As some readers have noted today both Whitestone REIT (NYSE:WSR) and Atlas Financials Holdings (NASDAQ:AFH) are taking hard poundings today.
WSR announced earnings last night–and obviously the market doesn’t like what they saw-or heard. Shares fell as low as $10.68, before starting a recovery to the $11.00 area now (1 pm CST). We reviewed the financials and didn’t see anything that really frightened us. WSR has been marginal in terms of net income and FFO for many years and it continues-no giant surprise to us. We have owned shares off and on since the company came public. We simply like the strategy of holding quality properties in upscale markets that rent to small tenants.
On the other hand we may have too much bias in WSR. For us we have liked it since day one and maybe we should be scrutinizing it harshly. Sometimes getting ‘wed’ to a particular company can be painful. Of course most REITs have gotten slaughtered and in particular shopping mall and shopping center so their is little reason to believe that WSR should be immune.
We hold these is the High Yield Portfolio and personally–fortunately they are small positions. Being a new portfolio we hate to take hits this soon–we hate to lose (oh I forgot–per Seeking Alpha articles you only lose when you sell).
Additionally Atlas Financial Holdings 6.625% baby bonds (NASDAQ:AFHBL) took a hit today as the company decided they need to reserve more for old claims–prior to 2017. The common shares got hammered lower by $7/share, but even the baby bonds are off 65 cents. The company claims that taking these reserves will put them on track to report $2/share earning for 2018 and for now we have to take them at their word. Obviously any time an insurance company pulls one of these stunts you have to question their credibility. The company didn’t announce all the specifics of the reserves and claims to have things totally under control. Typically when insurance companies experience higher claims premiums move higher which is beneficial to the future–we hope this is the case here.
The baby bonds are the only debt the company has ($25 million) and as such we are not compelled to sell–BUT they will be on a short leash until they prove they are moving in the right direction. We hold shares in the Moderate Duration Portfolio as well as in personal accounts.