Much jaw-breaking came from the investment community last week, when Warren Buffett purchased an 8% stake in the newly-formed REIT Seritage Growth Properties. When Sears and K-Mart contributed to Seritage last July, we saw much bashing from the community. Most argued that the properties would be of poor quality. Last week, Seritage spiked 18%, becoming the week’s stock highlight. Only time will tell who is right in this case, but Buffett probably has an edge on this.
What is special about Seritage? If many investors have anticipated the demise of the struggling Sears, many wonder why Buffett would consider purchasing its properties. If Sears gradually closes its stores because of underperformance, Seritage will revamp and lease the property for a higher amount. Seritage also has the support of three important retail peers — Simon Properties, General Growth and Macerich have ownership in the company.
Volatility spikes ahead of the Fed meeting. Volatility S&P500 (VIX) increased 65% last week, approaching the 25 mark. On August 24, during the major 2015 selloff, VIX achieved 40. The Fed meeting will be December 15 and 16, and many Wall Street analysts believe an interest rate hike will start this time.
CorEnergy Infrastructure’s nightmare. CorEnergy Infrastructure Trust is experiencing a nightmare following its one-for-five reverse split on December 1. Moods have swung, and the share decreased 23% last week. No significant recent news besides the stock arrangement has yet surfaced, so we think the decrease was a reminder to investors that it was better to realize losses right now and begin anew next year. CorEnergy stock is among the bottom three performers for 2015.
Companies: CorEnergy Infrastructure Trust (NYSE:CORR), Seritage Growth Properties (NYSE:SRG), Macerich (NYSE:MAC), General Growth Properties (NYSE:GGP), Simon Property Group (NYSE:SPG)
Disclaimer: This is not a recommendation to buy or sell stocks. The highest-yield stocks are not necessarily the best portfolio investment choice. The purpose of this report — which is essentially a snapshot of information available on December 11, 2015 — is to reduce your stock analysis by enabling you to compare stock and sector performance. Please do your own due diligence before making any investment decision.
As of November 30, 2015, the equity REITs are constituent companies of the FTSE NAREIT All REITs Index. Companies whose equity market capitalization is lower than $100 million have been disregarded.
This report is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.
Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.