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2 Top Picks On Sale During Uncertain Times



  • Bags of coins sit there like a Ford going uphill.
  • COLD has the blueprint for success; who says ethics don’t pay?
  • AGNC preferred shares fall into our buy range again. Lock in a fat yield.
  • MITT traders await an opportunistic dip.
  • Looking for a helping hand in the market? Members of The REIT Forum get exclusive ideas and guidance to navigate any climate. Get started today »

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

When the market starts falling, many investors get the wrong idea.

You shouldn’t be running from the market.

Bags of coins don’t make a comfortable pillow.

They don’t emit dividends.

They will not expand like the coronavirus.

They will sit there like a Ford (F) trying to go uphill.

Investors should be looking to invest more defensively. At The REIT Forum, we’ve been urging investors to focus more on preferred shares and lower-risk REITs.

We’d like to cover some investments in the REIT space which include an equity REIT, a preferred share, and a mortgage REIT. Let’s start with the equity REIT!

Taking a look at COLD

Americold Realty Trust (COLD) looks great. We did the fundamental research during their last big dive. Then shares rallied hard and we tossed it all on the back burner. Now, they are on sale. They carry a risk rating of 1.5 and land in our strong buy range:

We should caution investors that the share price has been more volatile than we expect for a risk rating of 1.5 On the other hand, the balance sheet is better than a risk rating of 2.0. We’re splitting the difference and assigning the 1.5 risk rating. It’s a solid balance sheet:

Source: COLD

Equity made up more than 80% of their total market capitalization. Granted, that’s when their equity was priced higher, but getting past 80% is exceptional. Most REITs with 80% in equity get a risk rating of 1.0. They have a very strong position in a highly segmented sector:

Source: COLD

We expect a great deal of consolidation over the next decade. We wouldn’t be surprised if the top 20 combined for over 20% of the global market share in

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This article was written by

Colorado Wealth Management is a REIT specialist who began his decades-long investment career in a family-owned realtor office before launching his own company and embracing his drive for deep-dive REIT analysis. He holds an MBA and has passed all 3 CFA exams. He focuses on Equity REITs, Mortgage REITs, and preferred shares.

He leads the investing group The REIT Forum. Features of the group include: Exclusive REIT focus analysis, proprietary charts and data models, real-time trade alerts posted multiple times a month, multiple subscriber-only portfolios, and access to the service's team of analysts and support staff for dialogue and questions on the REIT space. Learn more.

Analyst’s Disclosure: I am/we are long COLD, AGNCO, ANGCP. 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.

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Comments (33)

COLD yes! On my watch-list since inception. Thanks for analyzing.
Colorado Wealth Management Fund profile picture
I wish I had looked at it more near inception. It traded at an exceptionally attractive price.
5ofDiamonds profile picture
Folks under 35 should ignore this article, which is meant for older, seasoned investors who already have investments in better businesses.

My 1c.
Colorado Wealth Management Fund profile picture
In which manner is this not meant for those under 35? I consider COLD a good REIT for investors who like to earn a strong total return over a long time period.
Why buy COLD at 2.54% yld when I can get 1.8% in FDIC insured savings i.e. zero risk!
Colorado Wealth Management Fund profile picture
That savings account will pay you less money next year (near certainty using forward rates).

COLD will most likely pay you more money next year, more the year after that, and so on. I like raises. Not big on cuts. So I'd rather buy a great business at a fair price than earn interest at rates headed below 1%.
On Monday, I saw a really decent price for a preferred share with pretty good trading volume. I went to put in a limit buy, and up pops a message: call Fidelity. It seems that fixed-to-float preferred shares trip some safety switch at Fidelity. I call, and of course can't get thru for an hour, and when I do the price went up 0.15. Not bad, I'll make that my limit. The guy puts in the trade and we hang up. Right at that moment, it went up another dime to par value. I find that I cannot "replace" the order. I'd have to call Fidelity.
Can anybody tell me just what the ***DANGER*** is in fixed-to-float other than going to the float?
Colorado Wealth Management Fund profile picture
That's the danger. Well, that and that you might not be able to buy shares because you have Fidelity.

