Strategic Hotels & Resorts: Only for Long Term Investors

Strategic Hotels & Resorts (BEE) continues to get beat down by the bad economy, and while I do believe that this stock - and other stocks like it - will eventually recover as people start spending money on luxury weekends and vacations again, I don't think that a recovery in this sector is imminent.

I think it'll be a long time before things 'return to normal' in that sector and these companies will merely survive for the time being.

That being said, a recovery should eventually take place in the sector and while I think that there are a lot of better places right now to put your money for more immediate growth - an investment in BEE with a long term outlook may not bee (bad joke) a bad idea.

Disclosure: No positions.

Comments

[malach hamo...:]

a much better play is the preferred

it can increase 6x on a recovery even if the company sells a lot of common.

also Felco & its preferred

Aug 27 05:39 AM

[doubleeagle:]

BEE actually gives investors the most promise right now in the short term. If they divest a property or two, then this stock will be instantly trading above two dollars. This stock has a lot of catalyst coming that could give this stock a pop of 50% plus. I have owned this stock from .84 to 1.17. I have followed it closely and if there are able to sell the Chicago Fairmont then it will put this company in great position going forward. Have to remember that this company has great assets. So selling more common stock is highly unlikely.

Aug 27 01:09 PM

[VFC's Stock...:]

Thanks for the comments.

Appreciate it and I can see BEE buzzin to some gains....

Lame jokes aside.

VFC

Aug 28 12:52 AM

[malach hamo...:]

the common is highly speculative and any additions to equity would dilute heavily

the preferred, at 4.50 including over $1 in accrued dividends, could quadruple on any sign of stability and a resumption of the div.

Aug 28 04:58 PM

[Chris B:]

Don't worry about dilution. If, for illustration, they sell 1M shares at a market price of $1 each, the company will be worth $1M more than it was before (cash from the sale of stock is added to the company's assets, or subtracted from liabilities) which exactly equals the dilution to existing shareholders for a net change of zero. Actually, if the prospect of bankruptcy was removed by the cash infusion, the "dilution" could cause existing shares to appreciate.

Sep 01 08:21 PM

[Kumar_kp:]

I got some shares at an average of 1.25. If it runs up to the 1.40s again I will sell half and hold the rest for a long term play.

Sep 02 12:26 PM

[malach hamo...:]

we still feel that the preferred is the way to go; however, now that it's over $7, it's got to prove that it can ultimately return to dividend payment;. otherwise, the preferred can be as dead as the common with a management that hangs on just to keep paying itself a salary.

Sep 21 08:29 PM

[FreeMkts:]

Recent sale of Mex City property at a profit (8% over book) only bolsters cash position to ride this out. Looks like total preferred outstanding is about $360M vs. $1.7B long term debt and $200M market cap. Plus preferreds are trading at 16%+ current yield (once dividend reinstated) with at least a 16% goose with cummulative function. Book value of $4.70 is likely understated but represents a reasonable upside expecation on the common. For preferreds it shows liquidation would have be at more than a 15% discount to book before the Par Value is compromised.

Oct 20 09:40 AM

[FreeMkts:]

Prefs at 50% discount to par versus stock at 45% discount to book? Preferred has similar upside, more protection on the downside and significantly better dividend/cash flow outlook.

Any other suspended dividend preferreds with similar prospects? NCT, FCH, MPG all look suspended but have not looked closer at fundamentals yet.

Oct 20 09:45 AM