Joshua Varghese
Member since: Aug '18
Portfolio manager at
Signature Global Asset Management, CI Investments
Signature Global Asset Management, CI Investments
120 Opinions
Latest Top Picks
(A Top Pick Dec 05/18, Up 33%) When he called it, ARE wasn't cheap. They hold life sciences properties, which is solid and lucrative (fuelled by R&D spending). They can raise rents by 20-30% annually with these companies, which means strong cash flow growth.
(A Top Pick Dec 05/18, Up 45%) It's a Blackstone-sponsored company that bought a bunch of single-family homes and rent them out. Blackstone IPO'd this and sold it in tranches over time. Now, the stock has legs and doesn't need the parent's support. They rent to tenants and are adding ancillary businesses, like pet services beyond just rent.
Was a spin-out of MGM (the casino). They structure a master lease to this parent. These rents are bullet-proof. Cash flows within MGM are strong (from gambling), even if there will be a recession. You're buying good long-term cash flow, supported by an investment-grade tenant. Also, they can buy more quality assets, some within gambling, some outside, which leads to more accretion. Offers stability yet growth. Pays a 6.1% yield. (Analysts’ price target is $36.15)
They own chilled warehouses, the biggest player in this space. Given consumers' food tastes (fresh foods), this will attract market demand. There's been a recent pullback in COLD, so now is a good entry point. (Analysts’ price target is $40.58)
They have less exposure (40%) to US coastal markets (than other industrial REITS) where there is a constraint of supply (and can seriously raise rents). Given the other 60% of the company pushes down the value--too cheap in his eyes. (Analysts’ price target is $43.33)
Signal
Opinion
Expert
Chart
BUY
BUY
December 2, 2019
Quebec's biggest REIT and once a darling REIT. But they had a lot of dilutive raises which increased leverage and bloated their portfolio. Also, the dividend is too high and will likely get cut. Last year, activists forced the company to change at the board level and cut the dividend (and needs yet another cut). The payout ratio is now much better and they've hired a new CFO who should do a fine job. Now, they are considering what to do with Gare Central in Quebec City, and this may benefit shareholders. A good time to buy.
Show full opinionHide full opinion
Quebec's biggest REIT and once a darling REIT. But they had a lot of dilutive raises which increased leverage and bloated their portfolio. Also, the dividend is too high and will likely get cut. Last year, activists forced the company to change at the board level and cut the dividend (and needs yet another cut). The payout ratio is now much better and they've hired a new CFO who should do a fine job. Now, they are considering what to do with Gare Central in Quebec City, and this may benefit shareholders. A good time to buy.
investment companies/funds
BUY
BUY
December 2, 2019
What he likes the most is that their managers expands from investing in pure real estate to asset management. This increases returns. NWH has moved into asset management in a big way. Also has good free cash flow.
Show full opinionHide full opinionWhat he likes the most is that their managers expands from investing in pure real estate to asset management. This increases returns. NWH has moved into asset management in a big way. Also has good free cash flow.
REAL ESTATE
BUY
BUY
December 2, 2019
For an RRSP as a 2-3-year hold, vs. BAM Go with BAM. But he likes Granite--boasts a very strong balance sheet with low debt which protects them in a downturn. Or they can lever up their balance sheet and buy accretive assets.
For an RRSP as a 2-3-year hold, vs. BAM Go with BAM. But he likes Granite--boasts a very strong balance sheet with low debt which protects them in a downturn. Or they can lever up their balance sheet and buy accretive assets.
property mngmnt/investment
BUY
BUY
December 2, 2019
A safe, low-Beta stock in single-family homes for rent in America. Revenue growth is a good 4-6% annually.
Show full opinionHide full opinionA safe, low-Beta stock in single-family homes for rent in America. Revenue growth is a good 4-6% annually.
REAL ESTATE
BUY
BUY
December 2, 2019
Has grown 280% over 10 years. A great way to play residential rentals in Canadian cities like Toronto.
Show full opinionHide full opinionHas grown 280% over 10 years. A great way to play residential rentals in Canadian cities like Toronto.
investment companies/funds
DON'T BUY
DON'T BUY
December 2, 2019
It's a saga. The latest is that an activist has come in during this sale to complicate things. We'll see where it goes. A few parties want to buy it and see more value than the current share price. But overall he's not positive about HBC.
