Friday File: Buying a “Bad to Less Bad” REIT, Plus Updates on TTD and IIPR

Adding a high yielder to the Real Money Portfolio, plus some quarterly updates

I’ve got a new buy to go into in some detail today, but first let’s go through some meaningful earnings reports that shook up the Real Money Portfolio this week and sent some questions my way…

The Trade Desk (TTD) beat the analyst expectations for both revenue and earnings this quarter, but not in a hugely dramatic way and still showing evidence of the fact that the growth is slowing down a bit as they get bigger… which is a natural and expected occurrence.

The shares were initially a little weak in the pre-open trading thanks to the flat forecast for the second quarter, though they did raise their expectations for the full year. When a stock is trading at this kind of nosebleed valuation, you really need to shock investors with growth to keep the shares going, and we had gotten used to that because TTD had been in a habit of offering very conservative guidance that led to some dramatic “beat and raise” quarters in the past, but this “beat” was more subdued and that might well have been what got the worries started. Expectations matter.

But that was just the initial reaction to the numbers before the market opened on Thursday… the reaction a little later became much more dramatic, which means, to me, that maybe investors started to freak out about CEO Jeff Green’s comments on the conference call about spending more money to grow market share in programmatic advertising.

Why? I don’t know. Perhaps those who were clambering all over this as a oft-repeated recommendation of the Motley Fool thought that TTD had somehow magically become the only ad-tech company around, or was going to get a pass on taking over the world. That never happens, or if it does happen it’s an accident… and, well, investors are freaking out this week in general and this is a stock that has quadrupled in value over the past year (and more than doubled just since January), growing the stock price far faster than the underlying company could grow the business, so volatility comes with the game. When a stock doubles in a couple months, you attract investors who are expecting dramatic things every time a new quarter is released, and this quarter, while very good, was not at dramatic in the context of TTD’s past performance.

Still a great company, still a pretty insane ...

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