All posts by thandavholdings

Hersha Trust

Ticker: HT, Buy below $20.

Hersha Trust is a REIT that owns and operates upscale hotesl in United States .

Why I Would Buy

  1. Cheap – Hersha Trustcurrently sells at 8x trailing and forward AFFO (Adjusted Free Flow from Operations).   
  2. Insider Buying – Strong insider buying during last last 12 months. No insiders have sold last 3 months.
  3. Dividend – 7%+ yield.
  4. Insider Holding – More than 10% of the outstanding units are held by insiders
  5. Low Dividend Payout – Less than 70% of AFFO paid out as dividends.

What Could Go Wrong

  1. High Debt – Debt-to-Equity at 1.39, several high yield preferred securities are outstanding.
  2. Risky Market Segment – Luxury hotel occupancies are highly sensitive to the health of economy.
  3. Interest Rates – Interest rates moving up will likely hurt all leveraged REITs including HT.

Disclosure: I am long HT, please read additional disclosures here before taking any action based on this post.

LyondellBasell

Ticker: LYB, Buy below $75.

LyondellBasell  is one of the largest plastics, chemicals and refining companies in the world.

Why I Would Buy

  1. Cheap – LyondellBasellcurrently sells at 7x trailing and forward earnings.   
  2. Return on Equity – LYB has maintained a RoE in excess of 40%for past 5 years!
  3. Dividend – 5%+ yield.
  4. Credit Ratings – Investment grade credit ratings: Baa1/BBB+
  5. Low Dividend Payout – Less than 30% of earnings paid out as dividends.

What Could Go Wrong

  1. High COGS – Incredibly high COGS, approaching80%. Any increase in cost of raw materials will eat into profits.
  2. Decline In Income – MRQ net income slid down significantly (39%+) y-o-y.

Disclosure: I am long LYB, please read additional disclosures here before taking any action based on this post.

ANZ Bank

Ticker: ANZBY, Buy below $22.

The Australia and New Zealand Banking Group Limited, is the second largest bank by assets in Australia.

Why I Would Buy

  1. Yield – ANZBY yields more than 5% at current prices.
  2. Cheap – Currently sells at close to 12 times forward earnings.   
  3. Return on Equity – ANZBY has maintained a RoE in excess of 10%for past many years.
  4. Credit Ratings – Strong investment grade ratings on long term debt: AA-/AA3/AA- by the top 3 ratings agencies.
  5. Currency Diversifier – A USD hedge.

What Could Go Wrong

  1. High Payout – Pays out > 80%.
  2. Dog –ANZBY has traded almost flat for the past 3 years.

Disclosure: I am long ANZBY, please read additional disclosures here before taking any action based on this post.

Southern California Edison – SCE Trust VI

Ticker: SCE-PL, Buy below $24.

Southern California Edison is electric utility located in Southern California.

Why I Would Buy

  1. Yield – SCE-PL yields close to 6% at current prices.
  2. Cumulative – The ordinary shareholders of Edison will not receive any dividends until holders of this security are paid.   
  3. Qualified Dividends – A rarity among preferreds, the dividends of this security are eligible for 15% tax rate.
  4. Discount – Selling at a 15%+ discount to par.
  5. Strong Issuer – Parent company is Edison International, which is a large utility holding company.

What Could Go Wrong

  1. Perpetual – SCE-PL is a perpetual preferred security with no mandatory call-date.
  2. Credit Rating – The security is rated Ba1 / BB+ by Moodys and S&P, which puts it into non investment grade ratings.

Disclosure: I am long SCE-PL, please read additional disclosures here before taking any action based on this post.

MAGNA

Ticker: MGA, Buy below $50.

Magna International is leading global automotive supplier.

Why I Would Buy

  1. Cheap – Magna trades at < 8x earnings.
  2. Reducing Sharecount – Magna is aggressively buying back stock.   
  3.  Low Payout – The dividend payout ratio is below 20%, while the yield is 3% +.
  4. High ROE – Return on Equity > 10% for past few years.
  5. Low Debt – Debt to Equity is just 30%.

What Could Go Wrong

  1. Trade War – Trade War with China is weighing the stock down.
  2. Cyclicality – Automobiles are a cyclical industry which is possibly at it’s peak right now.

Disclosure: I am long MGA, please read additional disclosures here before taking any action based on this post.

CK Asset Holdings

Ticker: CHKGF, Buy below $15.

CK Asset Holdings is an real-estate and infrastructure assets focused holding company based in Hong Kong .

Why I Would Buy

  1. Low Earnings Multiple – CK Asset trades at < 7x earnings.
  2. Below Book – CK Assets is trading at 0.75 times tangible book value.   
  3.  Low Payout – The dividend payout ratio is at a very healthy 20%, although the yield itself is < 3%.
  4. High ROE – Return on Equity > 10% for past few years.
  5. Insider Buying – Li Ka Shing (the “superman”) purchased significant blocks of shares from the open market.

What Could Go Wrong

  1. Concentration – 80% of revenues are derived from real estate in Hong Kong and China, where there is a persistent talk of a bubble forming.
  2. Conglomerate – CK Assets is a weird conglomerate holding disparate assets such as real estate, airline leasing, home heating services and the like.

Disclosure: I am long CHKGF, please read additional disclosures here before taking any action based on this post.