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

A Behavioral Overreaction Makes Select Income Realty An Opportunity

The purpose of this article is to alert readers to some strange market behavior that has created an opportunity.

What happened?

After market on July 9th, it was announced that CommonWealth REIT (NYSE:CWH) sold its Select Income Realty (NYSE:SIR) shares to Government Properties (NYSE:GOV) at $31.51/share. On July 10th, the market reacted to this information with the following price changes.

Company

Price at close of 7/9/14

Price now (intraday 7/10)

% change

SIR

$29.98

$28.80

-3.9%

CWH

$25.91

$26.75

+3.2%

GOV

$25.38

$24.72

-2.6%

Data from SNL Financial

The opportunity

CommonWealth's gain makes sense as it sold the shares at about $1.50 premium to market price so it recorded an immediate gain. For the...

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