I'm Not Gonna Brag, But I Did Recommend STAG [View article]
Great call Brad, thanks for the idea. Still long STAG. Not to be too nit-picky, but I think your P/FFO # though looks a tad high for ARCP in the chart above - its more like 19.8x on a 2012 proforma basis and 17.7x 2013 guided FFO. Not sure where they came from perhaps not your doing.
Silver Bay Realty Trust: A Disaster Waiting To Happen [View article]
Hi thanks for the article. Dare i suggest the bull case here? housing prices are increasing at a 9% yoy rate acc to case schiller. low rates, improving consumer balance sheets and loosening underwriting standards probably provide a solid backdrop for continued pricing gains likely for quite some time. not to mention that phoenix, atlanta and tampa are seeing 23%, 10% and 16% yoy home price appreciation (better than the national 9% average). I'd guess that the company has selected these areas for exactly that reason - cheap prices, beaten up from the housing bubble pop, but with lots of upside now. these are growing cities (unlike say detroit) where housing LT likely stays in demand.
As far as ROIC goes, yes unrented homes throw off no CF and it takes a few months to do so. But eventually homes get rented, and understand that home rental turnover is 1/2 the level of apt turnover. Net net, i think rental income could generate real cash yields of 6-9%, which is probably inline with private market cap rates on a variety of other real estate in the US. Not sure that the company buying homes today with cash and renting them out after they fix them up points to a fundamentally flawed business model - i know lots of people that do that.
I dont think this is really a cash play as much as an asset recovery play in US housing though. Assuming 6% yields, coupled with conservative 4-5% annual price gains in housing means this could easily be worth 10-12% compounded over the next 5-7 years, or a 70% gain in 5 years cumulatively. housing could also be considered an inflation hedge, but its not necessary for this to work i dont think. I see book value at 700mm pretty close to the current market cap too, so its not like you are paying a big premium like many of the HB stocks today.
Acquisition prices at 75/foot is also far below replacement cost (even if some need repairs), which is probably closer to 95-100 bucks easy. So, purchasing real estate assets, with an improving pricing backdrop at below replacement cost may not be a bad trade, esp when you can rent them out to cover your overhead while you watch real estate prices rise. Just my 2c, probably a reason why colony capital and a dozen other smart PE firms are and have been snapping up homes - they are simply front running the consumer who eventually will buy them in 5-10 years.
My Last Article And My Last Best Idea [View article]
I will stay out of this debate exc to say that SA keeps getting better, and I enjoyed working with all the editors quite a bit. My suggestion is that SA continue to move up the value chain in terms of articles, and I'd guess while not perfect, Pro helps to do this....TL
My Last Article And My Last Best Idea [View article]
Well done, I recall one commenter so verklempt over my coal idea that he ran out the next day and wrote a bearish article here on the sector. Hopefully he didn't short it. It was hard to find listeners back then.
My Last Article And My Last Best Idea [View article]
They love beta at business school - and I was ingrained w/ it too when I got my MBA. Sometimes you have to unlearn what the crowd thinks to get better. Thx for your comment MtnWolf.
My Last Article And My Last Best Idea [View article]
Thanks duke you always asked the right questions. Sorry ANV turned out to be such a pig...I'd suggest looking at Extendicare, could make up for it. Stay in touch.
My Last Article And My Last Best Idea [View article]
Thx for the note. On IQNT, I can $6 pretty easily. If numbers get better in 2014 via cost cuts or new business, then there could be more upside but it might take a little more time. Seems the easy money was made but there is still the proxy catalyst coming soon.
Highfields Capital Is Wrong Because This Digital Cloud REIT Ain't Going Nowhere But Up [View article]
Well, I would argue that Worldcom was audited also by a big 5 accounting firm too. The difference w/ Jacobsen's allegations is that he is pointing out that maint capex is much higher than the company reports. Understand though that maint capex as reported by mgmt in FFO calcs is purely at their discretion, and NOT part of the companies audited financials. I think that is the distinction. It's odd that the companies audited capex #s include $156mm of what the auditors actually call "Other capital expenditures include capitalized replacement and other projects relating to the existing operating portfolio." To me the auditors are basically saying this is maintenance capex, but mgmt is providing supplemental disclosures that investors should ignore it, and that maint capex is only $24mm. I am not so sure, it would make a real difference in the valuation. At 156mm, it would reduce FFO by $1 a share, perhaps a 13-15 hit to the stock (assuming a 13-15x FFO multiple). Invest in what you know and can understand.
