corporate Mission, we will be able
to
achieve our
Corporate Long Term Goal.
Clearly
Defined Long Term Goal
§
“Attract,
Retain, and Grow Equity Capital.”
Making
the
Mortgage REIT Model Better:
Diversity,
Diversity, Diversity
Diversity
is
Inherent in Everything We Do
§
Diverse
Business Model in our Core Competences
»
Mortgage
Origination Platform – Three Origination Channels, Over
100
Products,
Geographic Diversity.
»
Portfolio
Management - $3.5 Billion in Assets, 40 Asset Sub-Classes.
»
Liquidity
Management – REPO, Margin Waivers, Committed
Facilities,
Trust
Preferred Debt.
§
Being
Diverse is Key to Avoiding Event Risk
»
Margin
Calls
– Principal Prepayments, Price Declines.
»
Cash
Flow
– Some Part of the Portfolio is Always Generating Cash
Flow.
»
Business
Cycles – Each Product and Asset Responds Differently to
Changing
Business
Environments.
Making
the
Mortgage REIT Business Model Better:
Board
and Management
are Large Shareholders
Approximate # of
Shares
§
Independent
Board(1)
675,500
»
Bespolka,
Hendricks,
Kaplan, Mortenson, Ortale
•
Self,
Spouse,
Children, Trusts
§
Senior
Management(1,2)
3,755,000
»
Zimmer,
Cauley,
Norden, Levine, Floyd
•
Self,
Spouse,
Children, Trust
s
§
13
Other
Senior Employees(1,2)344,000
Total
#
of Shares = 4,774,500
Approximate
Current Value of $40,000,000 as of
5/12/2006
Ownership
Position
Equals ~19% Of All Classes of Shares Outstanding
No
Board Member,
Management Personnel, or Employee Referred to on this Page has Sold any
Shares
of OPX
since
Inception of
the Company and through 5/12/2006
Notes:
(1)
Includes all
Issued or Fully Vested Class A, Preferred A, and Class B Shares
(2)
Includes Shares
Paid as Past Compensation Vesting Between May 2006 though 2008
All
Data as of
5/12/06
Making
the
Mortgage REIT Business Model Better:
The
Strategic
Thinking Behind the OFS Acquisition
§
Diversify
Sources of Revenue, Yet within Opteum’s Core Area of Competence.
»
Decrease
Reliance of
RMBS Portfolio Arbitrage on Federal Reserve Rate Decisions.
§
High
Teens
ROE Potential is Accretive to REIT Investment Opportunities.
§
Purchase
Price was Very Fair, if not Cheap.
»
Price
was
approximately “Book Value” at a time when the Publicly Traded Peer Group
Multiples
were 1.3x
to 2.2x book.
»
Book
Value Consists
of Mortgage Servicing Rights and Residuals.
»
The
Mortgage Banking
Operation was Essentially “Free.”
§
Executive
Expertise – Experience is Key to Avoiding Event Risk.
»
Top
Three OFS
Managers Each have Between 18 and 28 Years of Origination Experience.
»
100%
Stock Deal –
Only 20% of OFS Management’s OPX Stock can be Sold within First
Three
Years.
»
OFS
Managers Have
Purchased More Shares in the Open Market Since the Transaction
was
Announced.
§
OFS
is
Nearing the Point in Their Lifecycle (sometime in mid-2007) where Cash
Flow
from Operations
will be Sufficient to Sustain Organic Growth.
Data
Provided By FlagStone Securities
Price
to
Book Ratios for RMBS (Portfolio Only)
REITs
and REITs with Origination Platforms (Active/Prime)
and REITs with Origination Platforms (Active/Prime)
Data
Provided By FlagStone Securities
Current
Price to Book Ratios for
Active
Originator
REITs
Capital
Structure
|
Class
A Stock Market
Capitalization*
|
$203,789,751
|
|
|
Shares
Outstanding: 24,318,586
|
||
|
Share
Price:
$8.38
|
||
|
Bimini
Capital Trust I
|
$50,000,000
|
|
|
Interest
Rate
of 7.61%
|
||
|
Bimini
Capital Trust II
|
$50,000,000
|
|
|
Interest
Rate
of 7.8575%
|
||
|
Total
Capital Structure
|
$303,789,751
|
|
|
Loan
to OFS at 11%
|
$65,000,000
|
|
As
of
5/12/2006 *Note: 318,388 Class B Shares were issued with
dividend and voting rights.
