February Idea of the Month: Love Snow

By Travis Johnson, Stock Gumshoe, February 13, 2015

I don’t have a single idea that makes me want to jump up and down this month — I’ve been trickling more money into Pershing Square Holdings (PSH.AS, PSHZF) and Tekla Healthcare (THQ) as well as more boring broad index funds and such, and have been tempted by some other investments, but nothing jumps out as a great value or an exciting story at the moment. Such is life when the markets have spent six years going almost straight up.

The new stock I’ve come closest to adding in the last week or two is probably QTS (QTS), which is a data center REIT that’s in the same basic business as Coresite (COR), one of the more successful stocks I’ve ever written about and a fairly large personal holding now… but COR is still really a better company, to my eyes, and just had another blowout quarter yesterday and has been on a tear so far this year, so why buy a company that might eventually be as good? I still may do so at some point, just to diversify my exposure to a sector I like a lot, but I really would prefer to see an interest rate panic bring down REIT prices so I can pick off some of the better companies at better prices.

I’ve also got my eye on the timber REITs, since I’ve wanted to get timber back into my personal portfolio since I sold the disappointing Rayonier (RYN) last year, with my primary candidates being Weyerhauser (WY) and Catchmark (CTT) — but again, though nibbling seems reasonable I hate to bet big on new REIT positions when the likelihood of an interest rate scare dropping the shares across the board sometime this year seems so strong. CTT is the one that jumps out at me in that bunch, it’s small and pays a higher dividend… but the big WY is much more resilient and can more easily handle its dividend. I’ll let you know if any of them get cheap enough that I can’t resist, but that seems unlikely in the near future.

And speaking of REITs, MPW, the hospital REIT I also own and have written to you about in the past, also just reported — they didn’t blow out the numbers like COR did, but were right in line with expectations and kept their forecast for the year at ...

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