Stone Fox Capital
Long/short equity, growth at reasonable price, research analyst, deep value

Colony Financial: Too Volatile For A 6.5% Yield

Most investors know Colony Financial (NYSE:CLNY) for its investment in single-family rental homes, but the company is actually so much more. In reality, the company is a real estate investment trust, or REIT, that owns a diversified portfolio of distressed and opportunistic commercial real estate debt and equity investments.

The REIT currently offers a solid 6.5% dividend, but Colony Financial has raised money multiple times at similar prices in relation to the current net asset value, or NAV. In addition, the company is now highly invested in equity at nearly 40% of the investment portfolio, but the stock has seen limited gains since the IPO back in 2009 at $19.50.

Colony Financial has consistently grown core earnings since...

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