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Why ProLogis (PLD) is the Best REIT Stock to Buy Now

Alex Smith

Third Avenue Management recently released its Q1 2020 Investor Letter, a copy of which you can download here. The Third Avenue Real Estate Value Fund posted a return of -28.83% for the quarter as compared to its benchmark, the FTSE EPRA NAREIT Developed Index which returned -28.34% (before fees) in the same quarter. You should check out Third Avenue Management's top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Third Avenue Management highlighted a few stocks and ProLogis Inc. (NYSE:PLD) is one of them. ProLogis is a real estate investment trust company. Year-to-date, ProLogis Inc. (NYSE:PLD) stock gained 9.2% and on June 15th it had a closing price of $94.39. Here is what Third Avenue Management said:

"ProLogis is a US-based Real Estate Investment Trust (“REIT”) that is the largest owner of modern logistic facilities with a platform of more than 800 million square feet globally. Previously held in the Fund, the company’s portfolio is more than 96.0% leased (on an average lease term in excess of 6.0 years) and primarily located in key urban markets and trade hubs in North America, Europe, and Asia--essentially acting as critical infrastructure for supply chains in developed markets. At the same time, the company is extremely wellcapitalized with a net debt to asset ratio below 25%, a fixedcharge coverage ratio in excess of nine times, and more than $5 billion of liquidity. Therefore, ProLogis seems well-suited to deal with a contraction in near-term activity but ideally placed to benefit from structurally higher levels of demand for strategic distribution facilities given a continued rise in e-commerce, modernizing supply chains, and the “on-shoring” of manufacturing over the long-term."

Real Estate Investment Trust

In Q1 2020, the number of bullish hedge fund positions on ProLogis Inc. (NYSE:PLD) stock increased by about 14% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with ProLogis's growth potential. Our calculations showed that ProLogis Inc. (NYSE:PLD) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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Disclosure: None. This article is originally published at Insider Monkey.