Dane Bowler
Value, hedge fund analyst, REITs, long/short equity

Superb Fundamentals Portend 100% Upside For Sotherly Hotels

SoTHERLY Hotels (NASDAQ:SOHO) is a rare investment opportunity with a 20% expected return on invested capital. Typically, obtaining such a return requires taking on substantial risk, but given its extreme undervaluation at a price to expected AFFO of only 5[x], SOHO provides investors with a superior risk/reward tradeoff.

The buy thesis

As SoTHERLY Hotels realizes its earnings and growth potential, the market should begin to assign a fairer valuation. I believe that achieving a proper valuation would provide current investors with over 100% upside and this valuation will be justified through fundamental analysis. Specifically, we will look at:

  1. Earnings
  2. Growth
  3. Financial health

Let us dive right in.

Earnings

Early in 2013 SOHO provided the following guidance: (click to...

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