Aircastle Limited: Significantly Undervalued At 6x Earnings, Sports A 6.0% Dividend Yield [View article]
I still own and like - trading at 80% of book (20/share bv), at 9.5x earnings, and rental yields are a healthy 13%. Div yld is smaller now at 4.3% but directionally I like this it still can easily get to 90% of book I believe which is $18/share. Fleet quality continues to improve. Good luck.
Highfields Capital Is Wrong Because This Digital Cloud REIT Ain't Going Nowhere But Up [View article]
Thanks Brad, vey helpful. Still not sure I get what the 156mm is for but I can see what the co says. I appreciate your work and like to debate the merits of various ideas, but I did find a lot of your comments on hedge funds to be needlessly inflammatory with respect to some pretty successful investors, ones who by the way have crushed the market over the long term. I also agree that anyone who is either long or short is a speculator with pure profit incentives. I deem the motives and opinions of the short seller to be no different than the long buyer.
I'm Not Gonna Brag, But I Did Recommend STAG [View article]
Take Profits In GRX [View instapost]
Silver Bay Realty Trust: A Disaster Waiting To Happen [View article]
As far as ROIC goes, yes unrented homes throw off no CF and it takes a few months to do so. But eventually homes get rented, and understand that home rental turnover is 1/2 the level of apt turnover. Net net, i think rental income could generate real cash yields of 6-9%, which is probably inline with private market cap rates on a variety of other real estate in the US. Not sure that the company buying homes today with cash and renting them out after they fix them up points to a fundamentally flawed business model - i know lots of people that do that.
I dont think this is really a cash play as much as an asset recovery play in US housing though. Assuming 6% yields, coupled with conservative 4-5% annual price gains in housing means this could easily be worth 10-12% compounded over the next 5-7 years, or a 70% gain in 5 years cumulatively. housing could also be considered an inflation hedge, but its not necessary for this to work i dont think. I see book value at 700mm pretty close to the current market cap too, so its not like you are paying a big premium like many of the HB stocks today.
Acquisition prices at 75/foot is also far below replacement cost (even if some need repairs), which is probably closer to 95-100 bucks easy. So, purchasing real estate assets, with an improving pricing backdrop at below replacement cost may not be a bad trade, esp when you can rent them out to cover your overhead while you watch real estate prices rise. Just my 2c, probably a reason why colony capital and a dozen other smart PE firms are and have been snapping up homes - they are simply front running the consumer who eventually will buy them in 5-10 years.
My Last Article And My Last Best Idea [View article]
My Last Article And My Last Best Idea [View article]
Federated Investors: Undervalued Money Manager With A Generous 4.25% Yield [View article]
My Last Article And My Last Best Idea [View article]
My Last Article And My Last Best Idea [View article]
My Last Article And My Last Best Idea [View article]
My Last Article And My Last Best Idea [View article]
My Last Article And My Last Best Idea [View article]
My Last Article And My Last Best Idea [View article]
Highfields Capital Is Wrong Because This Digital Cloud REIT Ain't Going Nowhere But Up [View article]
operating portfolio." To me the auditors are basically saying this is maintenance capex, but mgmt is providing supplemental disclosures that investors should ignore it, and that maint capex is only $24mm. I am not so sure, it would make a real difference in the valuation. At 156mm, it would reduce FFO by $1 a share, perhaps a 13-15 hit to the stock (assuming a 13-15x FFO multiple). Invest in what you know and can understand.
Aircastle Limited: Significantly Undervalued At 6x Earnings, Sports A 6.0% Dividend Yield [View article]
Highfields Capital Is Wrong Because This Digital Cloud REIT Ain't Going Nowhere But Up [View article]