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Return of the REITS!

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May 06, 2008 – Comments (2) | RELATED TICKERS: RAS , AFN , CSE.DL

As mentioned in the April BLOG, I was looking at financial companies as I thought there were several that were beaten down.

Both RAS and AFN reported today and exploded as I expected.

 http://biz.yahoo.com/bw/080505/20080505006532.html?.v=1

RAS's book value is now 25.63 and RAS price jumped to 9.45.  It's EPS was .53 this quarter covering it's dividend of .46.  At new share price of 9.45, that's still a 19% yield.  I plan on re-investing the dividend for as long as fundamentals continue to look solid.  RAS has had a nice runup since April 2nd with SP increasing about 35%, with a lot more to run.  These REITs had been hit way, way too hard and market pricing them for bankruptcy.

AFN reported after the market closed this evening. 

http://biz.yahoo.com/prnews/080506/nytu126.html?.v=101 

As expected, their book value is now  5.38.  AFNs share price rose today with the earlier reporting of RAS, but is now 4.31, still under book value.  AFN earned .34 a share, covering the dividend of .25 a share.  With it's dividend of 1.00, AFNs yield is still 23%.  Not as good as the 33% or so from the 2s, but still very good.  I also plan on re-investing my dividends unless the fundamentals change.  AFN has increased from 2.98 to 4.31 for a 44% increase since April 2nd, but there's still room to go.

Both of these stocks were prime examples of the market throwing out every single thing related to financials.  In these cases, they should not have been priced that low and have excellent chance of recovery. 

 

Capital Source also had a great quarter, and my 3 main REIT holdings are looking great moving forward.

http://seekingalpha.com/article/75897-capitalsource-inc-q1-2008-earnings-call-transcript

They confirmed their dividend of .6.  Also mentioned that environment is very good as many of their competitors have left.  CSE has improved from 11.25 to 14.67 for 30% gain since April 2nd.  Yield is now 16%.

 

 

2 Comments – Post Your Own

#1) On May 06, 2008 at 10:57 PM, motleyanimal (93.53) wrote:

I totally agree. RAS is my biggest winner, even though I have traded it numerous times as the shorts pounced on it and got squeezed. There is risk, but the reward is huge.

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#2) On May 07, 2008 at 1:37 PM, EnigmaDude (98.06) wrote:

Great post - I was thinking of posting a similar blog, but you beat me to it! Fool that I am, I sold my shares in AFN about a week ago (at $3.30) fearing that the earnings report would be below market expectations.  Now I am going to have to wait for a drop before I get back in.

What do you think of RSO? I'm thinking it might be an even better stock than AFN in the long run.

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