Show full opinionHide full opinionIt's a saga. The latest is that an activist has come in during this sale to complicate things. We'll see where it goes. A few parties want to buy it and see more value than the current share price. But overall he's not positive about HBC.
department stores
DON'T BUY
DON'T BUY
December 2, 2019
It's range-bound and getting to the lower end, which may lead to an entry point. It's a low-risk investment. The CEO owns a lot of stock. The downside is protected, but don't expect much on the upside. He's concerned about their big mall portfolio, because malls aren't doing too well. Also, he's not impressed with the total return.
Show full opinionHide full opinionIt's range-bound and getting to the lower end, which may lead to an entry point. It's a low-risk investment. The CEO owns a lot of stock. The downside is protected, but don't expect much on the upside. He's concerned about their big mall portfolio, because malls aren't doing too well. Also, he's not impressed with the total return.
property mngmnt/investment
PAST TOP PICK
PAST TOP PICK
December 2, 2019
(A Top Pick Dec 05/18, Up 33%) When he called it, ARE wasn't cheap. They hold life sciences properties, which is solid and lucrative (fuelled by R&D spending). They can raise rents by 20-30% annually with these companies, which means strong cash flow growth.
Show full opinionHide full opinion(A Top Pick Dec 05/18, Up 33%) When he called it, ARE wasn't cheap. They hold life sciences properties, which is solid and lucrative (fuelled by R&D spending). They can raise rents by 20-30% annually with these companies, which means strong cash flow growth.
REAL ESTATE
PAST TOP PICK
PAST TOP PICK
December 2, 2019
(A Top Pick Dec 05/18, Up 45%) It's a Blackstone-sponsored company that bought a bunch of single-family homes and rent them out. Blackstone IPO'd this and sold it in tranches over time. Now, the stock has legs and doesn't need the parent's support. They rent to tenants and are adding ancillary businesses, like pet services beyond just rent.
Show full opinionHide full opinion(A Top Pick Dec 05/18, Up 45%) It's a Blackstone-sponsored company that bought a bunch of single-family homes and rent them out. Blackstone IPO'd this and sold it in tranches over time. Now, the stock has legs and doesn't need the parent's support. They rent to tenants and are adding ancillary businesses, like pet services beyond just rent.
REAL ESTATE
BUY
BUY
December 2, 2019
It's pulled back recently, so now is a good time to buy. They hold apartments, especially in the east coast, like Halifax and Charlottetown. Well-run.
Show full opinionHide full opinionIt's pulled back recently, so now is a good time to buy. They hold apartments, especially in the east coast, like Halifax and Charlottetown. Well-run.
property mngmnt/investment
BUY
BUY
December 2, 2019
A way to invest in Europe, though it's a Canadian REIT. Buy this.
Show full opinionHide full opinionA way to invest in Europe, though it's a Canadian REIT. Buy this.
WEAK BUY
WEAK BUY
December 2, 2019
They hold retirement communities. To be honest, it's not incredibly hard to build such facilities, but aging demographics are a tailwind. It's not one of his top holdings, but belongs in a portfolio.
Show full opinionHide full opinionThey hold retirement communities. To be honest, it's not incredibly hard to build such facilities, but aging demographics are a tailwind. It's not one of his top holdings, but belongs in a portfolio.
other services
TOP PICK
TOP PICK
December 2, 2019
Was a spin-out of MGM (the casino). They structure a master lease to this parent. These rents are bullet-proof. Cash flows within MGM are strong (from gambling), even if there will be a recession. You're buying good long-term cash flow, supported by an investment-grade tenant. Also, they can buy more quality assets, some within gambling, some outside, which leads to more accretion. Offers stability yet growth. Pays a 6.1% yield. (Analysts’ price target is $36.15)
Was a spin-out of MGM (the casino). They structure a master lease to this parent. These rents are bullet-proof. Cash flows within MGM are strong (from gambling), even if there will be a recession. You're buying good long-term cash flow, supported by an investment-grade tenant. Also, they can buy more quality assets, some within gambling, some outside, which leads to more accretion. Offers stability yet growth. Pays a 6.1% yield. (Analysts’ price target is $36.15)
REAL ESTATE
TOP PICK
TOP PICK
December 2, 2019
They own chilled warehouses, the biggest player in this space. Given consumers' food tastes (fresh foods), this will attract market demand. There's been a recent pullback in COLD, so now is a good entry point. (Analysts’ price target is $40.58)
Show full opinionHide full opinionThey own chilled warehouses, the biggest player in this space. Given consumers' food tastes (fresh foods), this will attract market demand. There's been a recent pullback in COLD, so now is a good entry point. (Analysts’ price target is $40.58)
REAL ESTATE
TOP PICK
TOP PICK
December 2, 2019
They have less exposure (40%) to US coastal markets (than other industrial REITS) where there is a constraint of supply (and can seriously raise rents). Given the other 60% of the company pushes down the value--too cheap in his eyes. (Analysts’ price target is $43.33)
Show full opinionHide full opinionThey have less exposure (40%) to US coastal markets (than other industrial REITS) where there is a constraint of supply (and can seriously raise rents). Given the other 60% of the company pushes down the value--too cheap in his eyes. (Analysts’ price target is $43.33)
investment companies/funds
COMMENT
COMMENT
December 2, 2019
You can still get into REITs despite this year's run-up. Valuations are still good and REITs offer a total return including dividends that compare well to fixed income. REITs have held up in the past year during three market sell-offs. We're not out of the woods in the world economy, and he expects a slowdown and choppiness. Also, pension funds invest in REITs to meet their long-term returns (they no longer achieve that with bonds); so they are moving into REITs and will continue to.
