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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (24563)	8/10/2006 2:12:14 AM
From: Carl Worth	Respond to of 78673

when you mentioned TSY previously, it looked pretty good until i listened to the conference call...they gave a fairly mixed picture of the outlook for their business, due to the competitive nature of the "1031" real estate business environment, with too many bidders causing deals to be done at cap rates that were not high enough for TSY to want to participate...that seems to be playing out now, with their reduced guidance for the balance of the year this time, on their call, they guided only modestly lower, but in response to an analyst question, they acknowledged that their current payout is already higher than they see as ideal, and that they would like to be at about 85% of AFFO, whereas in this past quarter, they were at 95% of AFFO as such, given that FFO is supposed to be around .60 for the second half of the year, and assuming that the IPS business continues to show compressed margins, it seems likely that the dividend would be cut to something like .25 to .27 a quarter (85% of 1.20 a year, give or take a penny or two) AFFO will probably be a little bit higher than FFO, but i would use the .25 to be conservative, and then figure what yield i would want on my money to buy the stock of a company which, while trading very close to book, isn't likely to grow its earnings in the near term...for me i would want a yield of at least 10% to buy such a stock, considering all of the other ideas available with yields in that area, and/or with better growth prospects, so i probably wouldn't want to buy the stock unless it sold off down to 10 bucks...at that point it would be well below book value, and the yield would be reasonably safe IMHO, so it would pay you decently while you wait for conditions in their IPS business to improve on the positive side, they said that their average customer has a rent/sales ratio of 6.7%, which is quite low, and only 19% of their rental contracts come up for renewal in the next 5 years, so their TRS division should be in good shape for a long time to come of course there is a chance the stock will never drop to 10, but this is another case where i would rather wait for my price than pay up at a price that probably doesn't have much upside for a while as an aside, i now see GAIN as something along those lines for the time being...i didn't think their latest report was especially inspiring, and with this quirky market, i won't look to buy that one unless it dips a fair amount...i'm sure they will do fine in the long run, as i think the management is very solid, but it appears that it is taking them quite a while to get their money deployed, so i don't see any hurry to buy the stock all IMHO as always