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thepupil

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  • Birthday 11/22/1988

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  1. Take stream of monthly gross long exposure and monthly long contribution (if long only just your return). For a given month average the month end long exposure w/ prior month’s. Monthly return / monthly avg exposure = return on invested capital. String your monthly ROIC together to get your annualized ROIC. compare to annualized return. The difference is tour cash drag.
  2. https://www.google.com/amp/s/www.cnbc.com/amp/2021/11/03/house-democrats-propose-increasing-salt-cap-to-72500-through-2031.html this would be wild for blue state high income real estate. A couple making $500K would have an extra $16-$20K / year for mortgage payments, at current rates improving purchasing power by some $200k+ for the record, I don’t really agree with the policy, though it would be wonderful for me.
  3. NYC is back and so is New Jersey! https://twitter.com/thepupil11/status/1456013721067786240?s=20
  4. starter position in CLI. Rumored 400K lease w/ $AMZN at previously out of service office building is the kick in the pants to get me involved. along w/ some other developments/lease ups AND most importantly the fact that it's clearly up for sale / restructuring. small position. I'd be bigger if a) the gap b/w price and NAV was larger b) the multifamily was not encumbered/levered w/ the preferred JV structure c) i had a more precise view of office NAV BTIG fluff piece says $25-$30, that's kind of where I think things shake out, so only really interesting if corporate event w/i say a year or so.
  5. To follow up, I bought 6 of the January 21, 2022 expiry $115 puts on the March 2022 future. The market value of these is immediately marked down to $80, from the $200 I paid for them. This gives me the right but not obligation to sell 6 of the MArch 2022 10 year note futures, expiring in January. If the 10 year note were to declinne by 20% (a highly highly highly improbably scenario involving several hundred bps of movement over a short time frame, this would be worth $11K from a cost of $200. In the other 99.9% of outcomes, I will lose my $200 bucks and not tell my wife I wasted a nice dinner on an experimental futures options trade. it seems the shorter expiries have all the liquidity, so you may want to set aside whatever you're willing to lose and roll twice or thrice. In my view this is the most direct way to hedge a rise in rates that are most relevant in determining 30 year mortgages. Many bothan spies dollars died in bringing us this information. As a further wrinkle, I've discovered that the "10 year future" actually is a 6.5-10 year future and one may want to go to the "ultra 10 year note future" for a true 9.5-10.0 year note type of exposure. good times.
  6. More or less, yes. Though, I think you'd probably be overhedging by going at the money and therefore hedging any move in the 10 year note. Perhaps you only want to hedge for a given X%, that would decrease cost. My logic is this. The mortgage rate is a combination of a number of things. Mortgage rates are determined by Fannie/Freddie's guarantee fee (Constant) Servicing Fee (constant) Rates along the part of the curve where MBS lie (roughly 10 years) the mortgage basis (or the difference in expected/modeled yield b/w the tsy/swap rate and mortgages). differences b/w various banks (ie if a banks backlog is overwhelmed, they'll increase rates to slow down demand) The most straightforward and largest component of this is the treasury rate at the part of the curve where 30 yr MBS lie, hence my recomendation of 10y futures. You could either short roughly your notional in 10y futures. Or could cap your downside w/ futures options. It depends on what you're trying to solve. If you only want protection from a huge move, I'd buy some further out of the money. for fun, I just tried to buy a few hundred dollars of 10% OTM options on the June 2022 future which expire in April. They show up as costing pretty much nothing. I'm trying to see if i can get a fill to make sure this is actionable
  7. This is not the right part of the curve for hedging a (standard US 30 year) mortgage. if he intends to take out an ARM, I agree, but don’t think that’s the intent. why hedge a rise in the mortgage rate, which is 10y tsy + swap spread + mortgage basis with an instrument linked to <1yr rates?
