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  • Wait For Realty Income To Fall $9 Before Buying [View article]
    If you look at the chart I provided a link to, you will see that over the course of 2004 O always traded completely inverse to the 10-year yield.
    May 22, 2015. 07:38 PM | Likes Like |Link to Comment
  • Wait For Realty Income To Fall $9 Before Buying [View article]
    riddix: That is completely untrue. Throughout 2004 and 2005 the 10-year treasury yields were quite volatile and O's share price movement completely followed in lock-stop in the opposite direction of the rates. Thus the inverse correlation I discussed above held in 2004 as well.

    See the second figure for O vs the 10-Year rate on my instablog post here:

    May 22, 2015. 07:58 AM | Likes Like |Link to Comment
  • Wait For Realty Income To Fall $9 Before Buying [View article]
    I read over the M* analyst report. While they did raise their FVE to $50 due primarily to lower cost of equity (from 8% to 7.5%), there were several cautionary statements in the report regarding the looming interest rate hike. This included a statement that the pending rate hikes may provide an opportunity for investors to purchase O at a greater margin of safety after a pull back due to the hikes. They also give a wide range for their FVE estimate, from a high of $62 to a low of $37.

    Here are a few blurbs from the analyst report that I think are noteworthy:

    "Realty Income remains one of our favorite real estate investment trusts, but the changing environment is likely to present the firm with unique challenges relative to its first 20 years as a public company. Nonetheless, the potential for higher interest rates may present an opportunity to add shares of this quality firm at a reasonable margin of safety.

    Relative to its traditional non-investment-grade retail tenants, investment-grade tenants should be even more likely to honor lease commitments during the initial lease term, but we think the nonretail tenants may present greater risk when leases expire because there is often not the same direct economic incentive to re-lease Realty Income's property as opposed to another. If we're right, this might lead to higher re-leasing costs or more vacancies longer term than Realty Income has experienced historically, although we wouldn't expect this to play out until the nonretail tenant leases begin expiring, which is still a few years away.

    Although the acquisition environment has been very favorable for Realty Income recently, we expect volume to slow later in our forecast. We ran upside and downside forecasts to reflect potential future environments that are either more or less favorable, respectively, than our base-case expectations. Our upside fair value estimate is $62 and our downside fair value estimate is $37."
    May 21, 2015. 12:20 PM | 1 Like Like |Link to Comment
  • Wait For Realty Income To Fall $9 Before Buying [View article]
    I agree with the author's opinion on O. It is my humble opinion that when the Fed does idicate that it will raise rates, this will throw a monkey wrench into REIT share prices and they will tank on a broad market overreaction.

    For this reason, I have taken profits on several of my REITs (in which I did not feel very comfortable with the purchase price in providing me a margin of safety). I would much rather wait a year or so and buy at a great price then buy or hold now and collect a meager dividend. My goal right not is total returns, not income.

    If you don't think a rate hike will affect REITs, you should consider the extremely tight inverse correlation between REIT share price and the 10-Year treasury yield.

    See some charts, including O vs. the 10-Year rates here:
    May 21, 2015. 09:47 AM | 4 Likes Like |Link to Comment
  • TJX Companies May Be The Better Retailer, But Are Bed Bath & Beyond And Kohl's Better Stocks? [View article]
    I completely agree that TJX's strong earnings growth is baked into the current price. However, it is a best of breed company with compelling growth prospects. Why buy sub par companies when you can own the best?

    My advice would be to wait and buy TJX on dips, especially broad market pull backs. In the meantime if one has cash to invest, look for bargains in other sectors. No need to focus only on retail.
    May 20, 2015. 03:49 PM | 1 Like Like |Link to Comment
  • Home Depot - A Definite Sell Into Earnings [View article]

    I of course completely agree. The way to generate wealth is to buy quality companies and hold for the long term. Since I'm still working and in accumulation phase, I have plenty of regular and positive cash flow to invest over time. No need to waste my energy and pulling in and out of positions. That is too much work when I can simply let the the company do the work for me.

    Congrats on your long-term hold in an outstanding company.


    May 20, 2015. 03:12 PM | 1 Like Like |Link to Comment
  • Why You Shouldn't Put Too Much Weight On Dividends [View article]

    You stated:

    "So my question once again: you say you don't concern about price fluctuations. But if a stock drops by 30-50%, how does a 2% dividend help you? You can tell yourself that it is a paper loss - there is no such thing as paper loss. A loss is a loss."