Show full opinionHide full opinionYou can still get into REITs despite this year's run-up. Valuations are still good and REITs offer a total return including dividends that compare well to fixed income. REITs have held up in the past year during three market sell-offs. We're not out of the woods in the world economy, and he expects a slowdown and choppiness. Also, pension funds invest in REITs to meet their long-term returns (they no longer achieve that with bonds); so they are moving into REITs and will continue to.
PAST TOP PICK
PAST TOP PICK
December 2, 2019
(A Top Pick Dec 05/18, Up 15%) They hold single-family rental homes. They confused investors last summer when they bought some apartments, but long term this is a good strategy, because they're trying to create an asset management platform. They would be the asset manager, raise third-party capital and collect a fee on them. This confusion has pressured the stock, but the stock has since rebounded.
Show full opinionHide full opinion(A Top Pick Dec 05/18, Up 15%) They hold single-family rental homes. They confused investors last summer when they bought some apartments, but long term this is a good strategy, because they're trying to create an asset management platform. They would be the asset manager, raise third-party capital and collect a fee on them. This confusion has pressured the stock, but the stock has since rebounded.
REAL ESTATE
COMMENT
COMMENT
December 2, 2019
They hold data centres and cell towers which surprisingly make up a big part of the real estate index. He likes this but prefers the biggest player in the world, Equinix. Having scale in this business matters.
They hold data centres and cell towers which surprisingly make up a big part of the real estate index. He likes this but prefers the biggest player in the world, Equinix. Having scale in this business matters.
REAL ESTATE
BUY
BUY
December 2, 2019
They hold data centres and cell towers which surprisingly make up a big part of the real estate index. This is the biggest player in the world in this business. Having scale in this business matters.
Show full opinionHide full opinionThey hold data centres and cell towers which surprisingly make up a big part of the real estate index. This is the biggest player in the world in this business. Having scale in this business matters.
REAL ESTATE
BUY
BUY
December 2, 2019
It's fairly valued now. He likes IIP for renovating buildings well then capturing the upside in rent. Free cash flow yield of 3% and free cash flow growth of 15%. The stock will move and up from time to time, but if you buy it now you will make money.
Show full opinionHide full opinionIt's fairly valued now. He likes IIP for renovating buildings well then capturing the upside in rent. Free cash flow yield of 3% and free cash flow growth of 15%. The stock will move and up from time to time, but if you buy it now you will make money.
property mngmnt/investment
COMMENT
COMMENT
December 2, 2019
He prefers owning the parent, BAM. BPY owns US malls and New York City offices, both high quality assets. But at this stage of the cycle, those properties will demand a lot of capex. A few years ago, BPY bought a bunch of malls from GGP and will make a lot of money of them down the line, but not immediately.
He prefers owning the parent, BAM. BPY owns US malls and New York City offices, both high quality assets. But at this stage of the cycle, those properties will demand a lot of capex. A few years ago, BPY bought a bunch of malls from GGP and will make a lot of money of them down the line, but not immediately.
REAL ESTATE
BUY
BUY
December 2, 2019
A good, liquid way to get exposed to Canadian REITs. It's fairly valued now. He expects volatility in world markets going forward, so money will flow into REITs where RioCan will benefit.
Show full opinionHide full opinionA good, liquid way to get exposed to Canadian REITs. It's fairly valued now. He expects volatility in world markets going forward, so money will flow into REITs where RioCan will benefit.
property mngmnt/investment
BUY
BUY
December 2, 2019
Dream Global REIT Dream Global REIT was sold in September to Blackstone. A fee was paid to Dream Unlimited in this sale, so the stock spiked. This cash gives DRM the chance to buyback more stock. You can still make money here, though it's moved up.
