- LA-based Colony Capital has been beaten down by a disastrous merger, according to IPO Edge editor in chief John Jannarone.
- Based on Jannarone’s analysis and the new involvement of an activist investor, he sees a recovery in Colony’s near future.
- Specifically, he likes buying Colony Capital at $5 with a stop loss at $3.50, and upside potential to $11 over the next year.
IPO Edge editor in chief John Jannarone told viewers of Real Vision’s Trade Ideas that Colony Capital (CLNY), a beaten-down REIT, is set to recover from a merger that sent its stock tumbling off a cliff in 2017.
The three-way merger was “misguided” and the company struggled from the beginning to match up smoothly with the other two companies, Jannarone said.
The turnaround point for CLNY began earlier this year, when an activist investor, Blackwells Capital, got involved. Jannarone has a source close to Blackwells who told him that the activist investor will require Colony to either “do something drastic,” like selling assets or running a real auction process, or they will try and replace the remaining directors and board.
So, why is this positive for Colony’s stock? Jannarone did a sum of the parts analysis where he studied the seven different groups of the company:
He found that CLNY is worth at least $11 per share, more than double its current trading price of around $5.
Jannarone says that the pressure from Blackwells is “enough to be a catalyst” for the stock. “I think they want to see this thing approaching what the sum of the parts value is, and that’s over 100% higher than the current price,” he said.
He likes buying CLNY at $5 with a stop loss at $3.50. He sees upside potential to $11 over the next year. “The downside is super limited,” Jannarone added. “And this thing yields around 10%... so, especially with interest rates going down, it can't fall that much more.”
This article was written by
Analyst’s 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.
This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors (collectively, “Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise (whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance. Well that was pretty intense! We hope you got all of that - now stop reading the small print and go and enjoy Real Vision.
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.