Investor Education - The Most Important Metrics for REIT Investing

One thing that is important when you do you own investment selections is to understand what you are buying and how to investigate the underlying business.

There is always risk to investing. An investor cannot simple remove risk. What an investor can do is lower the risk factor by education. Armed with information, an investor can make a prudent investment for his risk tolerance.

All that stated, anytime I find a news article or website with what I feel is of important investment educational value, I will post the link under the heading Investor Education.

Real Estate Investment Trusts (REITs) are great income generating investments. However, REITs are not for every investor. How does one determine if REITs are proper for one's individual portfolio? Learning what an REIT is and how it works as well as how to evaluate an REIT is the key.

Linked article is The Most Important Metrics for REIT Investing by Brian Bollinger of Simple Safe Dividends. Click on the hyperlinks for more info on Bollinger and his newsletter.

Happy investing! As always, I present my research for educational purposes only. Please due your own due diligence before you invest. Mentions of my personal transactions are for full disclosure and education purposes and are not recommendations on my part for anyone else.

Starting From Scratch

Greetings all from Monkeyland.

I'm starting my portfolio over. A few years ago, I sold off all my holdings to buy a house. That was fantastic decision as I later sold the house for a sizable gain.

I've decided that now is the time to restart my investment portfolio.

You have to start from somewhere, so today I begin by assembling my watch list.

I signed up to receive an email from Daily Trade Alert. I try to scan it and read for ideas.

A while back, I talked to a coworker about the cannabis industry as a growth play. Lo and Behold, an article with seven cannabis stocks popped up on Daily Trade Alert recently.

The link is These 7 Cannabis Stocks Are Legal Monopolies.

The seven stock mentioned in the linked article:

Happy hunting as this is my first official watch list additions.  I'll keep this updated as I investigate each potential holding.

Stock Holdings Update and Current Purchases

I've been evaluating my portfolio and my current holdings and amounts.  As stated previously, I sold off the majority of my stocks to help fund the purchase of a new home.

I have a certain dollar amount which I call a full position.  Sometimes I overweight on a stock if I feel particularly confidant that it has potential.  Other times I underweight a position if is more speculative and risky.  A lot of investing involves investing money amounts that you are comfortable with.  If you put amounts that are keeping you awake at night.  You then need to rethink your philosophy and how much you put in.

For the record, my current portfolio contains the following holdings:

• Arctic Cat (ACAT) - currently acquiring shares for a full position.
• Ameresco (AMRC) - currently acquiring shares for a full position.
• Activision Blizzard (ATVI) - holding full position
• Dolby (DLB) - holding full position
• Momenta Pharmaceuticals (MNTA) - holding a third of a position.  Currently evaluating whether to continue to acquire shares.
• National Oilwell (NOV) - overweight 17% above a full position due to dividend reinvestment.
• Seaspan (SSW) - overweight 5% due to dividend reinvestment.

In my stock search, LinkedIn has move to the top of my list.  Next week's stock order will include my last purchase of ACAT to complete a full position.  It also included my first purchase of LNKD.  

LNKD will be an addition to my Thundercougarfalcon Fund.  That fund was started two years ago to track my own selections outside the newsletters.  Unfortunately, I neglected my own stock research so currently the fund holds one stock.  I wanted to add three to four stocks a year to it.  If I had followed through, I'd probably have a 8-10 stock personal fund.

Next post, I hope to have my reasons and some research on why I'm buying LinkedIn.

New Watch List for 2012

So what?  The year is starting the sixth month.  I'm sticking with the old adage that it's never to late to invest.  Since I purchased the house, I've neglected my portfolio.  Now is the time to start rebuilding it.

Today I was pleasantly surprised when I took a peak at my brokerage account.  I have a little more than I thought I did.  That's always nice.

I decided to start a new watch list.  It's been so long that I actually updated my old watch list that I decided it is better to start from scratch.

The new watch list consists of:

Regis (RGS)

Retail Opportunity Investment Corp (ROIC)

Brookfield Infrastructure Partners (BIP)

Builders FirstSource (BLDR)

From the Motley Fool article, 3 Unappreciated Stocks To Buy Hand Over Fist in 2012, , the three stocks mentioned are:

Regis (RGS) - Owns hair salons including Super Cuts.  

Article Notes:

1. Old ownership wasted shareholder capital  on bad deals and bloated middle management.

2.  Starboard Capital won a proxy fight and installed three members on the board. 

3.  Due to Starboard challenge, CEO-elect and COO resigned.  Middle management cut and company looking to sell non-core business such as beauty schools and hair restoration business.

4. North American operations is a cash cow.  Cuts of management, sell of non-core assets and other moves could leave it with plenty of cash.

Retail Opportunity  Investment Corp (ROIC) - a REIT that prefers property in affluent areas with a high traffic retail anchor store.  Also buys depressed commercial real estate and low prices.

Article Notes:

1.  CEO Stuart Tanz experienced with REITs.  Ran Kimco Realty that earned investors over 800% in ten years.

2. $600 market cap, 4% dividend, payout of 70-80% of funds.

Brookfield Infrastructure Partners (BIP) - owns a wide variety of assets such as "timberland, railroads, ports, power transmission assets and coal terminals."

Article notes:

1.  Looks to invest in high quality assets with steady income streams.

2. Lists acquisition of two Chilean toll roads and Australian Prime Infrastructure as examples of types of assets BIP invests in.