Show full opinionHide full opinionDream Global REIT Dream Global REIT was sold in September to Blackstone. A fee was paid to Dream Unlimited in this sale, so the stock spiked. This cash gives DRM the chance to buyback more stock. You can still make money here, though it's moved up.
REAL ESTATE
WEAK BUY
WEAK BUY
December 2, 2019
They moved a lot lately, so don't be in a rush to get into this. You can make some money in this, though, supported by the ongoing demand for industrial REITs.
Show full opinionHide full opinionThey moved a lot lately, so don't be in a rush to get into this. You can make some money in this, though, supported by the ongoing demand for industrial REITs.
investment companies/funds
BUY
BUY
December 2, 2019
VRE vs. XRE Ignore both and buy RIT. It has a history of outperforming the Canadian REIT index handily, actively managed by his company.
Show full opinionHide full opinionVRE vs. XRE Ignore both and buy RIT. It has a history of outperforming the Canadian REIT index handily, actively managed by his company.
REAL ESTATE
COMMENT
COMMENT
October 9, 2019
WeWork is the largest user of Manhattan office space. If that IPO is unsuccessful it could have a major impact on the real estate market there. Who would back-fill the commitments to the space. It is not so much of an impact in Canada however. The multiples applied to WeWork are high.
Show full opinionHide full opinionWeWork is the largest user of Manhattan office space. If that IPO is unsuccessful it could have a major impact on the real estate market there. Who would back-fill the commitments to the space. It is not so much of an impact in Canada however. The multiples applied to WeWork are high.
COMMENT
COMMENT
October 9, 2019
WeWork is the largest user of Manhattan office space. If that IPO is unsuccessful it could have a major impact on the real estate market there. Who would back-fill the commitments to the space. It is not so much of an impact in Canada however. The multiples applied to WeWork are high.
Show full opinionHide full opinionWeWork is the largest user of Manhattan office space. If that IPO is unsuccessful it could have a major impact on the real estate market there. Who would back-fill the commitments to the space. It is not so much of an impact in Canada however. The multiples applied to WeWork are high.
Technology
COMMENT
COMMENT
October 9, 2019
Embassy Office REIT is India's first REIT IPO, backed by BlackStone. His company was asked to help anchor this high quality holding of assets and it is up 40% since the IPO in March. It trades on the Mumbai exchange -- difficult for Canadian investors to access.
Show full opinionHide full opinionEmbassy Office REIT is India's first REIT IPO, backed by BlackStone. His company was asked to help anchor this high quality holding of assets and it is up 40% since the IPO in March. It trades on the Mumbai exchange -- difficult for Canadian investors to access.
COMMENT
COMMENT
October 9, 2019
A new GTA REIT Continuum REIT is his single largest holding in their Real Estate fund -- a private fund that just launched its prospectus last week. It holds apartments in the GTA area of Ontario. They are exploring an IPO -- a pure play exposure in this very hot market. Rent controls in the market actually caused other rents to spike as people held onto their apartments. This REIT will take advantage of the opportunity to raise rents on the units available. This shows rent controls are not the answer to keeping rent affordable. You need to increase the supply.
Show full opinionHide full opinionA new GTA REIT Continuum REIT is his single largest holding in their Real Estate fund -- a private fund that just launched its prospectus last week. It holds apartments in the GTA area of Ontario. They are exploring an IPO -- a pure play exposure in this very hot market. Rent controls in the market actually caused other rents to spike as people held onto their apartments. This REIT will take advantage of the opportunity to raise rents on the units available. This shows rent controls are not the answer to keeping rent affordable. You need to increase the supply.
BUY
BUY
October 9, 2019
The Starlight buy allowed TCN-T to expand apartment rentals in the US to be added to their single-family for rental portfolio of holdings. They were able to issue stock to the Starlight holders at very high values to bring them in -- a very smart strategy. This created a large overhang of shares that could hurt share prices. Recently TCN-T removed the overhang to allow them now to sell those shares unrestricted. Investors on the sidelines appear to have sopped up the surplus. The only reason it was not a Top Pick, is that he was blind sided by the share announcement. His discussions with the management team about the US acquisition is solid, he thinks. He likes the valuation of the company, he thinks it could be worth $13 per share.