  8. I would keep it simple. conventional mortgages may amortize over 30 years, but MBS are far closer in duration to the 10y note than the 30y bond. therefore I’d hedge with the 10 year, futures trade in $100k increments and there are futures options as well if you wish to cap your downside. far simpler and more direct and a true hedge. Gregmal’s may be a fine investment idea, but has little to do with your desired hedge.
  9. I repeat my prior feedback. There are plenty of companies discussed on this board. Not all of them engage in buggy whip manufacturing or own real estate. You appear to be inclined to invest in high growth companies of the future. For ones where you have insights to share, please feel free to do so. You also appear bearish of real estate. there are numerous real estate (long) idea threads. Please feel free to share your thoughts regarding their intrinsic values and your rebuttals to the echo chamber / bull cacophony that can sometimes occur when Greg, BG, RealAssets, and I form a circle and start moving our arms up and down. there are numerous types of investors on this board. high quality posts on the companies of the future would be welcome. high quality denigration of ideas is also welcome. have at it.
  10. there are a wide variety of styles and posters on this board. some post about #neversell amazing companies like Constellation, some post about crappy NAV / RE holding companies, some post about hongkong net nets, some post about canadian energy companies, some post about blue chip tech companies, banks, options on banks etc . you can choose to contribute/engage with what floats your boat. what companies/investments do you like? why? Are they discussed here? if not, start a thread, if you dislike the discussion or derive no value from it, move on.
  11. many threads on housing / RE 1. Gregmal expresses aggressive, bullish, extremely confident view, that's likely expressed in real life in slightly more nuanced, maybe slightly less one dimensional fashion than it is in a message board rant. 2. Pupil: thanks Greg, I agree mostly, though I'd nitpick on a) immaterial nuance number 1 b) immaterial nuance number 2. I'd also point out here's how our view may be wrong. 3. Someone else: expresses more bearish view 4. Gregmal to someone else: you're an idiot 5. Someone else: no you're an idiot. 6. Pupil : while i mostly agree with Gregmal, I agree with someone else on this point. 7. Gregmal: pupil you're a wimp 8. Pupil: Gregmal you're too confident and make so much mor emoney than i do. i hate you!!! 9. someone else: you're both idiots 10. everyone takes their ball and goes home.
  12. My parents first house they bought in Fort Lauderdale in the 80’s was $40K. Steps from the ocean, infested with snakes and cockroaches . Then that coke money poured in to SoFla and the rest is history!!* *parents were actually wiretapped because a tenant was dealing, house got raided lol
  13. yes, it's the opportunity and problem, and APTS mgt could solve it if they want. we'll see.
  14. It is still very much true. there are still 2.5 asset classes (stub office+mg+grocery anchored), please name a leading REIT that trades at above comps multiples with this combination. net debt + preferred / EBITDA or NOI is FAR FAR FAR higher than peers disclosure sucks Part I: they announce they bought units as if we should give them a gold star, never disclosing price paid (per unit or cap rate), creating fear that APTS is the one paying steamy prices (which they are, which validates the value of the resto of portfolio but creates capital allocation fears) disclosure sucks Part 2: tough to tell anything regarding the actual returns from the loan program. disclosure sucks part 3: a basic capitalization table in the supplementals with preferred ourstanding is not there. APTS does not have access to the unsecured bond market due to lack of history and its unusual cap structure, aforementioned capital allocation fears are exacerbated by the return of capital unearned dividend and lack of articulation regarding getting to a REIT appropriate leverage level people like a good stock chart. APTS management has made some right moves, but the reason this is flat over 5 years versus MAA and CPT at 16% -19% / year is pretty clear it's still rinky dink and small Let's not delude ourselves. this is a shitty REIT. purpose built to repel the establishment and only NAV boyz (like 3rd Ave and myself), Sunbelt/apt bulls (Gregmal), and leverage junkies (you) are interested. Until they do something about that, why should it trade for an MAA/CPT price? Much less NAV or a premium thereto.
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