I don't think there is that much uncertainty persistentone.
Wholesale funding is continually being paid down and with each day that goes by it reduces the risk of withdrawal of that funding. If some wholesale funding was withdrawn it would make little difference in any case as mortgages would just be sold off at par like RHG did to NAB a couple of years ago.
The only uncertainty is what the directors are going to do with the $1+ cash per share minimum at the end of this year when the mortgage book runs down. Either re-enter the mortgage business, buy into another opportunity (after shareholder approval) or return the cash to shareholders in 2011. Getting $1+ for 64c is a pretty good deal to me.
The risk therefore is that the company makes a poor investment with the accumulating cash. Shareholders will have the opportunity to bail before that happens anyway based on shareholder approval.
RHG Price at posting:
56.4¢ Sentiment: None Disclosure: Held
