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

To: bruwin who wrote (78095)	9/12/2025 7:14:04 PM
From: E_K_S	1 Recommendation Recommended By bruwin Read Replies (1) \| Respond to of 78478

RE: National Storage Affiliates Tru (NSA) (Note AI helped me compose this response) My investment thesis is pretty straightforward: I believe this company is currently undervalued due to its high debt load, which is a hangover from past acquisitions. However, I see a clear path to significant value creation through strategic asset sales. By divesting underperforming properties, management can pay down debt and improve the company's financial profile. This should lead to a higher and more sustainable Funds From Operations (FFO). I'm betting on a few key outcomes: Lower Debt: I expect the company's debt-to-equity ratio to fall, bringing it more in line with the sector average. This makes the company less risky and more attractive to investors. Higher FFO: By shedding inefficient assets and reducing interest expenses, the remaining portfolio will be more profitable. This 'cleaner' FFO and the prospect of future growth should drive a higher stock price. My Valuation Approach To support this thesis, I've been doing some valuation work. I'm looking at this from a few angles: Reversion to the Mean: This is my primary metric. I'm confident that once the debt is reduced and the FFO improves, the stock will revert to its 5-year mean, which for me represents a price appreciation of over 35%. The current disconnect is what makes this a compelling opportunity. Discounted Cash Flow (DCF): While tough to project with all the moving parts, a DCF analysis helps model the future cash flows after the asset sales. I'm building different scenarios to see how the reduced debt and improved FFO impact the company's intrinsic value. Comparable Analysis: I'm also using market comps, looking at how other self-storage REITs with similar financial profiles are valued. This helps to validate my reversion to the mean thesis. What I'm Watching and Why I'm Sizing In I currently have a small "tracking position" in the company. My plan is to scale in and buy more shares once management makes a concrete announcement about asset sales. I'll be watching the news closely. A key point to consider is the potential Goodwill write-down. When they sell assets, they may have to write off some of the goodwill from the original acquisition. This could cause the stock to temporarily tank. If it does, I'll see it as a buying opportunity because it doesn't fundamentally change the future cash flow picture. It's a non-cash charge that most retail investors will likely panic over, giving me an entry point to increase my position at a discount. This is a very interesting exercise. I'm confident in the thesis and think the risk-reward is favorable. It’s all about patience and waiting for management to execute on their strategy.