Entering text into the input field will update the search result below

Two Harbors Has A Preferred Share Clearly Better Than The Rest


  • Some of TWO’s preferred shares are clearly overvalued.
  • However, 1 of their preferred shares is significantly better valued than others.
  • We do not expect a call for TWO-E which has no more call protection on the calendar.
  • This idea was discussed in more depth with members of my private investing community, The REIT Forum. Start your free trial today »

This research report was produced by The REIT Forum with assistance from Big Dog Investments.

We recently had a bullish public article on the common stock of Two Harbors (NYSE:TWO). We are happy to reiterate that bullish rating today. Shares of TWO are materially undervalued and it is one of the larger positions in our portfolio today. We have a weighted average purchase price of $12.47 which is $0.10 higher than Friday's closing price.

Today, we will be taking a look at the preferred shares for TWO. Preferred shares are a great income tool for buy-and-hold investors along with traders. TWO’s preferred shares come with a risk rating of 2.5 making them a good fit for either.

How The REIT Forum looks at B&H positions

We tend to suggest sticking to securities that are below a risk rating of 4 when it comes to buy-and-hold investors.

Here's our reasoning:

We’re willing to hold risk rating 4 security on the expectation that the price will go up, but we want to monitor them carefully. We wouldn't be comfortable being tied to the position. If the risk rating is under 4, we are comfortable with being tied to at least a small position. We can't predict where prices will be 2 years from now on riskier securities, primarily because we can't be confident that management will be competent.

We would look to lower risk preferred shares if we were starting to build a new B&H portfolio. When it comes to risk ratings of 1 and 2, We can suggest buying those securities even if we knew the investor was going to log out of their account for the next two years. We give TWO’s preferred shares a risk rating of 2.5.

That's how we think about B&H positions. What would we be

The REIT Forum is the #1 rated service on Seeking Alpha. 

Bought VNQ (REIT index ETF)? Your returns track the red line. Bought PFF (preferred share index ETF)? Your returns track the yellow line. Why index? By carefully picking individual shares, we've been able to dramatically outperform the indexes for our sectors.

Try a Free 2-week trial today. You can use your Seeking Alpha account.

This article was written by

Leader of The REIT Forum
Get exclusive articles. Never sent public.
We post our portfolio for you. You also get real-time alerts on every trade we place. Our reasoning for placing a trade is explained in clear English. You can even see the exact trades with the images we include from our stock accounts. We don’t offer you several different “portfolios”, instead, we show you exactly what we own, when we bought it, and how we are doing in that position. We make it simple for investors to follow our strategy. 

You’ll find several reports on The REIT Forum that don’t get posted to the public side of Seeking Alpha. Many of our public reports are dramatically reduced versions of subscriber articles. If you enjoy our public articles, you’ll love the content we keep for subscribers.

Analyst’s Disclosure: I am/we are long TWO. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.