as the $16 sell target subject seems to continue to be misinterpreted. I posted that number in the middle of the run last summer....said it was crazy and it was a number where I would exit my long position.
Unfortunately we only hit $15 and change and thus I'm still holding my core postion.
My core postion causes me to keep track of the stock. Over the years I've been trading in and out and fortunately have been able to lower my basis through those trading profits.
I listened to the conference call and I have to agree with smalltrade FSP looks to have some management issues. I was attracted to this stock as I liked the low debt model and have seen other REITS go to 0 during challenging times. I do think that FSP is positioned to capitalize on the tough market however it looks to me like they are buying early and paying high prices even if the cap rates are 9%+. I think that they are buying cash flow to support the dividend as their lease rolls in 2010 and 2011 will reduce their cash flow from the previously acquired properties. While this might be a reasonable stratedgy to preserve the dividend, properties purchased today will be worth less 12 months from now regardless of the cap rate....I would like for them to be more opportunistic which would result in share price growth over the long run.
At this point I'm waiting for the bottom and if the replacing cash flow stratedgy doesn't work and the dividend is cut further I think it could move down another 25% from current levels. I also think that due to the equity offerring, $13 will be the high point for some time to come. If we hit that level there will be several who will look to get out.
Not a trade yet but will look to start again sub $10 or if there is some momentum shown from current levels.
I don't think your sell target was misinterpreted. You said $16 might be a time to take profits and then actually raised that target to $17.50 saying that this run was crazy.
What I pointed out to you then was that the market was not properly valuing this stock as the price of $14-15 failed to take into account FSP's significant exposure to rent roll. I also noted that FSP basically said in their 2nd qtr conf call that they would be doing an equity offering and that would weigh on the stock price.
FSP was priced too high based on its underlying assets as I've said many times. I am surprised they were able to get the offering done at $13.
As to your comments that FSP is buying too soon, that is simply speculation. No one knows when the bottom will occur or if it has already done so. Trying to pick an absolute bottom is a fool's game. I do agree, however, that FSP appears to be trying to add cash flow from new properties to offset their declining rents due to vacancy. I would hope, at least , that they still believe these properties represent long term values.
I also find it somewhat odd that you now think FSP could fall another 25% from current levels which would give a valuation of about $8. 6 weeks ago you said you bought in at $13 for a trade and now you think the stock could hit $8. That would mean the company would be worth nearly 40% less than your buy price. I understand you said it was for a trade but I'd suggest you never want to be long any stock that has that kind of downside potential.
As to the current valuation, I hope we don't get below $10 as I'm short a bunch of naked puts at that level. Book value is still near $12 and even if you factor in value reductions for vacancies, the current portfolio should be worth $10 per share.
I saw that Baird upgraded the stock earlier this week. I can only imagine what Baird must be hearing from their clients who they put into the offering at $13.
I'm trying to get my hands on the Baird report and the Stifel Nicolaus report that put a sell on FSP at $12.50. If I get them, I'll try to summarize then here.
I started the thread asking the question does anyone think that $16 is a time to sell. That was my target. I am a commercial real estate broker not a stock broker so the sell target was my personal target where I would get out. I was asking for opinions not making a recommendation. I did post a stated "crazy" target 2 days later as FSP was going up 5-10% per day and forget the fundamentals the momentum was overly positive. You responded a week later after the run up had subsided that I was wrong....good for you ....you told me what I already knew at that point. It's pretty easy to be correct looking in the rear view mirror.
Yes, I did buy in for a trade after the offering and fortunately when that started moving against me I stopped out well above current levels. I still hold my core position.
I'll stand by my comment that they are buying early....Have I mis read all of the articles outlining the impending commercial forclosures? Guess so.
In my humble opinion and I certainly bow to your superior intellignece and market knowledge, I think that many factors have changed in the last 6 weeks
1) the dilution 2) institutional selling of FSP....Fidelity is no longer listed as a holder....perhaps this occurred a while back but I've just now realized it. 3) Management is chasing yield vs fundamental value (Falls Church price was nearly $300 per square foot. No matter what the yield this cannot be considered an opportunistic buy) 4) concern that the current pay on the dividend is at risk (to clarify I said that "if the dividend is cut further....then it could drop 25%...does that clairfy your odd comment...)
I've been happy to post my opinions and have somewhat of a debate...you tend to get personal and twist what I post so you can exhibit how right you are and how wrong I am.
So yes my attitude toward FSP has changed and I will use any rebound in the share price to get out....clear enough for you?