Seeking Alpha


Send Message
View as an RSS Feed
View charliezap's Comments BY TICKER:

Latest comments  |  Highest rated
  • Pipeline worry sparks Alaska plea for Obama to open oil spigots [View news story]
    """ the new administration will take over and oil will recover """

    How will oil recover? By banning new drilling? Or by starting a new war in the Middle East?
    Sep 1, 2015. 01:14 AM | 2 Likes Like |Link to Comment
  • Pipeline worry sparks Alaska plea for Obama to open oil spigots [View news story]
    """one of his swan songs is to defeat oil. he's already put THOUSANDS out of work in the coal industry."""

    Funny. So why has US oil production gone up 80% since Obama was inaugurated?

    Funny also. Thousands are currently losing their jobs in the oil industry. Is Obama to blame for that?

    Funny fact: In the 19 months since the end of 2013, job gains have averaged 222,000 per month, in spite of oil and coal losses.

    Another Funny fact: July was the hottest month in Earth’s hottest year on record so far. Is it a man made phenomenon? I'll go with the scientists who say it is. If you disagree, please let me know your qualifications.
    Sep 1, 2015. 12:18 AM | 7 Likes Like |Link to Comment
  • REITs Are 23% Cheaper Than They Look [View article]
    matt, with your attitude you will never invest in REITs, and you will be eliminating a large and profitable investment segment from consideration.

    WSR, the strip center REIT that I linked, currently has a 10% yield. FFO in 2015 is expected to be $1.31, up 8.3% from last year, and is more than enough to cover the $1.14 annual dividend. The company maintains an active program of acquiring, upgrading, rehabbing, and recycling properties. But the trailing P/E on WSR is 41, so I presume WSR would never be of investment interest to you.

    O (Realty Income) is everyone's favorite REIT. It has returned a compounded 16.4% total return to investors since listing on the NYSE in 1994. O triple net leases what are mostly retail buildings. The trailing P/E on O is also 41 . . . so scratch that one also.

    SPG (Simon Property), the largest cap REIT, is a big time MALL owner. The stock is an institutional favorite and it sells at a premium price -- Price/FFO is 18 and the yield is only 3.1%, which is peanuts for a company that is obligated to pay out 90% of taxable income. It doesn't seem to me that the institutions think that SPG will be closing down anytime soon: on balance they're still buying SPG. The 4 largest owners are Vanguard, State Street, Cohen & Steers, and Blackrock. SPG may appeal to you since it sells for a lower PE than either WSR or O -- the trailing PE is only 37.

    Obsolete NURSING HOMES can be demolished and the ground can be redeveloped into high rise condos. Happened right across the park where I live.

    Good luck in your investing.

    PIPELINES? I don't know of any REITs that own pipelines.
    Aug 31, 2015. 11:58 PM | Likes Like |Link to Comment
  • What Is SunEdison Worth? [View article]
    Peter. I agree. Using BV to value a stock as dynamic as SUNE borders on the un-sane (if there is such as word). There is no indication that SUNE is planning to liquidate at any time in the near future.

    I'd rather go with Credit Suisse's sum of the parts valuation, which gives a target price of $35. I'm long and hanging on for the longer term.
    Aug 31, 2015. 02:20 PM | 1 Like Like |Link to Comment
  • REITs Are 23% Cheaper Than They Look [View article]
    )matt, I disagree

    If you think GAAP EPS is "best" then you simply don't understand the equity REIT business model. The professional Wall Street REIT analysts, who get paid a lot of money for their efforts, mostly don't even look at EPS. Instead the estimates they put out are for FFO per share (Funds from Operations -- as defined by NAREIT this is GAAP EPS with depreciation added back, and adjustments made for asset sales). If you don't believe me go to the (old) Yahoo 'Analyst Estimates' page for any equity REIT (link below) -- all of the 'Earnings' lines on this page relate to FFO, not EPS.

    Why FFO and not EPS? Well to get to EPS, the accountants insist on writing down REIT property values each year through depreciation. But well-located, properly maintained property usually appreciates over time. By deducting depreciation, GAAP accounting: A) misses the unrealized income gained through appreciation, and, B) understates the book value of the stock.

    Some say maintenance capex should be taken into account. So some analysts and companies put out an AFFO number that takes this and some other items into account (AFFO = Adjusted FFO).

    Here is the Yahoo 'Analyst Estimates' page for Whitestone REIT:
    Aug 31, 2015. 02:01 PM | 3 Likes Like |Link to Comment
  • Big oil companies face prospect of reduced refining profits [View news story]
    I'm checking out of this discussion. Its becoming like . . . dumb and dumber!
    Aug 30, 2015. 07:13 PM | Likes Like |Link to Comment
  • REITs Are 23% Cheaper Than They Look [View article]
    Dane, excellent. I have long observed that funds such as VNQ are overweighted with high multiple stocks such as BXP, PSA, and AVB.