Capital
Allocation and the Relationship Between the
REIT
and the Taxable
REIT Subsidiary (“TRS”)
§
The
Company
can Allocate Resources in Three Ways.
1.
Capital
to Opteum
Financial Services (“OFS”, the Company’s TRS) to Facilitate Growth.
2.
REIT
Portfolio
Investments.
3.
Corporate
Stock
Buy-Back at a Discount to Current Book Value.
4.
Q4
2005 - 561,800
Shares Bought at an Average Price of $9.29.
5.
Q1
2006 - 527,300
Shares Bought at an Average Price of $8.50.
§
OFS
(TRS) is
Expected to Make a Profit through Their Own Operations.
»
OFS
will Securitize
in Agency or Private Label Format their Originations and Sell them at
the
TRS Level.
»
OFS
(TRS) will Retain
the Mortgage Servicing Rights and the Securitization Residuals.
»
OFS
uses Gain on Sale
GAAP Accounting.
»
Any
GAAP Profit
Produced by OFS over at least the Next Few Quarters will be Retained
(Book
Value
Growth).
§
The
REIT
(Opteum Inc.) does Not Currently Anticipate Purchasing OFS
Originations
for
Portfolio.
»
Exception:
Specified
Agency Pools.
Opteum
Financial Services
The
Company’s Mortgage Origination Platform
and
Taxable
REIT
Subsidiary
Who
is
OFS?
Opteum
Financial Services
§
OFS
is a Paramus,
New Jersey Based Mortgage Banker
§
Founded
in 1999 by
Peter Norden and Marty Levine
»
28
Years Each in the
Mortgage Business (Accounting and Financial Backgrounds)
»
Founded
Three
Mortgage Companies Previously
§
Diversified
Originator
»
Three
Channels of
Originations
»
Retail
–
1/3
»
Wholesale
–
1/3
»
Conduit
–
1/3
»
All
Loan Products
Originated
»
Prime
‘A’
»
Alt-A
–
62%
of 2005
Originations
»
Expanded
A-
»
Subprime
–
All
sold,
servicing released, for cash
»
Originate
Loans
Through Builders and Realtors
»
Not
a REFI
Shop
»
Loans
Originated in
47 States in 2005
»
Over
1,000 Employees
with 35 Offices
§
Expansion
Through
Selectively Adding New Offices with Seasoned
Mortgage
Loan
Officers
Wholesale
Division:
Regional
Offices
(2)
Branch
Offices
(4)
Retail
Division:
Branch
Offices
(30)
Conduit
Division:
National
Office
(1)
The
Origination Platform: Opteum Financial
Services
§
OFS
no longer
securitizes Subprime products (starting with OPMAC 2005-2).
§
OFS
sells 100%
of it’s Subprime Originations Servicing Released.
§
OFS
no longer
securitizes second mortgages (the last one in OPMAC 2005-2).
