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By Nathaniel E. Baker
Valuations of equity REITs are starting to appear frothy, setting new 52-week highs and trading at premiums to the underlying real estate assets. While this is by itself not necessarily a point of serious concern, Colorado Wealth Management Fund has still moved a lot of its portfolio to cash while holding out for select opportunities.
Where are these opportunities? Look to preferred shares, where there are securities with low risk profiles and experienced management teams that are selling at a discount. Also a complex REIT, where this complexity may have scared off some investors.
- 2:20 - CWMF's risk-averse approach to buying REITs
- 3:45 - Details on CWMF's screening process
- 5:20 - Preferred share dividend capture and how it can be a useful tool for creating income
- 8:30 - How CWMF profited from swapping preferred shares of Two Harbors Investment Corp. (NYSE:TWO)
- 13:00 - What can be expected for the near- and medium-term for REITs and why CWMF has more of its portfolio in cash than normal right now
- 16:00 - Why mortgage REITs may be due for a pullback
- 18:30 - The last 16 months have seen two drawdowns, both of which turned out to be non issues. There could be other, similar points of panic in the months ahead, which may be good entry points.
- 20:40 - Why the odds of a recession in 2020 are materially higher than they are this year.
- 22:00 - What are the opportunities? MFA.PB, one of the preferred shares of MFA Financial (MFA), and Spirit Realty Capital Inc. (SRC).
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.
Additional disclosure: Colorado Wealth Management Fund is long MO, SRC, and MFA.PB. Nathaniel Baker has no positions in any stocks discussed. Nothing on this podcast should be taken as investment advice.