I have some accounts that are locked to Fidelity, but I always suggest investors pick something other than Fidelity. I've been happy with Schwab. I believe many subscribers are happy with Schwab or with Etrade. Those seem to be the two getting the most positive reviews in our group.
Most of my money is with Fidelity. I asked them the same question when trying to buy an AGNC preferred, and they said most investors don't understand that a floating rate will kick in at some point in the future. They want you to call so they can make sure you understand the situation before you place the order. It's probably just a CYA policy, but they've been good to me overall so I don't begrudge them. After all, there's no box to check on their website that tells them you've been reading CWMF's posts on SA.
gponym profile picture
Thanks for the alternates to Fidelity. While I love their customer service, their handling of fixed to floating is frustrating. They offer a disclaimer checkoff that takes permanent effect in some cases - sorry, can't recall a specific one at the moment - but not for fixed to floating. It seems like it'd be so easy to handle better. (Sometimes I speculate that f-to-f is regarded by Fidelity bond traders as the red-headed stepchild - yet it's crazy, for the policy just wastes their time.) Maybe if they lose enough assets they will change. I'm ready to move an account or two to Schwab, and find out how they compare.
Thank you CWMF! COLD is a REIT I had not come across before. I bought a little bit for my Roth today and will monitor for an even better entry point in the days/weeks to come.

I'm a bit leery on the mREITs with the whole Fed Repo daily fiasco ongoing. Not sure how that will all end up.
Colorado Wealth Management Fund profile picture
I'm a bit concerned on the sector as well. Falling repo rates is nice, but long-term rates are falling too far.
AGNCN is now trading just 15 points higher than AGNCO. Looked like a good time to jump from O to N.
How can you say that AGNCO series E preferred is a safe bet? How are you deriving your risk rating? According to the prospectus for this preferred issue the company has $96.2 billion of debt that is senior to this issue. Plus they can issue additional debt that can further dilute the value of this issue. See for yourself from this SEC filing: www.sec.gov/...
Any reply from the author here?
Colorado Wealth Management Fund profile picture
Hi Gilbd,
Issuing debt doesn't dilute the value of AGNCO. The math doesn't work that way. It's like saying issuing debt would make a tree grow. They are unrelated.

Regarding the high volume of debt that AGNC has, that is a function of "repurchase agreements". They buy a huge volume of very liquid investments (agency RMBS) and they get financing from the bank. To protect against a massive move in the value of the assets, the company hedges against a change in interest rates.

I would encourage you to look at the price history chart for AGNCO and AGNCN over the last few years. Look at how steady they were compared to the equity markets. That steady price is a reflection of tons of big investors who are looking at this the same way we are.
The worst is over. I'm still picking up dividend bargains. EPR operates ski resorts and recreation. Monthly REIT. It's a bag of gold. Gloom and Doom is a classic BUY signal.
Colorado Wealth Management Fund profile picture
EPR was fun. We warned investors it was too risky and may underperform the sector. Then it was the single worst performer among the triple net lease REITs. Valuation may be more reasonable now. Still don't love the risk.
Well, it is obviously not a dividend play, but rather an opportunity for capital gains. That means for me that it belongs in a taxable account. Right now my taxable account is maxed, partly because I like to keep more cash in uncertain times. But I will keep it on my radar.
howard2374 profile picture
:-) Your opening sounded like the beginning of a bad joke: 'An equity REIT, a preferred share, and a mortgage REIT were sitting at a bar. The equity REIT said ... ." Actually, nice article. Thanks
Colorado Wealth Management Fund profile picture
Thanks. I have my apprentice design the intro for several of my articles. Really appreciated his bit on Ford.
Capt. Spaulding profile picture
Hat tip re the piece, and giving credit to your apprentice. Nice.
Wapiti19 profile picture
There is not enough -30 degree warehouses / storage to meet that frozen space demand.
Economics 101.
Does BYND need to be frozen to -30 degrees?
callgood profile picture
Just a note- the light blue and some other colors on some of the graphics range from extremely hard to impossible to read, at least on a Dell Latitude laptop.
Colorado Wealth Management Fund profile picture
Thank you. Could you identify which charts by anything you cash see on them? I might just have contrast turned up. I'd like to fix anything I can though so the charts work for everyone.
howard2374 profile picture
@callgood I had the same issues.
callgood profile picture
@Colorado Wealth Management Fund Sorry for my tardy response. I've been occupied elsewhere for a few days. I assume you addressed the problem as the charts are MUCH clearer today. Thank you.
"They have economies of scale"

What economies of scale are there in cold storage warehousing?
Colorado Wealth Management Fund profile picture
To name a few: overhead for management, for being a public company, better debt ratings (cost of getting rated plus higher score for being larger), and customer negotiations (multiple locations at once).
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