<<Re: "unlikely to have real estate risk - i.e, the company is doing nothing."
I don't understand. How can a REIT not have real estate risk? How can a REIT do nothing and still pay a high yield?>>
He was not looking for action, not looking for the company with the hot development or acquisition, i.e. nothing going on and no management risk. What he was looking for was real estate kicking off a cash flow, where management could disappear and the value would still be there. Probably the kind of company where you wish management WOULD disappear, i.e. liquidate. A REIT CAN do nothing and pay a high yield. That's what real estate is all about, long term leases.
That said, anybody paying over $22 for SKT is an idiot. Buffett bought it for 18-19, with a valuation of 22 or so.
SKT and TCT are not "Buffett stocks" the way we use the term. This was a Ben Graham investment - I have no doubt about that. He is laughing his head off right now, and I also have little doubt that he has sold. If he has not sold SKT at 26, it is simply because he does not want to take advantage of fools who "invest" in his name.
JJC |
