Opinions
Tyler Mordy
The Real Estate Select Sector SPDR Fund
XLRE-US
DON'T BUY
Jul 15, 2021
N/A
Stock price when the opinion was issued
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BUY
Crown Castle and American Tower represent 20% of this ETF; this is the whole 5G craze, since they own the towers needed for 5G. No problems holding this. He has no worries.
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DON'T BUY
We've seen the bounce from March 23, but they haven't performed well since then. There's lack of visibility on the future. Until we get past Covid, it's not his favourite sector. It has structural headwinds against it. People are out of work, and we haven't had the wave of bankruptcies yet. Better places to look.
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TOP PICK
Part of rotating to defensive sectors. The real estate sector has done very well. REIT's trade with the state of the economy and are affected by interest rates. The sector is more co-related to the business cycle. It typically does well until September but the upside this time may not last until then.
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BUY
Bought it yesterday. Public REITs will see a mean reversion for a discount valuation vs. private markets in 2023. If there's a recession, there will be a lot of M&A, driven by private equity cash wanting to do deals. XLRE will take advantage of this mean reversion. Public REITs have outperformed private RE in the last several recessions and following four quarters of each.
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Good momentum. Basket of commercial, residential, storage, and so on. Issue is the expensive valuation. Another way to play it is to look at the US homebuilders, such as ITB, his preference, which also has a home renovation component. Supply/demand dynamics speak to years and years of home building.