Show full opinionHide full opinionThe Starlight buy allowed TCN-T to expand apartment rentals in the US to be added to their single-family for rental portfolio of holdings. They were able to issue stock to the Starlight holders at very high values to bring them in -- a very smart strategy. This created a large overhang of shares that could hurt share prices. Recently TCN-T removed the overhang to allow them now to sell those shares unrestricted. Investors on the sidelines appear to have sopped up the surplus. The only reason it was not a Top Pick, is that he was blind sided by the share announcement. His discussions with the management team about the US acquisition is solid, he thinks. He likes the valuation of the company, he thinks it could be worth $13 per share.
REAL ESTATE
HOLD
HOLD
October 9, 2019
A small Canadian REIT focusing on US middle market apartments. He likes these specific markets because they less risk around the affordability and the ability to raise rents without regulatory issues. They are trading at a discount to NAV, which confused him why they issued at a discount. Yield 4.4%
Show full opinionHide full opinionA small Canadian REIT focusing on US middle market apartments. He likes these specific markets because they less risk around the affordability and the ability to raise rents without regulatory issues. They are trading at a discount to NAV, which confused him why they issued at a discount. Yield 4.4%
REAL ESTATE
HOLD
HOLD
October 9, 2019
REITs in general have done well and are now fairly valued -- there are no desk pounding deals out there. You want to own them as they prove they hold their value in the late stages of the bull cycle. As we get more into uncertainty in growth, political turmoil and trade wars the income they generate is good. Don't expect a ton of growth, however, due to the required capex. Yield 5.4%
Show full opinionHide full opinionREITs in general have done well and are now fairly valued -- there are no desk pounding deals out there. You want to own them as they prove they hold their value in the late stages of the bull cycle. As we get more into uncertainty in growth, political turmoil and trade wars the income they generate is good. Don't expect a ton of growth, however, due to the required capex. Yield 5.4%
property mngmnt/investment
HOLD
HOLD
October 9, 2019
He likes holding this one. Apartments are doing well in the space. He worries if these are being over valued. REIT distribution yeilds need to be re-though. Real Estate is very capital intensive and high distributions may require more debt and more equity to get raised to pay them. He prefers a lower yield and low payout ratios. This REIT has done things well, with a low distribution yield that is allowing free cash flow to grow at 18%. He prefers owning apartment REITs versus owning a condo. Yield 1.8%
Show full opinionHide full opinionHe likes holding this one. Apartments are doing well in the space. He worries if these are being over valued. REIT distribution yeilds need to be re-though. Real Estate is very capital intensive and high distributions may require more debt and more equity to get raised to pay them. He prefers a lower yield and low payout ratios. This REIT has done things well, with a low distribution yield that is allowing free cash flow to grow at 18%. He prefers owning apartment REITs versus owning a condo. Yield 1.8%
property mngmnt/investment
BUY
BUY
October 9, 2019
The business of realty income is good. They buy big portfolios of real estate and have the low cost of equity to allow them to make acquisitions. They often offer sale lease-backs to the owners of the assets they buy. You would not be hurt to buy it even here.
Show full opinionHide full opinionThe business of realty income is good. They buy big portfolios of real estate and have the low cost of equity to allow them to make acquisitions. They often offer sale lease-backs to the owners of the assets they buy. You would not be hurt to buy it even here.
REAL ESTATE
PAST TOP PICK
PAST TOP PICK
October 9, 2019
(A Top Pick Aug 16/18, Up 21%) If you want to own one international real estate holding -- this is it. They continue to raise lots of capital and have an army to deploy it. They charge fees to management assets and fees on the profits. The bigger the pool of assets, the bigger the fees they collect. Their inside owners interests are well aligned with investors. If markets do drop, they are best positioned to take advantage of opportunities. There could be some risk that regulations that come into the private equity market, but he is not too concerned it would impact their fees.
Show full opinionHide full opinion(A Top Pick Aug 16/18, Up 21%) If you want to own one international real estate holding -- this is it. They continue to raise lots of capital and have an army to deploy it. They charge fees to management assets and fees on the profits. The bigger the pool of assets, the bigger the fees they collect. Their inside owners interests are well aligned with investors. If markets do drop, they are best positioned to take advantage of opportunities. There could be some risk that regulations that come into the private equity market, but he is not too concerned it would impact their fees.
management/diversified
PAST TOP PICK
PAST TOP PICK
October 9, 2019
(A Top Pick Aug 16/18, Up 24%) One of the best capital compounders out there. They build life sciences buildings on campuses across the US. Biotech companies co-locate on these campuses, creating great opportunities. The fundamentals remain positive and he continues to hold it.
Show full opinionHide full opinion