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Jason Knapp

Mr. Market Yawned At Great News for VEREIT, Buy More While You Can...Special Situation Investing News - 8/27/2015

One common theme of my posts here at the Special Situation Investing News, has been that REITs and MLPs are extremely cheap. Today I am going to revisit an investment idea that I have written about here several times.  Including back in June:

Mr. Market Hates Uncertainty, But Investors Can Profit From It

and more recently at the end of August:

How to Buy Filet Mignon at Beef Jerky Prices

I have written in the past that I believed that the reinstitution of a dividend at this once troubled REIT might be the catalyst that would cause Mr. Market to realize how truly undervalued it was.  Well, the company announced on August 5th that it will once again begin paying a dividend, $0.1375 per quarter or $0.55 annually to be exact, putting its current yield at around 6.9%.  One would think that the removal of uncertainty about what the distribution would be as well as the alleviation of the general disdain that REIT investors naturally have for REITs that don't pay distributions would have created some positive momentum for the stock.  Alas, Mr. Market yawned at this news.

If anything, even though the company has an extremely well-regarded new management team in place that has a history of turning around broken companies, has culled a number of unwanted assets from its portfolio and reestablished a dividend, shares of VEREIT are actually down more than 6% past three months.

A three-month chart of $VER (blue) vs. the S&P 500 (red) (click to enlarge)

This morning I came across an excellent article about VEREIT by well-known REIT author Brad Thomas that lists a number of potential catalysts that may cause this battered stock to finally start heading higher.


Tipping Point 1: Portfolio Pruning.

Tipping Point 2: Investment Grade Rating.

Tipping Point 3: Monetize Cole.

Tipping Point 4: Safe Dividend.

What Is The Tipping Point For VEREIT?

Of the points that Brad mentioned, I personally believe that one and two are very closely related and could have the biggest impact on the stock.  Many conservative investors are scared off by VEREIT's high level of debt.  If the company's new management team, headed by turnaround specialist Glenn Rufrano, is able to sell off many of its less desirable assets and use the proceeds to pay down debt not only will the company have the potential to be more profitable in the future by improving its credit rating, in turn lowering its borrowing costs but it should be afforded a higher multiple by investors for its new, lower risk profile.

I personally have owned $VER since its implosion last fall and I have continued to add to my position on the recent weakness.  I strongly believe that investors who purchase shares today will be handsomely rewarded over the next several years.

And now for the rest of the Special Situation Investing News:


Shire Weighing Options to Sweeten All-Stock Offer for Baxter Spinoff Baxala

U.S. oil producers thirsty for cash eye wastewater unit spin-offs

$MGM Resorts International: It’s Not Just REIT Potential

$MGM Resorts: You Don’t Need a REIT to Tell a Good Story

Madison Square Board OKs Spin-Off Of Sports And Entertainment Businesses

Interesting section on Gannett #spinoff Tenga $TNGA. A Fund Manager Sticks With Mattel for the Long Haul

Supervalu Works to Deliver Value for Investors



Bill Ackman Comments On Former SPAC Nomad Foods Ltd.

TPG blank check company Pace Holdings prices $400 million IPO at $10 per unit

ROIQ Warrants Possible 100% Upside In 2 Months With This Special Situation Opportunity

Hennessy Capital Acquisition Corp. II Common Stock and Warrants to Commence Trading Separately on 9/11/15


Merger Arb:

GE emerges as key player in Halliburton buyout deal

Blackstone Group planning bid for ATM-maker

$NCR Is Said to Resume Attempt to Sell Itself

Mylan takes buyout offer for Perrigo directly to shareholders

Spectra Energy Exits Auction For Williams, Leaving Energy Transfer Equity The Only Serious Bidder


Tender Offers:

DOW: Odd Lot Arbitrage Opportunity With $400+ Upside

Nathan's $NATH up nearly 10% on Tender Offer to Repurchase up to 500,000 Shares of its Outstanding Common Stock


Activist Investors:

Pershing Square's Ackman tells CNBC Mondelez could be takeover target

Barron's 13D: Starboard Examines MedAssets, Trian Wants Seat at Pentair

Activist Investing Daily: Buying For A Discount


Investment Write-Ups:

$ENSG #spinoff CareTrust REIT Has All Of The Ingredients For Something Special $CTRE

VEREIT: Should You Buy This REIT At $8?

Could you imagine what this would do to $YHOO? Alibaba: Why It Could Fall 50% Further.


Other Investing News:

Value Stocks Look Poised to Outperform the Market

Kroger’s ‘Vindication’ Sends Stock Soaring

Yahoo 'SOTP' Shenanigans

How Jeffrey Immelt Is Staking His Legacy on Alstom

It's Time To Be A Greedy REIT Investor

Canadian Buffett's Tembec Wager Shadowed by Bond Default Bets

Pimco, Fidelity Stung by Collapse of Petrobras's 100-Year Bond



Which Fed Leaders Fear Inflation? Look at When They Grew Up


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