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The Dimension Fund (contrarian investors) has been buying to add to their position. When they buy into a company, that is a good sign for a lot of investors. This company has been a fascinating topic of conversation over the past few years. They were doing too many takeovers and taking on way too much debt. Still has a big debt load, but have been paying it off and he can see how this could be a good turnaround play. Because of their debt, there are still dangers out there.
The stock is incredibly hot, and the whole field is hot. If you can choose the right company, you can do very, very well. The difficulty is choosing the right company. He only buys companies that have been around for at least 10 years. They just completed a takeover of a large greenhouse company. A lot of people are going to be burned in this area.
This is on his Buy list. It pays a nice $.05 quarterly dividend. Just reported earnings, and looked really bad because their Addition L subsidiary, took a big write down of about $26 million. There are difficulties in the retail space, however their same-store sales were up on their bricks and mortars stores. They’re also up in terms of the Internet. This is a good fit.
IPO’s are generally fools’ plays. If you buy into an IPO, odds are it is going to be down a year later. It’s great for the people selling. Often the price is inflated as they want to get it out there and make a lot of money. BV is about $1.70. There doesn’t seem to be tremendous value. He wouldn’t rush out to buy this, but it is certainly better value than it was at its IPO.
In some way, this company has transitioned positively. They now have revenues. Have lowered their operating costs. Still losing a lot of money, about $12 million last quarter. A few years ago, they had around 90 million shares, but now have about 307 million shares, which makes it very, very hard on the upside. There could be a further dilution. Speculative.
Doesn’t know this very well. REITs is a very hot field. A lot of people are saying apartments are the way to go. Thinks there are some major things that might hit the economy such as huge debt loads, both government and personal. Also, real estate prices have gone up like crazy, although they have cooled to some degree, but could still fall quite a bit.
An 8% dividend is about the point where he starts to get nervous about a company. If it is much higher than 8%, often the market is correct. The company has great management and a long history. If real estate gets hit, a lot of companies are going to take it on the chin. Dividend yield of 8.4%.
Market. For him, this is the best time of year. A lot of people wait until the end of the year to Sell their losers. It’s the simple law of supply and demand that puts more supply out there, therefore the price generally goes down. He gets to take advantage of that. This year there is going to be less tax loss selling because stocks have done well. He isn’t looking to buy a lot of stocks, perhaps 3 to 7.