MKZR

Mackenzie Realty Capital ($MKZR) CEO Aggressively Buying Amid 55% Stock Plunge - But Is the 32% Dividend Yield Sustainable?

04/01/2025 15:08

Despite a staggering 55% plunge in Mackenzie Realty Capital's ($MKZR) stock price over the past six months, top executives have been consistently purchasing shares, signaling a potential belief that the stock is currently undervalued. $MKZR shares climbed to around $4.69 in mid-December 2024 before suffering a dramatic decline, bottoming out at $1.75 in early January 2025. After a brief recovery, the downward trend continued, with shares recently trading near the $1.50 mark. This represents approximately a 55% decrease in value over the six-month period. Amid this persistent decline, Mackenzie Realty Capital's CEO Robert Dixon has been aggressively buying shares. Notably, he purchased a total of 40,000 shares (worth approximately $105,150) across three transactions between January 16-21, 2025. His buying activity intensified in March, when he acquired an additional 85,591 shares (valued at approximately $153,263). Officer Christine Simpson also joined the insider buying signal, purchasing a total of 2,500 shares throughout March. What's particularly noteworthy is that these insider purchases were concentrated during periods when the stock price was at its lowest. Dixon's buying became especially aggressive after mid-March when the share price fell below $1.70. SEC filings indicate that both executives also hold indirect stakes through MPF Successors, LP, further highlighting management's long-term commitment to the company. Examining Mackenzie Realty Capital's financials reveals a small real estate investment company with a market capitalization of approximately $22 million and trailing twelve-month revenue of $23.09 million. However, the company reported a net loss of $19.47 million during the same period, resulting in earnings per share (EPS) of -$1.46. The company also carries $128.60 million in debt, resulting in a concerning debt-to-equity ratio of 129.1%. Particularly striking is the company's extremely high dividend yield of 32.3%. The payout ratio of 285% indicates that Mackenzie is distributing far more in dividends than it earns, which may not be sustainable in the long term. The next dividend payment is scheduled for April 25, 2025. The aggressive insider buying in this context can be interpreted in several ways. First, management may have strong confidence in the company's long-term prospects. Alternatively, they might anticipate that the current net losses are temporary and expect performance to improve soon. Or they may simply believe that the current stock price ($1.50) is significantly discounted compared to the company's actual asset value (book value per share of $5.07). Real estate investment companies have generally faced challenges in the high-interest-rate environment and amid economic slowdown concerns. Nevertheless, the share purchases by Mackenzie Realty Capital's management could be interpreted as a signal that the current stock price is undervalued. However, the high debt levels, continued losses, and seemingly unsustainable dividend policy remain significant risk factors. Investors should look beyond the high dividend yield and carefully examine the company's fundamental financial health and business model sustainability. While management's aggressive stock purchases are undoubtedly a positive signal, they don't necessarily offset all risk factors. It will be worth monitoring whether the company announces any additional funding plans or business strategy updates following the April 25 dividend payment.

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