Friday File: Pot Dividend Surges, plus thoughts on gold and “bargains”
by Travis Johnson, Stock Gumshoe | June 14, 2019 5:57 pm
A couple buys in the Real Money Portfolio this week, plus notes on IIPR, Sprott, WRTC, Osisko, Nokia and 3M... among others.
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Source URL: https://www.stockgumshoe.com/2019/06/friday-file-pot-dividend-surges-plus-thoughts-on-gold-and-bargains/
Where can I get this y chart?
ycharts.com is a charting/data service. They offer a limited free version, but it’s mostly paid — I think of it as a lower-cost way to get most of what I’d want from a Bloomberg terminal. Koyfincharts.com is another option that’s become pretty popular, though I haven’t tried it.
Hi Travis, great feedback as usual. As I know you previosly owned Franco-Nevada do you personally not see that as a good play on rising gold prices ( i cant rememer why you originally sold out of them)? do you just believe that sandstorm and potentially OR offer better upside potential from the current levels?
I feel that IIPR price has risen too rapidly, but then I’ve been watching it for months waiting on a pullback that never materialized. Has anhyone researched viable alternatives to IIPR…companies that are similarly positioned?
You’re probably right, though, as you’ve seen, it’s always hard to pick a buy point for a rising stock.
There are no other publicly traded marijuana REITs in the US just yet, though there are some private REITs who have done fundraising and there are a couple competitors being created by substantial growers or retailers who are likely to go public at some point.
In terms of REITs in general, what stuck out for me with IIPR was also what stood out for me with CoreSite so many years ago: If you can get a REIT whose unit economics are really good (strong returns on each property, for any of a variety of reasons — COR was because they could raise prices and ad more racks and charge for interconnection and power, IIPR is because they get high cap-rate deals, the tower REITs might stand out because they can place more antennae on the same tower without increasing their costs, etc.), and you can identify that REIT before it levers up the balance sheet or begins to establish a dividend growth pattern, there might be the opportunity for an unusually strong investment. Especially if the company is relatively small. One shorthand way to begin to seek these out is by looking for REITs with low or no debt.
Such companies don’t catch my eye often, but I’m often looking for them. If you notice something like that, holler.
Thanks Travis. So much for any sort of a pullback. Given IIPR’s current unique position I bit the bullet … we’ll see if I bit soon enough.
Trade Note
OK, finally the surge got to be too much for my portfolio management…
Innovative Industrial Properties (IIPR) is acting like a crazy pot stock, not like a REIT, and that’s enough reason now to take a small amount of profit now that my trading embargo has lifted from last week, and the stock has surged another 30% in a week.
As I mentioned in the post above last week, I hesitate to sell a dividend-paying stock, and I am never correct about selling the top in growth stocks, but as a position becomes very large in the Real Money Portfolio I do have to pay some attention to risks. 7.5% of the portfolio at risk in IIPR at these prices is a little too much for my comfort level (remember, this is real money we’re talking about here — this is not a “model portfolio” where the risks don’t matter and you can change your mind about stocks without real consequence).
So I’ve sold a little less than 20% of my IIPR position to take a little profit (in effect, that’s almost pulling out my entire cost basis in the stock, thanks to a 300% surge in 18 months). It may keep rising, but unlike the software stocks it doesn’t have that theoretical near-infinite leverage potential — they own real buildings, with real lease terms, and at some point that “realness” can become an anchor even as the current dividend growth and the marijuana “story” are providing the stock with some wings. The future is unknowable, of course — I think IIPR could go to $200 if they lever up with a bond offering as Wall Street loosens up in marijuana, or they could fall to the $50s or $60s if sentiment swings the other way.
Thought this a useful analysis of IIPR: https://seekingalpha.com/article/4270867-innovative-industrial-bet-pot-reit
Definitely agree that I wouldn’t short IIPR 🙂
I sold half my position when I got to 100% over cost basis. That was before the dividend hike and now I regret it. I’m now at 227% and am hoping you are right about $200 a share. But even if it goes to zero I’m playing with their money now.
Great call! I also sold 45% of my position yesterday (6/20) when it became the largest position in my portfolio. Only problem is my spreadsheets can’t figure out how to deal with taking more out than I put in. Keep up the great work!
About IIPR- Similar ambarrassment. I sold a higher percentage and might buy again with a part of the cashed profit if a 20-30% correction points out.
I am up almost 300% like you. And I thank you for telling us about it. I was going to sell at 90 than 100 but going up so fast i just watched. I am not going to sell just raise a trailing stop. Anything over 100 is a super ROI
My concern about IIPR is its not like it is a trademarked process. I get emails occasionally about other entrants in this market. Treehouse is one and there is another in Beverly Hills. Free market entry, or in other words someone sees a good thing and “gotta get me some of that”
True, the only really clear advantage they have is cheap financing and a head start. Though sometimes it feels like just “not being a corporate governance disaster” is somewhat of a relative advantage in weed world.