GHI

Greystone Housing ($GHI) Directors Double Down on Undervaluation Bet Amid Stock Plunge

11/17/2025 21:24

Senior executives at Greystone Housing Impact Investors ($GHI), a small-cap mortgage finance company, have been actively buying shares amid a significant stock decline, drawing investor attention to potential opportunities. According to insider trading disclosures filed November 17, Director Jeffrey Baevsky purchased a total of 2,585 shares for $22,301 across two transactions on October 29 and November 3. This marks the first insider buying activity in approximately 15 months since CEO Kenneth Rogozinski's consecutive purchases in August 2024. Greystone Housing Impact Investors is a specialized mortgage finance partnership based in Omaha, Nebraska, that focuses on acquiring, holding, and trading mortgage revenue bonds (MRBs) financing affordable multifamily housing, student housing, senior citizen housing, skilled nursing properties, and commercial real estate. The company operates through four primary segments: Affordable Multifamily Investments, Seniors and Skilled Nursing Investments, Market-Rate Joint Venture Investments, and Multifamily Properties. Originally known as America First Multifamily Investors, the company rebranded in December 2022 to better reflect its strategic focus on impact-driven housing finance. The timing of insider purchases is particularly noteworthy given $GHI's severe stock underperformance. Shares have declined from around $13 in June 2024 to approximately $10.8 currently, representing a year-to-date drop of 36% and a one-year decline of 42.56%. The stock is trading near its 52-week low range of $6.53-$13.29, with particularly sharp declines occurring in October-November 2024 when shares fell from $12 to the $10 range. Despite the stock's poor performance, the company's fundamentals show significant improvement. Third quarter 2025 results revealed a return to profitability with net income of $2.0 million ($0.03 per Beneficial Unit Certificate), a dramatic turnaround from a $4.64 million loss in Q3 2024. While revenue declined 11.9% year-over-year to $21.68 million, the company maintained strong profit margins of 30.18% and operating margins of approximately 39.80%, demonstrating effective cost management capabilities. More significantly, Greystone is undergoing a strategic transformation to enhance stability. The company is actively reducing capital allocation to market-rate joint venture equity investments due to rising interest rates and capitalization rates negatively impacting multifamily property values. Instead, management is focusing on tax-exempt mortgage revenue bonds (MRBs), governmental issuer loans (GILs), and senior housing investments to provide more stable cash flows and tax advantages. As part of this strategy, the company has listed its 288-unit Vantage at Loveland property for sale to redeploy capital into preferred investment categories. The financial position remains solid with $37.82 million in cash on hand as of Q3 2025, providing adequate liquidity for operations and investments. The current ratio of 2.09 indicates healthy short-term liquidity coverage. Cash Available for Distribution (CAD) reached $4.6 million ($0.20 per BUC) in Q3, supporting ongoing distributions to unitholders. The company offers an attractive dividend yield of 18.13%, appealing to income-focused investors. However, high leverage remains a key risk factor. The debt-to-equity ratio of 273.85% is substantial even for mortgage finance companies and could pose challenges in a rising interest rate environment. The dividend payout ratio of approximately 788% relative to earnings raises sustainability concerns without earnings improvement or capital restructuring. Analyst sentiment remains cautiously positive. Citizens maintains a 'Market Outperform' rating while Jones Trading assigns a 'Buy' rating. Average price targets around $10.50 suggest meaningful upside potential from current levels, with some analysts setting targets as high as $14. The forward P/E of 6.79 compared to trailing P/E of 38.94 indicates expectations for significant earnings improvement ahead. The insider trading pattern appears encouraging. Director Baevsky purchased 2,285 shares at $8.67 on October 29 and 300 shares at $8.30 on November 3 - both below current trading levels, suggesting management views the stock as undervalued. CEO Rogozinski's previous purchases of 4,000 shares around $14 in August 2024 demonstrate consistent insider confidence. Several catalysts could drive future performance. The company announced an $80 million credit facility increase in July, extending maturity to June 2027 (with possible extension to 2029), significantly expanding investment capacity. In October, Greystone raised $5 million through Series B Preferred Units to fund new investments and operations. If the strategic transformation succeeds, the company should achieve a more stable earnings profile. All MRB and GIL investments remain current with no forbearance requests, and interest rate swaps generated net receipts of approximately $814,000 in Q3 as part of the hedging strategy. Near-term challenges include potential earnings pressure from reducing the market-rate joint venture segment. Continued interest rate elevation and multifamily market headwinds could create temporary volatility. However, the long-term portfolio shift toward stable, tax-advantaged investments should establish a foundation for sustainable growth. The stock's beta of 0.62 indicates lower volatility relative to broader markets, potentially attractive for risk-conscious investors seeking steady income streams. The high dividend yield remains appealing to income investors, though sustainability requires careful monitoring given the elevated payout ratio relative to current earnings.