|
2005
|
2006
(Through 3/31/06)
|
||||||
|
Product
|
#
of
Loans
|
Loan
Amount
|
%
of
Total
|
#
of
Loans
|
Loan
Amount
|
%
of
Total
|
|
|
FNMA
/
FHLMC
|
2,784
|
508,751,552
|
7.6%
|
798
|
151,987,479
|
11.8%
|
|
|
FHA
/ VA
|
1,682
|
245,493,826
|
3.6%
|
384
|
60,494,764
|
4.7%
|
|
|
Non-Conforming
|
1,084
|
343,155,332
|
5.1%
|
174
|
52,816,540
|
4.1%
|
|
|
Prime
ARM
|
518
|
106,226,617
|
1.6%
|
25
|
6,536,262
|
0.5%
|
|
|
ALT-A
|
15,438
|
4,202,591,998
|
62.4%
|
2,656
|
785,015,215
|
60.8%
|
|
|
Expanded
A- /
Subprime
|
2,880
|
701,699,259
|
10.4%
|
390
|
79,625,969
|
6.2%
|
|
|
Second
Liens
|
7,184
|
385,583,161
|
5.7%
|
1,151
|
72,505,012
|
5.6%
|
|
|
Negative
Am
ARM
|
50
|
17,332,919
|
0.3%
|
8
|
2,342,550
|
0.2%
|
|
|
Brokered
Loan
|
1,430
|
226,854,353
|
3.4%
|
400
|
78,946,316
|
6.1%
|
|
|
TOTAL
|
33,051
|
6,737,689,017
|
100.0%
|
5,986
|
1,290,270,107
|
100.0%
|
|
OFS
Production Summary
OFS
Origination Production by Channel
Actual
Conduit Results May Vary Greatly Based on Market Conditions
OFS
Issuance
Summary By Deal Name
|
Name
|
UPB
Issue
Amount
|
Gross
WAC
|
Net
WAC
|
WALTV
|
WACLTV
|
WA
Fico
|
|
HMAC
2004-1
|
309,846,147
|
6.114
|
5.634
|
81.64
|
84.67
|
683
|
|
HMAC
2004-2
|
387,791,245
|
5.559
|
5.296
|
77.35
|
81.32
|
692
|
|
HMAC
2004-3
|
417,055,302
|
5.529
|
5.244
|
77.00
|
81.89
|
692
|
|
HMAC
2004-4
|
410,125,325
|
5.960
|
5.620
|
79.60
|
84.72
|
690
|
|
HMAC
2004-5
|
413,874,752
|
6.161
|
5.864
|
79.34
|
85.15
|
690
|
|
HMAC
2004-6
|
761,026,691
|
6.255
|
5.936
|
81.30
|
87.56
|
686
|
|
OPMAC
2005-1
|
802,625,137
|
6.077
|
5.792
|
78.10
|
85.18
|
688
|
|
OPMAC
2005-2
|
883,988,562
|
5.927
|
5.642
|
75.99
|
84.13
|
693
|
|
OPMAC
2005-3
|
937,116,704
|
6.067
|
5.796
|
75.56
|
84.61
|
699
|
|
OPMAC
2005-4
|
1,321,738,004
|
6.203
|
5.923
|
75.57
|
85.09
|
701
|
|
OPMAC
2005-5
|
986,662,596
|
6.209
|
5.918
|
74.05
|
82.35
|
702
|
|
OPMAC
2006-1
|
934,441,048
|
6.429
|
6.141
|
72.53
|
83.12
|
704
|
|
Total
Issuance
|
8,566,291,513
|
6.099
|
5.806
|
76.60
|
84.28
|
695
|
|
Provider
|
Commitments
|
|
|
Inter-Company
Loan
|
||
|
REIT
Loan to
OFS (10 Year Fixed Rate at 11%)
|
$
65,000,000
|
|
|
Warehouse
Lines
|
||
|
GMAC
–
RFC
(Committed)
|
$
100,000,000
|
|
|
UBS
(Uncommitted)
|
$
750,000,000
|
|
|
Colonial
Bank –
Syndication (Committed)
|
$
284,500,000
|
|
|
JP
Morgan
(Committed)
|
$
150,000,000
|
|
|
Aggregation
Line
|
||
|
Greenwich
(Repo
Facility)
|
$
200,000,000
|
|
|
Citigroup
|
$
1,500,000,000
|
|
|
Residual
Financing Line
|
||
|
Citigroup
|
$
50,000,000
|
|
|
Proposed
Syndication
|
||
|
JP
Morgan Chase
(Committed)
|
$
1,000,000,000
|
|
OFS
Credit
Facilities and Sources of Capital
The
REIT
Portfolio
The
REIT
Portfolio
§
The
REIT
Currently owns Agency Mortgage Related Securities.
»
Very
Little Credit
Risk.
§
Diversification
Across Various Types of Low-Duration Assets.
»
There
is Always Cash
Flow from Some Type of Mortgage, Even When other Types are
Not
Generating Cash
Flow.
»
Low-Duration
Assets
have Historically Exhibited Low Price Volatility.
»
Diversification
Limits Potential Volatility from Overexposure to any One Asset Class.
1.
Adjustable
Rate Securities (those
that reset
within 12 months)
2.
CMO
Structured Monthly Resetting Floaters
3.
