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Strategies & Market Trends : Value Investing

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To: Sergio H who wrote (47105)	3/18/2012 1:37:00 AM
From: E_K_S	Read Replies (2) of 78748

Hi Sergio - Thank you for the update on IRET. This is a position I bought for the IRA which now represent 1.3% of that portfolio. I have two different Buys 7/2011 and 4/2011. The dividends are reinvested back into stock w/ a 5% discount offered by the company. The initial idea was to seek out a REIT that owned properties in the Midwest oil shale region that could benefit from the drilling dollars being invested in that area. IRET was the only major REIT I could find that was a "pure" play on this theme. My investment is still underwater but I will continue to hold as they still maintain their foothold in North Dakota and eastern Montana. As the real estate market stabilizes and eventually increases in value over the coming years, IRET's properties should benefit. If they can be profitable in the tough times, then when times get better EPS should get better too. Many of the standard value measures are really not that good. The company does carry a lot of debt, BV is only $4.84/share (Price/BV=1.76) and the only positive I see is their forward PE should come down to 11 and the company should have sufficient cash flow to maintain their 6.7% dividend. In summary, I am still betting on more growth and better returns on the properties they manage. The key is for them to increase their cash flow(s) from their portfolio of properties they own and/or acquire new properties (I like their interest in multi-family units) where they can generate a higher ROI on these new investments. The company is still small enough to make significant changes that will impact their EPS. So maybe some of these new property acquisitions will allow them to do just that. At least this is the right time in the cycle to be buying properties. EKS

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