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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (33738)	3/8/2009 11:42:48 AM
From: E_K_S	Read Replies (1) of 78774

Hi Spekulatius That's a very detailed and comprehensive report that Citigroup put out on REITs. Do you know how the small individual investor can buy REIT debt directly ? This would be much safer than buying either the preferred or common shares. Many of the preferred series are priced between $0.25 (ie LXP) to $0.35 (ie HRP) on the dollar (based on their original issue price). That signals to me that at the lower end they are priced for a default and at the higher end they are definitely priced as "junk" and carry a lot of risk. It will be interesting to watch how these get priced in 6-18 months. I found it very interesting how some of the CDS spreads are priced for GE and Berkshire Hathaway. On Fast Money they pointed out how the market is pricing the risk component for these two blue chip companies. cnbc.com From the article:"...Consider this: Berkshire Hathaway [BRKA 0.018 -0.004 (-18.18%) ] credit default swaps are now trading wider than Vietnam, according to Bank of America/Merrill strategist Michael Hartnett. Meaning that Berkshire bondholders need to pay more to protect themselves against default than those holding sovereign debt issued by Vietnam. Hartnett holds this up as just one example of the extremes he's seeing in the credit markets. He also shows that GE [GE 7.06 0.40 (+6.01%) ] CDS are trading wider than Russia...." We are living in very interesting times. EKS

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