Ticker: HT, Buy below $18.
Hersha Hospitality Trust is a small cap REIT focused on hospitality industry.
Why I Would Buy
- Cheap– Trailing P/AFFO: < 9x.
- Insider Trends – Management has been aggressive buyers for last 12 years, especially so in the last 3 months.
- Dividend – Currently yields over 6%. This is well covered by Adjusted Free Flow from Operations (AFFO), the payout is less than 55%!!
- Buyback – A recently announced buyback would retire 13% of outstanding shares.
- Below Book –Hersha trades below 80% of book value.
What Could Go Wrong
- High Beta – The Hotels industry is strongly correlated to the overall economy, and would suffer disproportionately in a downturn.
- Industry Trends – Home rental services are potentially disruptive trends for the hospitality industry, the full extent of impact is indeterminate.
Disclosure: I am long HT, please read additional disclosures here before taking any action based on this post.