Hybrid
ARMS
and Balloons
4.
Fixed
Rate
Assets (specified
pools,
sequential CMO’s, agency debt - with low durations)
5.
Cash (Opteum
typically has 40% of its equity in cash, especially prior to monthly
bond factor
and
prepayment
release)
§
Leverage,
Defined as Debt to Equity, Typically Ranges from 8x - 12x.
§
Portfolio
Constructed with the Aim of Performing Well in Both Rising
and
Falling Interest
Rate Environments.
»
Inelastic
Borrowers
and Adjustable Rate Assets.
How
does
Opteum Effectively Address Weaknesses in the
Mortgage
REIT
Investment Portfolio Model and Make it Better?
1.
Cash
Management and Committed Funding
Agreements.
•
$1.65
Billion in
Committed Lines
•
Two
Principal Prepay
Margin Waiver Contracts Totaling $150 Million
•
Typically,
40% of
Equity in Cash Prior to Factor Releases
1.
True
Quantitative Risk Management –
Basel Accord.
2.
Diversification –
Portfolio is Diversified across
Many Classes of
Low-Duration,
Low-
Price Volatility,
Agency Mortgage Related
Assets.
•
Over
40 Subset Types
of Loans
•
Weakness
of Hybrid
Mortgage Investment Model
•
Inelastic
Borrowers
1.
Loan
Level
Detail Analysis – CPR-CDR
Technologies.
•
Top
of The Pear
Tree
1.
Full
Transparency – Portfolio Released Every 6 Weeks, 8-K
Releases.
2.
Repo
&
Settlement Outsourcing – Experts,
Fail Rates, Reverse Margin Calls.
3.
Application
of Best Practices – In Everything We
Do.
REIT
Current
Portfolio Holdings
REIT
Current
Portfolio Holdings in More Detail
REIT
ARM
Reset Schedule
Opteum
(REIT) Liabilities
Opteum
ARM
& Hybrid Prepayment Speeds
Opteum
Fixed
& Balloon Prepayment Speeds
As
of
5/15/06
Today’s
REIT
Investment Opportunities
on
Marginal Equity
Net
Asset Yield
(After
Amortization)5.98%
Cost
of
Funding (3
Month
LIBOR)5.21%
Net
Interest Spread
(NIS)0.77%
NIS
x Leverage
(11:1)8.47%
Return
on
Unlevered Equity5.55%
Return
on
Investment
14.02%
Overhead
(2.00%)
Funding
Contracts/Other Expenses (0.50%)
Return
on
Equity
11.52%
Analysts
Estimates
for OPX
|
Firm
|
Analyst
|
Q2
2006
Earning
s Estimate |
Q3
2006
Earning
s Estimate |
Year
2006
Earnings
Estimate |
Date
of
Most Recent
Report
|
Rating
|
Year
2006
Dividend Estimate |
|
Deutsche
Bank
|
Steven
Laws
|
$
0.13
|
$
0.17
|
$0.61
|
March
22,
2006
|
Buy
|
N/A
|
|
FIG
Partners
|
Chris
Marinac
|
$
0.05
|
N/A
|
$
0.24
|
March
17,
2006
|
Market
Perform
|
$
0.28
|
|
Friedman
Billings
Ramsey
|
Merrill
Ross
|
$
0.04
|
$
0.11
|
$
0.39
|
December
13,
2005
|
Market
Perform
|
N/A
|
|
Hilliard
Lyons
|
Ross
Demmerle
|
$
0.32
|
$
0.34
|
$
0.81
|
March
22,
2006
|
Neutral
|
$
0.44
|
|
Cohen
Brothers
|
Alvar
Soosaar
|
N/A
|
N/A
|
$
0.55
|
May
10,
2006
|
Buy
|
$
1.08
|
|
Flagstone
Securities
|
Steve
Delaney
|
$
0.09
|
$
0.12
|
$
0.45
|
March
30,
2006
|
N/A
|
$
0.37
|
|
Average
=
|
$
0.13
|
$
0.19
|
$
0.51
|
$
0.54
|
|||
|
High
|
Low
|
Average
|
Analysts
Estimates for OPX Earnings Including OFS Earnings
www.opteum.com