ADD: Steel Dynamics (STLD) and Arbor Realty Trust (ABR) to the Investing Ideas Short List.
Commentary below from Keith within "Real-Time Alerts" delivered to #HedgeyeNation today.
SHORTING STLD
This is where The Game gets even more interesting...
Coaching Notes:
1. So the narrative was buy MAGMA because you can't buy anything Cyclical anymore
2. But today you gotta sell the MAGMA and buy Steel Stocks?
3. Jay Van Sciver's long-term Cycle work on this (bearish) is excellent
Staying with Energy, Steel, etc. on the Short Side in a Global #Quad4 (Demand) Recession.
SHORTING ABR
Oh, and you just have to get long Levered Real Estate on green today, eh?
Coaching Notes:
1. No
2. Of all of REIT Rob Simone's Shorts, this new one (Arbor Realty) both signals and smells the worst. He was really right on MPW. How right will he be on this one?
3. Here's a brief excerpt from his all-pro REIT Pro research product. Anyone who is long this and not reading his research on ABR is not doing their fiduciary responsibility:
- Short – Arbor Realty Trust, Inc. (ABR): Given that ~20% of ABR's equity capital buffer is preferred stock, it has a HUGE impact on the residual value available to common when using a P/BV framework; assuming our initial estimate of ~$1.4 billion of potential impairments from bridge loan restructurings in present value terms, combined with a 1x P/BV multiple = an equity value of ~$5/share today, or more than ~50% downside from here before dividends and borrowing costs; ABR remains a short
KM