    Disclosure: I am long low multiples, LXP, SNH, HPT, WSR, and CLI.
    Aug 30, 2015. 11:54 AM | 1 Like Like |Link to Comment
  • Big oil companies face prospect of reduced refining profits [View news story]
    Light sweet crude, such as that produced by fracking in Texas and ND, can be processed by simple "topping-reforming" refineries. Many smaller refineries in the mid-continent and other areas of the US conform to this pattern.

    Larger refineries, such as those along the Gulf Coast (Texas, Louisiana, Mississippi) are far more complex. They process a mix of crudes, including heavy sour (high sulfur). As the sour crude is corrosive, distillation units and other vessels must be made with stainless steel. Straight distillation produces a high proportion of undesirable heavy fuel oil that must be "cracked" or "coked" to produce lighter fractions that can be processed into higher valued gasoline, diesel and jet fuel. The traditional sour crude sources have been Venezuela, Mexico, and Saudi Arabia. However, Mexican crude production is declining, while there are degrees of insecurity attached to Venezuela and Saudi.

    The Keystone XL pipeline is intended to provide a more secure sour of heavy crude, and would reduce imports from the politically unstable Venezuela and Middle East areas.

    The Gulf Coast has 70% of US refining capacity, with large, complex refineries in places like Baytown, Beaumont, Port Arthur, Lake Charles, Baton Rouge, Pascagoula, etc. These refineries could make some adaptations to accept more lighter crude, but as presently configured, the optimum slates are geared to a high proportion of heavy crude.

    Here is a link to a recent study of the US refining situation:
    Aug 29, 2015. 01:51 PM | 1 Like Like |Link to Comment
  • 3 Overvalued Bank Stocks [View article]

    "Overvalued" BAC was 7.50-8 when your article was published. Now its $16.36, after peaking at $18.48.

    "Overvalued" Citi was around 27-28 when your article was published at the end of June. Now its $53.28, after peaking at $60.95.
    Aug 28, 2015. 11:01 PM | 1 Like Like |Link to Comment
  • Big oil companies face prospect of reduced refining profits [View news story]
    The states, e.g., California & New York, are just as much responsible for the many different grades and types of gasoline as the EPA. Regarding the EPA, would you rather have clean air or dirty air. Where I come from, clean air is regarded as better than dirty air. It will probably enable you to live longer too.
    Aug 28, 2015. 09:46 PM | 7 Likes Like |Link to Comment
  • High Growth REITs To Consider In The Current Market Dip [View article]
    Tim, re "dividends growing at 20%".

    Your assumption is that dividends will grow 20% in the future because these REITs have managed it for a few short years in the past. But one thing I can say for sure is that there is no REIT that will manage to increase dividends at a 20% rate for more than a few years, just simply because, if they are not already there, they will eventually bump up against the 90% of taxable income payout requirement, which leave limited funds to plow back for future growth. Yes, REITs can raise rents, but not at 20% p.a. And, yes, REITs can make new acquisitions, but this usually involves issuing new stock.

    Your article might have been more convincing if: A) you had done a cash flow analysis so as to get a better handle on dividend growth sustainability, and, B) if you had studied the business model of each of these REITs so as to get a better handle on future prospects for growth in funds from operations. Your analysis above is almost entirely focused on past history.

    As for the hotel REITs, you fully admit that their results are cyclical. A deeper examination of history would show that almost all hotel REITs cut or even temporarily eliminated their dividends during the 2008-2009 recession. I agree that the cyclical trend is still -- IMO, there will not be a US recession in the 18 months ahead -- but after that the likelihood of a recession increases -- as well as the odds that growth in dividends from hotel REITs will undergo a pause.
    Aug 28, 2015. 04:53 PM | 2 Likes Like |Link to Comment
  • Whitestone REIT Is Now Yielding 8.9% [View article]
    Bio, you are right. REITs are not like "commodities companies", although the latter may have mineral reserves that give them underlying long term value. REITs have the underlying real estate that can give one a handle on the "intrinsic" value. Sometimes, though, that underlying "market" value can get too high, as in the current era of relatively low cap rates.

    I don't think you should go chasing after equity REITs that are yielding over 10%, though WSR might be an exception. There are several mortgage REITs that yield over 10%, but these are too risky, IMO, because of possible interest rate swings. However, my portfolio includes the following high yielding equity REITs (+7%): LXP. SNH, HPT. WSR. But, here will be volatility over fed actions.
    Aug 26, 2015. 10:25 AM | 1 Like Like |Link to Comment
  • The Art Of Owning A Blue Chip Healthcare REIT [View article]
    Thank you again, Buster. You're so smart! I'm putting you on my "following" list.
    Aug 26, 2015. 08:58 AM | Likes Like |Link to Comment
  • Whitestone REIT Is Now Yielding 8.9% [View article]
    ""Buy when there is blood in the streets.""

    -- Baron Rothschild.
    Aug 26, 2015. 08:55 AM | Likes Like |Link to Comment
  • Whitestone REIT Is Now Yielding 8.9% [View article]
    Buster, thank you for your really helpful comment. We're all anxious, waiting for your next in-depth bit of wisdom.
    Aug 26, 2015. 08:53 AM | Likes Like |Link to Comment