Here's how I see the future of REITS; They need to be considered individually as there are so many different kinds. I sold all my AGNC and MTGE because I was uneasy with the profitable but very artificial business model created by ultra low interest rates. I'm staying away from companies that borrow at low rates and with much leverage invest in mortgages. What the fed has created, it will one day destroy. I'm sticking with REITS in other areas like mortgage servicing like NRZ or HLSS (which isn't actually a REIT) . I also hold NCT and more traditional brick and mortar REITS like HCP, HME, CDPYF, GOV (not actually a REIT) and JRS a real estate fund.
For how many years have we been listening to people telling us the rise in interest rates was imminent? Look at Japan. They have been stuck in a low interest rate enviroment for a decade or so. Recognizing that interest rates might eventually go up after all but surely won't go down, I keep my fixed income investments away from bonds and steer more toward floating rates. Holding positions in FFRHX, BKLN, PPR, VVR, JRO. As for stocks, I'm not going to let Barbara #$%$ me into reorganizing my portfolio which is almost totally in dividend paying stocks. One problem for me would be paying heavy capital gains taxes as the stocks are in a taxable account.
Stagg, As for SDRL not being an oil company but a company which leases rigs to oil companies. True, but should the price of oil collapse (which I don't think will happen) or more in the realm of possibility, if there should ever be an overbuilding of drilling rigs like we saw with ships, I don't think SDRL would be immune to the consequences. I own SDRL (a full position 3% for me) and am very happy with it but one of the requirements of owning a company is understanding what external conditions would help or hinder their business so you can buy more or head for the exits.
Stagg you are right, SFL isn't a shipping company but a company which owns ships and leases them out to shipping companies. That was the reason I first went into SFL years ago when it was spun off from FRO. To insulate myself from the uncertainties of the shipping business and procure a steady income from the leases. But here's how I see it: Imagine yourself a landlord who rents office space to business tenants. You're just there to collect the rents - their business problems aren't yours. But is that really the case? Eventually, if their business problems become acute enough, it impacts their ability to pay the rent let alone bonus payments like those that were in the FRO contract. That's what keeps me from going back into SFL. On the good side, SFL seems to be making a concerted effort to expand and diversify so oil transport is a smaller part of their revenue stream. I hope they're successful as I'd like to get back in.
Stagg, I don't buy the argument that world wide shipping is increasing so the participants are bound to make more profits. Increased trade, by itself, isn't good enough. Oil shipments around the world are greater than they were years ago, yet the oil transports are all in the dumpster where a few years back they were very profitable. Same for dry bulk shipping. All it takes is overbuilding of ships followed by intense competition and lowering of rates to the point that ships can't be run profitably. Unfortunately, the shipping industry has a long history of just that. So we need to 'look under the hood' in each case and keep an eye on the exit door.
Bob, we have to stop meeting like this. LOL . If this secondary is used to help SFL lessen their dependence on oil transport, then it's a good thing. Might even come back myself but am a little short on cash right now (as usual). I don't intend to take any position in NATDF because I already have a full position (3%) in SDRL and there just isn't enough difference between their businesses to justify commiting more money. Nothing against NATDF. I went overboard on NCT knowing it would split in half with different business models for NCT and NRZ. But have warned people on this board not to take this last distribution for NRZ and NCT too seriously as when the dust settles, I expect NCT's a little lower and NRZ's a lot higher. We'll see.
SFL and FRO are joined at the hip. Although SFL has made progress in diversifying from the oil transport business it is still too involved with FRO for my comfort. FRO was the reason I sold my SFL years ago and is what keeps me from going back. But what happened to FRO stock yesterday confuses me. Why would a company in a bad business (and with China importing slightly less oil-getting worse) which lost money last year and is on track for losing even more this year, suddenly have its stock shoot up 27% in one day on 6 times volume. A fat finger? a computer glitch? someone trading on insider information? (forget that - it would be illegal and that never happens.) Thoughts?
