Richard Woon

Richard Woon
Contributor since: 2008
Company: TH Vacation
Nice call on XIN way back in the day!
1) The debt covenant has become irrelevant now that they have met the FFO number required by it. It was only useful to try and forecast a possible dividend cut.
2) I'm only trading the stock so that's all I care about.
3) That has been the thinking. Until now, I saw very little evidence of synergies. This quarter they were able to cut costs significantly. I can only give them props for that.
4) That's the basis of my short position - they paid too much. However, I was looking for a catalyst to send the stock lower. I was hoping that would be a dividend cut. I know they have not taken enough of a hit in this area. Give their dorms a 33% haircut and see what you get?
I agree with you. Why fight the Fed & China? My buddy, Mr. Volatility, thinks that they might yank the 30 and funnel demand to the 10.
www.tradethepicture.co.../
I've spent some more time reviewing the press release. Although I stated in my article that I would get bullish on the stock if they blew-out the quarter, I just can't do it after looking over the numbers. I still believe the stock is fundamentally overpriced. I'll wait for the conference call for more info.
ACC just released their earnings and FFOM was $18,503,000. Thus, assumption #1 failed and ACC blew-out the quarter. They accomplished this on slightly lower revenue and much lower operating expenses. They were able to cut both operating and non-operating expenses significantly.
I congratulate the management team on a quarter well-done.
I still believe that FFO is a faulty metric. However, ACC's debt covenants are based on FFO (FFOM to be exact). Therefore, for debt covenant/dividend analysis, I have to use those metrics.
As a measure of a REITs financial strength and earnings, I still believe it is a metric that is based on a faulty assumption as we now know that real estate does decrease in value.
All road lead to Rome.
They have to pay 90% of taxable income - big difference since many of the REITs are losers with no taxable income. They BORROW to pay their dividends and hide their actions behind confusion in the REIT taxation law and the Fallacy of FFO.
On Apr 22 11:59 AM jimmy46 wrote:
> Read any REIT ANNUAL report:
> because they have to pay out 90% of profits every year they
>
> HAVE TO GO TO THE CREDIT & EQUITY MARKETS EVERY YEAR FOR NEW
> CAPITAL.
>
> Recently the SEC said they could pay up to 90% of those dividends
> in stock,
>
> BUT THAT DIDN'T AFFECT THE DEBT ALREADY ON THE BOOKS.
>
> ALL THE REITs you mentioned have debt more than 5x market cap. <br/>They
> need to rebalance their balance sheets.
>
> It's tough for the existing stockholders, but necessary.
The REITs are headed to ZERO
Short the weak sisters... the REITs!
I like ACC, ARE, KRC, PLD, HCP, VTR
Sakwa and the gang run the Churn & Burn well. Last year they had a ProLogis report with a BUY rating titled "Perception Becomes Reality."
Here is a link to the report at tradethepicture:
www.tradethepicture.co.../
I like your style.
Look at ACC. It's my candidate for "Short of the Year"
Obviously, CreditSights is as incompetent as Moody's, S&P and all the other FRAUDS.
I'm watching the afterhours action and it looks like the bulk of the volume took place lower than the close. I love how the powers that be try and run them up on low volume after hours or in the final ticks of the day. Even when the suckers get diluted they can be fooled into believing its good for them.
I wonder who is bookrunning and underwriting the mixed securities offering?
Benjamin Graham is obviously the king of fundamental analysis so I'd recommend him. I think one of Warren Buffet's relatives also wrote a short book with some of the basic concepts.
The best thing to do is just read 10k's and 10q's to get a feel for how they are structured. Eventually, you will be able to notice things that are off.
This company is a great short candidate. Every quarter things get worse and worse. It's a overpriced REIT disguised as an education company.
I'm glad someone has the guts to speak the truth.
What do you make of the price-to-book ratio when the books can't be trusted?
Andrew-
I respectfully disagree with you with regard to ACC. It is overpriced and overleveraged. I am doing quite a bit of fundamental research on the company at stripnomics.com.
I've done just a bit of analysis on ProLogis and I think you're absolutely correct.
Disclosure: I'm short PLD, ARE, HCP, V & EQT / Long GLD
Have the online brokers been profiting from the crash in terms of trading revenues? I would guess so but I'm not aware of any reports to substantiate that.
The use of a single family residence as an example is for simplification only. While the assets differ, the principles are the same. I agree that FFO is an earnings measure and not a value measure - but it is an earnings measure that is dependent on an asset value assumption. Thus, when value is adjusted downward, FFO should be adjusted downward as well.
You may not believe that commercial real estate values were overinflated. If so, my article is useless to you. However, I believe over time I will be proven correct. I also predict the stock market will fall more. If you think it has bottomed - buy.
I see that one of the top holdings is ProLogis (PLD). You'll think I'm crzay but I think it is seriously overleveraged and will be the next Lehman. I've done a comprehensive analysis at my blog. I'd love to get your candid review of my analysis.