Ashford Hospitality Trust: A View From The Perspective Of A Preferred Investor (Update)

| About: Ashford Hospitality (AHT)


Although Asford's common is slightly down this past quarter, it foretells no existential threat, further promised by its recent preferred offerings issued at favorably low interest rates.

Although its preferred prices are down for the quarter, they are once again in the realm of rationality and are potentially investable.

As far as I'm concerned at the current pricing, the G Series offers the best buying opportunity.

This revisit updates my initial look at Ashford Hospitality Trust (NYSE:AHT) from my August 17, 2016, article,"Ashford Hospitality Trust: A View From The Perspective Of A Preferred Investor".

Although it is my hope that you will read the entire article, for which I have provided the link above, my bottom-line assessment and buy recommendation at the time were as follows:

I re-affirm my statement that this company, at present, faces no existential threat, which as far as I'm concerned is the only way the cumulative preferred investor can ultimately lose; however, the picture might not appear this rosy had the market not gone wild this past half year. My concern is that this bull market might be covering up an otherwise negative picture that would have been apparent under normal market conditions. Consequently, I urge investors take a harder look and do more careful DD at any company, sector or fund they are currently interested in.

Let's see how the commons have performed over the past three months since I wrote the previous article concerning Ashford. Because of the greater volume of common shares traded as opposed to the limited liquidity of most preferreds, I find the commons to be a better indicator of a company's performance.

Click to enlarge

It appears that over the past three months, AHT's price movement has been choppy; however, it has trended down, with a recent upward swing, yet it still lost a bit over the past three months. On August 22, its commons traded at $6.85 and is currently trading at $6.52. A loss of $0.33.

Let's take a look at how AHT's perferreds performed over the past three months as shown by MarketWatch:

Click to enlarge

Click to enlarge

Click to enlarge

Click to enlarge

Over the past three months, except for the recently issued G Series, all three preferreds have trended down slightly. However, as I have predicted often and repeatedly, the basic preferred market was experiencing irrational exuberance and too many preferreds had, with little reason, exceeded their par values as AHT preferreds had done. Guess what folks, along with many others, AHT's preferreds have fallen back to a more sane value. Nothing to notice here, they are still trading around par value.

Now for a little forward guidance:

Because, as I illustrated above, as a long-term cumulative preferred investor, I am little concerned about quarterly financial reports and their attendant conference calls, which are liberally spun, I don't bother paying much attention to them unless the particular company is at risk of suffering some existential threat. AHT is not one of those companies; therefore, it's time to determine if either of its preferreds are a buy at this time, and if so, which is the better buy.

AHT Preferreds 11-18-16
Symbol Yearly Dividend Price Dividend/Price Yield Best
AHT-A 2.1375 25.17 2.1375/25.17 8.49%
AHT-D 2.1125 24.65 2.1125/24.65 8.57%
AHT-F 1.84375 22.44 1.84375/22.44 8.22%
AHT-G 1.84375 22.01 1.84375/22.01 8.38% Best
Click to enlarge

By far, the G is the best buy at these prices. Although its yield is a tad less than the D, its ultimate price appreciation upon call is significantly better, and because it's a recent issue, you can be assured of a respectable dividend until at least 10/18/21 when it becomes callable.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.