REFI

Chicago Atlantic Real Estate Finance ($REFI) CFO Buys Shares After 15% Stock Plunge, Highlighting 13% Dividend Yield Appeal

04/10/2025 20:11

Chicago Atlantic Real Estate Finance Inc. ($REFI) Chief Financial Officer Phillip Silverman has purchased company shares amid a significant price decline, according to a recent SEC Form 4 filing. The CFO acquired 769 shares at an average price of $13.00 per share on April 9, 2025, for a total investment of approximately $9,997. This purchase comes at a noteworthy moment for $REFI, whose stock has experienced substantial downward pressure in recent weeks. The stock, which traded above $15.50 in mid-February 2025, has since declined sharply, hitting $13.44 on April 8. Particularly striking was the nearly 10% drop between April 4 and April 8, coinciding with broader market declines driven by concerns about President Trump's tariff policies. Interestingly, Silverman's purchase occurred on April 9, the same day President Trump announced a 90-day pause on tariffs, which sparked a dramatic market rally. The S&P 500 surged 9.5% that day, and $REFI rebounded slightly to $13.63. This timing suggests the CFO may have caught the stock near what could be a bottom. Chicago Atlantic Real Estate Finance is a commercial mortgage real estate investment trust (REIT) that specializes in originating and investing in first mortgage loans secured by commercial real estate properties, with a particular focus on established cannabis operators across the United States. As a REIT, the company is required to distribute at least 90% of its taxable income to shareholders, resulting in its attractive 13.23% dividend yield. However, the company's recent financial performance has been mixed. In its Q4 2024 earnings report released on March 12, 2025, $REFI reported adjusted earnings of 39 cents per share, down significantly from 51 cents in the same period the previous year. Revenue decreased by 6% to $15.48 million, falling short of analyst expectations of $15.76 million. In contrast, the company's Q3 2024 results, announced in November 2024, exceeded expectations with adjusted earnings of 56 cents per share (versus the expected 48 cents) and a 7.1% revenue increase. This volatility likely reflects the uncertainties in both the cannabis industry and real estate financing markets. From a financial health perspective, $REFI maintains relatively strong fundamentals. The company's low P/E ratios of 7.13 (trailing) and 6.74 (forward), along with a P/B ratio of 0.92, suggest the stock is considerably undervalued. Additionally, its impressive current ratio of 21.74 indicates the company has ample assets to meet short-term obligations. However, investors should note the somewhat high debt ratio of 79.8%. Looking at insider trading history, $REFI executives have previously responded to price movements. In November 2024, officer John Mazarakis sold shares worth approximately $44,000 on November 7, only to repurchase a similar amount the following day. However, this appeared to be a portfolio rebalancing rather than the clear vote of confidence represented by Silverman's recent purchase. Analysts maintain a 'buy' rating on $REFI with a median 12-month price target of $18.00, suggesting approximately 33% upside potential from current levels. Nevertheless, challenges remain, including rising interest rates, real estate market uncertainties, and regulatory risks in the cannabis sector. In conclusion, CFO Silverman's share purchase can be interpreted as a signal that management has confidence in the company's value and future prospects at current price levels. With its high dividend yield and low valuation metrics, $REFI may present an interesting opportunity for income-focused long-term investors. However, given the recent earnings decline and market volatility, a cautious approach is warranted.

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