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Strategies & Market Trends : Value Investing
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E_K_S
Grommit
Spekulatius
To: E_K_S who wrote (55289)5/11/2015 11:54:33 AM
From: geoffrey Wren3 Recommendations   of 78740
 
Investors keeping track of the RMR maneuvers is like watching a soap opera, only it is the viewer who gets the venereal disease.

GOV has purchased two large blocks of SIR. Neither investment made sense for GOV. Both investments made sense for RMR (GOV and SIR's outside managers), as each purchase helped ensure that RMR would keep management rights for SIR. As for the reason for GOV to become in large part a one stock mutual fund, management at their last earnings conference twice stated that the SIR shares acquisitions were "compelling."

Now GOV has a very large holding of SIR stock worth around $~180m less than purchase price. They were forced to recognize $40m of that loss when SIR issued more shares to fund a large purchase of property from Cole. It was some sort of accounting rule. But they did not get into explaining more than saying it was a "non-cash" charge. They prefer to suggest shareholders have suffered no real loss because the SIR shares have not been sold for an actual loss.

If one can stomach holding a REIT where one knows outside management has shareholders second on the priority list, I'd suggest SIR is a better stock to hold than GOV. Higher dividend, better properties.
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