    I'll give you my real life example. I am a buy-and-hold investor and I bought INTC on May 9, 2012 for $27.04. I then watched as it subsequently dropped about 30% to $19 and change. At that point I then tripled my investment buying several lots between $20 and $21 dollars per share. During that time INTC continued to pay dividends, which were subsequently reinvested to purchase more shares. During that time period, I have received 39.522 new INTC shares from dividends, many of which were obtained during INTC's downturn, which also helped lower my cost basis.

    I still hold all of my original shares and the new shares from dividends, and instead of panicking and selling for 30% loss, I currently stand with 53% gain (with expectations for significantly more upside over the coming decades).

    So I'm no sure exactly what your point is with that comment, but a loss ain't a loss until you sell it. While some may say I made a mistake in buying INTC at $27, I surely would have made an even larger mistake by selling at $19.
    May 20, 2015. 01:45 PM | 5 Likes Like |Link to Comment
  • American Realty Capital Properties: Time To Risk A Position? [View article]

    Sure, everyone who does DD on an equity should question and examine quality, but txcounselor was not questioning the quality, she was stating that ARCP was in fact a low-quality REIT. I simply asked her to define this.

    While certainly stewardship is one such metric to base quality on, the previous questionable leadership has been removed and the accounting issues completely resolved. IMO, the far more important determinant of quality going forward is the quality of ARCP's tenants. ARCP currently is one of the largest, if not the largest, triple net REITs with 4,647 properties in 49 different states, a portfolio occupancy of 98.4%, investment grade tenancy of 47.0% and a weighted average remaining lease term of 11.7 years.

    Although the past accounting issues are certainly unfortunate and regrettable, they do not negate the vast and high-quality properties held by this REIT, nor the dividend potential and growth for ARCP going forward.
    May 20, 2015. 12:58 PM | 3 Likes Like |Link to Comment
  • American Realty Capital Properties: Time To Risk A Position? [View article]
    txcounselor: Please explain how ARCP, which currently does not pay a dividend, is a high yielding stock. Then please explain how ARCP, which holds a massive portfolio of largely investment grade properties, is low quality.

    Thanks so much.
    May 20, 2015. 09:15 AM | 7 Likes Like |Link to Comment
  • Why You Shouldn't Put Too Much Weight On Dividends [View article]
    "If you believe that the stock will grow, and it does, why not just sell 2-3% of it each year if you need income? It's exactly the same thing."

    Sigh. Not this same old argument yet again!

    Investors interested in this issue should read David Van Knapp's excellent article entitled, "Why Selling A Few Shares Is Not The Same as Getting a Dividend"

    May 20, 2015. 09:09 AM | 9 Likes Like |Link to Comment
  • Why You Shouldn't Put Too Much Weight On Dividends [View article]
    It would appear that investors taking advice from Betterment are indeed planning for a better retirement, i.e., a better retirement for Betterment, not for themselves.
    May 20, 2015. 08:29 AM | 5 Likes Like |Link to Comment
  • American Realty Capital Properties: Time To Risk A Position? [View article]

    Yes, they did state in the Q3 2014 results that the reinstated dividend would be on a quarterly basis.

    From the release:

    "The Board of Directors will announce the Company’s new dividend policy later in 2015

    • When the dividend is reinstated it is expected to be paid on a quarterly basis"

    Link to Release:
    May 20, 2015. 08:03 AM | Likes Like |Link to Comment
  • Is Williams' Total Return Expectation Crazy? [View article]
    Eli: Nice article and thanks for doing the number crunching. I've been long WMB since 2013 at $37 and recently doubled down on my position at $40.42 in January. Pretty much any growth scenario you describe above would suit me just fine. As with any of my purchases, I plan to hold for a very long time.


    May 20, 2015. 07:57 AM | 1 Like Like |Link to Comment
  • Goldman's Currie: "Too much money" in oil [View news story]
    What Jeff Currie said just before that: "Dude, don't bogart that joint."
    May 19, 2015. 03:18 PM | 9 Likes Like |Link to Comment
  • Home Depot - A Definite Sell Into Earnings [View article]
    I bought HD at $76. If I was to move in and out of positions, I wouldn't be sitting on a 50% total return right now. I don't plan to sell my shares for at least 20-30 years. If I want more shares, I'll buy more when the price looks good, but I will never sell my original shares.
    May 19, 2015. 02:55 PM | 1 Like Like |Link to Comment