Retail Opportunity Investments Corp. (NASDAQ:ROIC)

metoo105 (29.43) Submitted: 1/6/2011 10:45:15 PM : Start Price: $9.09 ROIC Score: -40.72

My gut here is to go against whatever picks that Tom Jacobs makes. I think that his analysis might be as good of a contrary indicator as it gets.That said, there are more substantive reasons as well.(1) Tanz's record is misrepresented.(2) The Claremont/Pomona properties that I am local to and familiar with were clearly bad investments.(3) Commerical real estate is really going to collapse if and when interest rates start to creep up. The damage to commercial real estate was just as severe as for homes because notes on the stuff were the subject of the same shenanigans that led to the collapse of the housing market. I've got a friend who gave me the skinny on the gaming of Moody's ratings. Trust me, it was the same junk. The banks have, however, so far avoided the day of reckoning by extending the loans forward so that the terms on upside properties have been extended. (Notes on commerical properties are typically for a fixed term like 10 years and nonamortizing with a balloon payment at the end.) The problem here is that this game only works for the banks so long as the interest rates are low or lower than when they made the loans. If and when interest rates creep up, the banks will be forced to stop playing the music and everyone will be rushing for the same chair.Now you might say that ROIC is not affected by this analysis because all that they really need to worry about is the cash flow on its particular investments. And of course, you'd be right. But since this is a Tom Jacobs pick, and I am pretty sure that his picks are nearly all duds, I am going to underperform it anyway.