by Travis Johnson, Stock Gumshoe | October 4, 2019 4:30 pm
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I put IRM into one of my wife’s IRAs and it has done well over the past 18 months.
I think that investing on $KSHB is a bet on the vaping industry not collapsing. If I had to bet on that, I would have put my coins on the FDA eventually approving it, but in a regulated way. I am interested to take this bet, but $KSHB is little too dramatic for me. I wonder what you guys think about Altria as a bet on the same idea?
Altria (MO) closed yesterday (10/4) at 41.74 a share, P/E 12.44, Yield 8.36%
Could it go down more? Of course, but that Dividend Yield is amazing. If a person is trying for a stable income from dividends, it’s a good deal. Arguably, a ban on vaping could send the current “vapers” back to smoking… I don’t know about the power of nicotine, my addiction is chocolate. *goes to look at Hershey’s*
nicotine is chocolate^3 or even more
Non-related question….is the price of an ETF dependent upon the price of the positions included or on the amt of the shares of that particular ETF sold? So would any fund that tracks the Dow, or whatever, be equal?
The price is based on some assessment of a starting price by the ETF creator — they build the basket of stocks to match that index, then dice and mince it to reach a per-share price that they think will be appealing to investors. All ETFs that track the Dow should perform almost identically to each other and to the index over time (there will always be a little tracking error, and some have higher fees, but in practice the big ones are all extremely similar), but they won’t be at identical prices. Two ETFs that track the S&P 500 (like VOO and SPY) should have identical percentages of their holdings in Microsoft (4.29%) and Apple (3.92%), and the performance up or down should be nearly identical on a percentage basis, but they won’t have the same per-share price because they started with different prices when they were formed. The number of shares of an ETF changes every day as new shares are created and destroyed based on rising or falling demand for the ETF, and one of the tools that ETFs use to keep matching that index is that they effectively allow large institutional holders to redeem the ETF shares for the underlying stock, which prevents the stock from straying too far from the net asset value, but any two ETFs that track the same index should have extremely similar performance on a percentage basis — differences should come down to one manager being better at reducing tracking error than another, or to higher management fees.
I think the biggest risk to $IIPR is widespread legalization. I f the federal government legalizes Marijuana than all the growers can get mortgages to buy properties themselves, and wont need them anymore.
#IIPR
That’s what I feared last year, when I was first buying IIPR, but I’m not really worried about that as a risk anymore — yes, it would mean cap rates come down, but it wouldn’t mean that the appeal of the sale/leaseback transaction goes away, and as cap rates come down with legalization IIPR would also be able to get cheaper debt financing, which would goose equity returns. MPW, for example, has often had plenty of business doing sale/leasebacks with hospitals for cap rates around 8%, which is not nearly as great as the 11-14% deals IIPR is doing but is still quite profitable if your cost of capital is reasonable.
I still think the biggest risk, by far, is the solvency of their tenants — mostly because the people building new companies in this new industry are using assumptions about demand and pricing that could easily be wrong.
Any idea what is causing the sharp drop today (-10.7%)? I’m not seeing any particular negative news for IIPR, actually seem like they made another purchase. Other marijuana stocks dropped today as well but not as much and IIPR actually has solid earnings and dividend, go figure…
A possible explanation why NOK and ERIC do not move up can be found here: https://www.visualcapitalist.com/the-future-of-5g-comparing-3-generations-of-wireless-technology/
Basically, the biggest investment by far in 5G is expected to come from China (more than 50% of global sales) and nobody is guaranteed a piece of that pie except Huawei, efven more so with the trade war raging…
“To date, China has built roughly 350,000 5G sites─compared to the less than 20,000 in the U.S.─and plans to invest an additional US$400 billion in infrastructure by 2023. Chinese mobile providers plan to launch 5G services starting in 2020.”
Yes, I do not expect Nokia or Ericsson to get a lot of business from China for building new 5G networks… though both of them are selling quite a bit into China at the moment.
It’s certainly a risk that this trade war and the Huawei fight results in a bifurcated world — China and its economic allies buying mostly Chinese stuff, versus the US and its group buying mostly US and European stuff, with no selling back and forth and a battle for territory. Don’t know how it will play out, of course, and I hope the trend against globalization and free trade ebbs, but there’s definitely a meaningful amount of risk.
Of course, just building 5G networks in Japan, Europe and the US would create more than enough business for Nokia and Ericsson to grow like crazy, particularly if Huawei is locked out of those markets… so you never know.
Surprise! PharmaCann and MedMen called off their merger today. MedMen is retrenching and focusing on building their retail brand in California instead of sticking with their initial plan to expand nationally, which seems mostly to be an admission that capital is not as free and easy in marijuana as it was a year or two ago (they decided that building out nationally wouldn’t be worth the large cost, and PharmaCann was a big part of that national expansion ambition). MedMen does get some Illinois assets as part of the deal cancellation, to repay a loan they had made to PharmaCann, but those weren’t assets that IIPR owned so it doesn’t have a direct impact.
It will be interesting to see how this shakes out, and I’d like to hear more from PharmaCann about their financial situation since that’s a risk for IIPR, but I don’t know anything more detailed yet.
“Blather” on Travis; I get a lot out of your thoughts. Much appreciated!
An aside – how often do you update the RMF?
Thanks again!