muscleman

Thank you!

Which book are you referring to?

Am I missing something? Relatively costless policy changes???? Aren't the proposals massively costly? In the trillions in terms of the US economy. The real question is what are the costs of doing nothing? If sea levels were to rise 10-20 feet, CAT 5 hurricanes become the norm, more extreme droughts, etc., what is the price tag of that? Additionally, if you read about mass extinsions throughout world history, it's commonly theorized that sudden climate change (warming and cooling) has been a major factor. https://en.wikipedia.org/wiki/Extinction_event. This isn't a 50-100 year problem (more like 50-100 million yrs), but illustrative of the potential scope. Remember the same group of scientists call this global cooling in the 70s then changed it to global warming and now climate change. Seems fishy to me of all their predictions

Things should start to improve from here. A few weeks ago, Trump issued an executive order or something like that to prevent the climate change scientists to review and approve their own funding, which makes total sense to me as it is a conflict of interest. As long as someone can review his own research grant, his research will never end in an objective way. No one wants to lose his job by losing his grant.

You may want to read Soros' Alchemy of finance. There was a chapter about REITs. When the stock price is above the intrinsic value, they can issue shares to increase per share value, and use that cash to buy more properties, and push up the stock price. It goes on and goes.

Why do people write articles in seeking alpha and then disclose to have no positions for the name mentioned? I am puzzled what incentivizes them?

Thank you Packer. Do you know anything about mortgage REITs? It seems like ABR is a mortage REIT paying over 9%. These REITs don't have real properties right? No, these mortgage Reits typically hold paper (commercial and residential mortgages), lever them up and live off spreads. Get something wrong like duration (easy to mess up with callable residential mortgages) or credit risk and you have a zero. So essentially these mortgage REITs have the same nature of lending business like the banks, but with a higher funding cost? The concerns you outlined seem to be the exact same concerns banks have. But WFC and BAC still seem to be investible by a lot of members here. When I look at mortgage REITs, what particular concerns should I have and look out for?

Thank you Packer. Do you know anything about mortgage REITs? It seems like ABR is a mortage REIT paying over 9%. These REITs don't have real properties right?

It is amazing how quickly this thread turned from a 40% a year perfect trade to put writing strategies that yields stable 8-10%. If you are not the athlete trying to be the Olympic champion making 40% a year, why not just put your money into an index fund?

What bothers me the most is that Cardboard's definition of the "perfect trade" is a trade that psychologically makes him feel good regardless of the outcome, while the actual "perfect trade" should always have been one with highest expected return, meaning I could lose 5 out of 10 such perfect trades but still make a ton of money. And some people here seem to really think he came across a genius idea. Let's take his idea to the extreme: With zero commission these days, Cardboard should have gone to the extreme and always place a buy order at BAC's bid, and right after fill, place a sell order at the ask. In this way, he can make 100 trades per day, making probably 1 cent per trade, which $1 per day. That's 3% a day, and 60% a month! How about that? Is this even more genius than his original idea? :)

This is absolutely the wrong way to think about it. If you don't have a stop loss, then you are risking 100% of the capital to make 11%. It could make you feel good but you have to be right 9 out of 10 times just to break even. Sooner or later your portfolio will be filled with failed BACs, each down 50%-90%, and no cash in your portfolio. (Who would have thunk of GE going down that much last year?) You can do technical analysis and trading instead of FA, and it works, but it definitely won't work in the way you described it.

+2 I have an exactly opposite view than most of you here. I had a tight stop and was stopped out of my big 20% position last Thursday and since then I've been flat. I was gonna post this yesterday but was too busy. I think a major top is right here. $14 is the key resistance for FMCKJ. The market reaction has never been worse. A positive court ruling only caused a false break out. Then this Monday's 20bn capital retaining news only caused a big volume down day, followed by another big volume down day yesterday. If you look at the daily chart since the positive court ruling and count how many down days you get vs the up days, and the volume on the only 3 up days, you'll see how little buying there was. This is the one of the few classic topping actions. I don't see any reason to continue holding this stock. It will either go flat or go down. This will be my last TA post here. I don't like being taunted over and over by lots of you. Thanks!

Thanks for the recommendations - have you been able to review the performance of these NNNs under stressed market conditions? How do you view tenant mix and location mix, particularly in terms of correlated risk? If AFFO is the main driver of returns and valuation, the question is what drives AFFO. As you mention the two methods to grow AFFO are rent increases, and acquisitions - but really this means tenant and location mix (i.e. what you acquire and where). The real question is how that tenant mix behaves under stress. In such situations, do you know if REITs typically modify lease terms to work with tenants (and maintain occupancy)? My concern is large exposure to small and middle market businesses which may perform worse in a recession - and while the tenant mix may appear diversified, will it actually behave like a hedge during a recession? One of the positives are the good underwritten NNN that were around in 2008 did well look at O, NNN. They acted more like bonds (which in part they are) & if the underwriting is done correctly you get first claim on many of these businesses as they pay their rent before their creditors where location is important. STOR has some examples were they have found new tenants when lease was in default. They key is property location which many of these REITs focus on. Broadstone has broader customer with about 40% industrial. Packer Thank you Packer. Do you have any views on the storage REITs?