As for WMC, I'm out of AGNC and MTGE because I couldn't take the suspense as to when the Fed which created this artificial mortgage rate situation was going to pull the rug out and collapse the profitability of that business model. I consider WMC as one of those. I'm still over 20% in real estate but it's HLSS, NCT, NRZ, JRS, GOV, O (preferred)....etc. The fed created the mortgage situation and they will destroy it. It's just a matter of when. If I still owned them , I'd keep one eye on the exit door.
Only problem is I really shouldn't have been accumulating NCT and NRZ as I was already at a 3% position for each. The devil made me do it. That cash was earmarked for buying additional gold, adding more DIV or starting a position in NYCB as I have no bank common stocks unless you count FGB. So many ideas..so little money.
"NRZ at $5.95?" Yes, I just rechecked my Fidelity statement. I had set a $6.00 limit order on Wednesday and according to Thursday's chart, it gapped down and started the day at about $5.90 and went straight up from there. Sometimes you just get lucky. The one that surprised me was the buy of NCT at $5.00 because according to Yahoo's chart, it never went quite that low. OT Bob, I just got my taxes back and my accountant said there was no special forms that had to be submitted for HLSS as long as the dividends were declared in my 1099 from Fidelity. Hope he's correct. With my right wing political bent, I'm sure to end upon the IRS's "enemies list"
Picked up 500 of NCT @ $5.00 when a limit rder was filled. Which surprised me as I didn't see where it went that low. Also 500 shares NRZ @ $5.95 on a limit order. These were small buys as I was already at maximum for these shares but I couldn't resist the temptation.
I think it initially was people bailing out of NRZ because they perceived it to be the lower yield of the two and moving into NCT which they perceived as the higher yield. The recent drop of NCT is probably due to the secondary. My plan is to hold both going forward and give them time to operate under their respective business models for a few quarters then see where we are.
I wasn't planning on adding more NCT but put in a GTC order at $5.00. The devil made me do it. Perhaps he'll make me raise the limit #$%$00 is beginning to look unlikely. I seem to remember this happening before with an NCT secondary where the offering price was lower but the shares sold higher anyway.
My whole investing style is built around yield. My taxable stock account has upwards of 40 equities in as many different areas as I could find. MLPs, REITs, and many high yield stocks like PM, TAL, NCT, HLSS, NRZ, GOV, FLY, BCE as well as funds such as SDIV, DIV, IAF, IAE, JRS......you get the idea. The stock portfolio generated 6.1% yield last year. GIM is in my IRA which is aimed more toward fixed income which has been a lot more challenging this last two years.
I can't keep abreast of international goings on in the bond world. Aside from staying way from US and western Europe government paper I'll let Templeton figure it out.
Look at it this way... If you 'lose' the shares at $7.50 you've made another 13.8% profit above where the stock is trading now(7.50-6.59 =13.8% profit). 13.8 plus 5.7 = 19.5 % which is not a bad profit for 5 months. You can always buy it back. Personally, I wouldn't go out that far especially for NRZ which will likely show a much larger distribution next quarter. I like to limit my covered calls to 2 months.
I'm sure it's my ignorance at fault but can someone please explain why ATLS shows a negative earnings when things are going so well. What am I missing?
The ladies are really freaked out by them. Wife will not eat outside. Constant howl from all those bugs in the trees. Bad smell from all the rotting carcases. Just another few weeks then they're gone for 17 years.
I guess that helps explain the higher yield and higher volatility. I just sold off my FAX which was mostly Australian bonds. So much for trying to figure out stability. The problem there was a resurgence of the US dollar which seems to be a problem now in all these sovereign bond funds.
As I warned before, the NCT/NRZ yields are not what they seem. The NRZ dividend was for only 45 days and the NCT dividend next time will not include some assets that have since been transferred to NRZ. Therefore,I expect one to go up, the other to go down. I own both and expect them both to meet somewhere in between where they are now so I'm holding both. Time will tell.