Well at least looking at the equity futures it must be party time–the banking crisis is resolved and summer is almost here (although it is 9 degrees here in Minnesota)!!
Of course this is so much baloney – reading comments on this website there are plenty of opinions on what is the next issue–commercial real estate, debt ceiling, consumer credit or a plethora of other potential issues. We all know they are out there and we all know they will eventually have to be dealt with – but undoubtedly they will be not be dealt until something bad happens.
As individual investors we have to do the best we can to deal with what we can control – not to fixate on what we can’t control. One thing I can control is my investments – and right now I wouldn’t want to own any preferred stock or debt of commercial real estate related company’s. This means commercial mortgage REITs. I now don’t own any shares at all, although I did through January, but out they went in February. This would include Arbor Realty (ABR), Ready Capital (RC), KKR Real Estate (KREF), TPG Real Estate Finance (TRTX), Acres Commercial (ACRE) and others. The remote work movement is here to stay–and locally we are seeing numerous large employers not renewing leases as they intend to remain remote and have no need to lease the space.
But it is not only the mortgage REITs , but the office REITs such as Hudson Pacific, Vornado etc. that will have big, big issues. Already their preferred shares are trading way, way down. Hudson Pacific preferred closed at $9.52 yesterday. The Vornado issues are all trading in the $10-12/share area. I think some of these will be buys in the future–but this will take years to play out and there is no use trying to catch the falling knife–why buy something today for $10/share when you might get it at $5 later this year or in 2024 or 2025.
I did nothing yesterday except wish I would have bought more Jackson Financial 8% preferred (JXN-A). When I wrote about it on Monday I had bought hundreds (not thousands) of shares–either way a 13% gain in 2 days is very nice, but I suspect there will be setbacks and one can add shares if desired. Shares are now at $23.94 and I would not be surprised to see them at $27 in a month or two–but on the other hand I wouldn’t be surprised to see the share price at $21 if we have an ‘event’ of some sort. We’ll see.
Today I doubt I will do anything, although I have 2 utilities I am looking at – both issues I have current positions in. I’ll write about them in the next week. My plan continues – hold bunches of CDs and treasuries in the 5% area, buy issues of decent quality when the opportunity presents and recycle CD and treasury money on maturity over the course of 3 months to 2 years (although whether some goes back in CDs or into preferreds will be determined based on conditions at that time).