I am stopped out of the position today, unfortunately. :'( I require tight stops for big positions. If I am very bullish, it has to start working right away, or I am out. I'll never be extremely bullish about a stock, buy a big position, and then as it goes lower, keep buying more. If it is not working right away, then I am wrong to be very bullish to begin with, hence the position size doesn't make sense.

muscleman, good luck. we'll likely need it against the media, big bank team, selected politicians, and unexpected events -- it's rarely comfortable in this pool. When everyone is comfortable, it is usually the top. 2018 January is a great example. My friend in Canada told me he tried to open an account in TD AM and was told to wait 3 months in line because too many retail investors were lined up to open accounts

now you have me worried... On which part?

I bought back my positions plus more. I think the TA is finally ready. I am being aggressive here for a 20% position because I've accumulated good profits on this stock since the start of the year, so I earned the right to be aggressive. (I use Soros and Stan Druckenmiller's approach for both analysis and risk control, not Buffet's approach)

Is it common for REITs to pay dividends while issuing stocks at the same time? It seems silly to me. Kinda reminds me of an Oil and Gas stock Fairfax was in that didn't end up well a few years back but I forgot the same. https://seekingalpha.com/filing/4607267 With that said, I remember S-1 forms are for issuing new equities. What is FORM 424B5?

Thanks for the recommendations - have you been able to review the performance of these NNNs under stressed market conditions? How do you view tenant mix and location mix, particularly in terms of correlated risk? If AFFO is the main driver of returns and valuation, the question is what drives AFFO. As you mention the two methods to grow AFFO are rent increases, and acquisitions - but really this means tenant and location mix (i.e. what you acquire and where). The real question is how that tenant mix behaves under stress. In such situations, do you know if REITs typically modify lease terms to work with tenants (and maintain occupancy)? My concern is large exposure to small and middle market businesses which may perform worse in a recession - and while the tenant mix may appear diversified, will it actually behave like a hedge during a recession? ERPT is mainly on small to middle market businesses, and I have the same concerns. Do they actually perform worse or do you think they perform worse in a recession?

The cell tower REIT's (AMT, CCI, SBAC) and data center REIT's (EQIX) have been growth stocks in recent years. They're not tech companies but tech-related. The dividend yields of these stocks are pretty low compared to your average REIT due to the stock prices being bid up, sort of similar to no yield growthy tech companies. Mike Thank you! I am taking a look at two REITs. QTS and EPRT. For QTS, it is a data center REIT. I am not sure why these data center REITs are good because I thought everyone is moving to AWS or MSFT cloud. It seems to be a headwind for all other data center operators. Can you please share your thoughts on this? EPRT is more e-retailer resistent REIT. But it seems expensive. Is it better to own a REIT with higher cap rate or lower cap rate?

Thank you! I see some REITs have very low yields like 3.8% while some REITs have yields like 10%. Do these 10% ones usually have problems? Can a REIT be a growth stock like a technology company?

You'd think. Yet the preferreds fall every day. Just rotation to commons? Im honestly perplexed to a degree also. Preferreds aren't much higher then back just before the Lamberth decision yet look how far we have come and where we are. Maybe it takes the NWS being off permanently or release of capital plan to see much closer to par. Either way seems like price will be up substantially overnight like after the 5th circuit ruling. TA hasn’t turned full bullish yet, and the ruling isn’t strong enough to disrupt TA completely like a full NWS cancellation would. I think it’ll just be a matter of few weeks before it is ready to go, which is why I haven’t bought yet.

FFO probably already includes maintenance costs for the properties right? The accounting depreciation for the properties don’t reflect the reality. ( unlike Oil and Gas companies who also use FFO like a joke)

With interest rate almost certainly going to continue falling, I wonder if REITs will continue to go up. So I start to get interested. Mind sharing what the most important metrics to look at for a REIT? If they keep paying out 90% of their earnings, how do they make new acquisitions of properties?

What if the commitment fee after the Senior preferred is cancelled is really high and it leaves very little profit available to common holders? Commitment fees in the business world are usually small. They are not meant as "profit". They compensate the issuer for the opportunity cost of the funds sitting idle. They are common and make sense. They will still mean billions (low single digits) for FF. I would be surprised if the commitment fee was more than 50bps. in theory it should be zero since the US treasury is not funds constrained like a normal commitment lender, but getting away from theory, it should be a fair market fee and 50bps is within a fair range. so $500MM per year for a $100B commitment Got it. Thank you!