3.  Also states that company has goal of capital appreciation of 12-15% a year along with a payout growth of 3-7%.

From one of my newsletter subscriptions:

Builders FirstSource (BLDR) - supplies raw materials to home builders mostly in the South and East United States.   Basically anything a builder needs, from materials to contractor services,  BLDR will sell or install it.  Insiders are buying on the open market. 

In my opinion, this is a very risky stock.  With prices ranging recently from $3-4, it almost looks either like a garbage stock or undervalued.  Only more research will tell which direction I will go.

Note on subscription watch list stocks:  I don't feel obligated to not divulge watch list stocks from newsletters.  The stocks are mentioned as ones to keep an eye on and for further research for subscribers.  The stocks are not recommendations and are not tracked with sell, hold or buy and updates like the formal recommendations are.  A stock may only be mentioned once in a newsletter and never heard from again.  Thus, I feel free to discuss those stocks on my blog.

Finally I ran a stock screen on the Wall Street Journal website: WSJ Stock Screen 6-9-2012 (pdf file).

Investing Update

Long time since my last investing check in.  Obviously much has changes since then.

First off, I sold off the vast majority of my holdings and at a profit.  Then second move stems from the first. With the proceeds from my investments I purchased my new home.

Now that I'm settled in my home and the necessities bought, I can once again focus on rebuilding my portfolio.

I've often read that one should have investment goals and a philosphy. It doesn't have to be complex, wordy or fancy. A simple statement to give one general direction to a goal. A philosophy of what type of investments will help someone keep focused and avoid buying unfamiliar securities.

In short, my goal is to make money. More long term, I want to invest to supplement my retirement or pay off my home house at retirement.

Philosophy-wise, I prefer small to mid cap stocks. They can be more volatile and risky but rewards can be higher.  I also look to mix in a few microcaps to try to juice my returns.

The Current Plan

I use two newsletters for stock ideas. Each newsletter provides four stock ideas. I can't afford to buy stocks a month so I evaluate one or two stocks with for best return.  Since both are subscription newsletters, I often delay announcing my buys. I don't think it is fair to newsletter subscribers, writers and me to give away the information immediately.

Aside from the newsletter buys, I plan on doing stock screen searches and other sources to build a watch list for research for future buys. Since those will be my independent research, I will post those as without delays.

The final goal is educating myself. Along the way I will make mistakes. I hope to learn from those mistakes and make better investing decisions. On the flip side, I hope just as much to learn from what I do right.

Stay tuned for further developments.

Portfolio Move - Adding Positions and a Candidate

I subscribe to one the Motley Fool newsletters so I can't claim the pick are my own.  As it is a subscription service, much of the data or analysis is not for public consumption.  I pay for the service and The Motley Fool issues stock and financial advice in return.  Given those circumstances, I will disclose very little other than say where my source for the stocks I'm purchasing are from.

I'm rating an immediate buy for Ameresco (NYSE: AMRC).  Ameresco is an energy services company.  I'll post a better description in a few days.  I don't want to publish results from the newsletter.  Instead I'll do my own synopsis. It's currently priced around $15 per stub.  There is a lot of potential for returns and it's a recent IPO.  More details coming soon.

Chinese web portal Sina is slow accumulation stock.  I plan on purchasing slowly over a period of time until I have a what I consider a full position in my portfolio.   

Watch List stocks: TTM Technologies (TTMI), Titanium Metals (TIE), Vodafone (VOD)

Vodafone will be an official candidate for the ThunderCougarFalconBird Fund pending research and due diligence.  I plan on presenting my research on this blog and making a decision on whether or not to add VOD to the Fund.

Finally, due to stock appreciation, I already own more than a full position in Dolby.  As of this post, I'm up 35% on my original investment.  Sometimes the best investment is a stock you already own.  So I'm considering adding to my Dolby holdings.

Brazilian Growth

I've been obsessed with Brazil and its economy. Finance media regards Brazil as an "emerging" market. I tend to disagree with that assessment. I'm starting to view Brazil as a stable and growing market versus an emerging market. Right now I'd rather money in Brazil than Greece or Ireland. Brazil striving to become a world class economy. Greece is struggling to stay afloat. China is a hot economy trying not to overheat.

Brazil obviously isn't without risk. When I describe it as stable, that term is still relative. Poverty and crime still are a major problem. No matter what you think, those issues affect the economy.

I have no clue about government regulation and oversight of financial markets.

Then there are risks inherent in investing such as human nature and greed, bad management and taking on to much debt and flat out business failure.

However as a growing economy Brazil represents a unique opportunity to profit in a country's growth and future. Over the next year or two I plan on investing in a three or four Brazilian companies as well as a broad market fund.

These investments will be gradual and in addition to my usual investing objectives. I view the Brazil opportunity as chance to augment my portfolio but not my primary investing concentration.

The iShares Brazil fund I talked about in my last post will probably be my first investment. While a broad index fund is a good way to get money on the table, individual stocks can increase profit potential. Keep in mind that individual stocks also increases risk.

So far I have four candidate companies from the the Motley Fool article "Follow Landers Into Brazil." The article features four companies I will use as jumping off points for research: Petrobras, Itua UniBanco, Vale and Banco Bradesco.

The choices I make will become part of the official ThunderCougarFalconBird Fund.

Also on my previous post, I indicated interest in an iShares high yield bond fund. It may or may not be what I was looking for. After reading the prospectus I'm not entirely clear if it is a junk bond fund. It probably is but of course the literature won't refer to it as such. Thus the term "high yield" because junk bond investors require a higher interest for the risk.