Heads: Win Big; Tails: Lose Nothing
Hi everyone. I hope that you all had a great Thanksgiving holiday. I know that I personally have a lot to be thankful for...a wonderful family, a great job, a great place to live, good health. With so much negativity out there in the news today it pays to take a second to count one's blessings. I try to do so as often as possible. It's actually been scientifically proven to change the brain for the better. Try googling it some time. Amazing stuff.
Anyhow, onto the subject of investing. I just came across a very compelling article about a tiny stock that I have written about before, Power REIT (PW). The company is currently involved in a lawsuit with the sole tennant that enables it to pay its 5% dividend. The author of this Forbes article claims that this tiny company has a number of potential positive outcomes as a result of this lawsuit and really no downside should it lose:
Potential moneys that the lessees might be ordered to pay are
• $0.23 per share or more in legal fees. I think this is very likely.
• $15,517,325 or $9.58 a share for the value of the settlement account. I think there is a decent chance that the court will order NSC to pay this one way or another, although it might not come as a lump sum.
• Interest on the above amount. If the court does award interest, it would come to about $55 million ($34 per PW share) of compound interest on top of the $15.5 million principal if they use the long term AFR.
• Increased rent under a renegotiated lease, which could be many times the current lease payment. The current lease pays $915,000, or $0.56 per PW share per year.
The downside for Power REIT would simply be that the court orders that the status quo be maintained (in which case they could still order the lessees to reimburse Power REIT’s legal fees.) In this case, the legal spending will stop, investors will have greater certainty and still own a REIT yielding over 5% which has plans to expand its asset base into renewable energy real estate. As I have previously written, that expansion is likely to allow PW to increase its per share dividend.
I remember looking into PW's management and not being all that enamored with them. However, if what most of what the autohor of this article says is true (and I have not independently verified this yet) this stock has some serious upside and very little downside.
Interesting stuff. Thanks for reading and have a fantastic evening!
Norfolk Southern v. Power REIT: Heads: Win Big; Tails: Lose Nothing