#$nnn

[jeffhirsch]

Next Stop Chi Town

Hot off my appearance at The MoneyShow Seattle last weekend I am ready for TradersEXPO Chicago July 21-23 and then I’ll be looking for my heart again at The MoneyShow San Francisco August 15-17. On my way to TradersEXPO Chicago I will swing through AAII Los Angeles Chapter on Saturday Morning July 20.

After 20 years Kim Githler and the MoneyShow Team brought the MoneyShow back to Seattle with a bang. In addition to my workshop covering my latest market analysis and outlook along current trading and investment ideas, I moderated two panels.

On Saturday I ran the Income and Growth panel of Chris Barry VP corporate communications for National Retail Properties ($NNN), Chris Gaffney, President TIAA Bank World Markets and Ian Selig, investor relations manager for Safehold ($SAFE) and iStar ($STAR). NNN boasts one of the longest records of consistent and increasing dividends – 29 years straight – with a yield of 3.7% from their massive portfolio of top quality free-standing retail locations. SAFE with STAR as the largest shareholder and manager has revolutionized mezzanine financing into a profit center for large commercial properties with ground leases – masterminded by Chairman and CEO Jay Sugarman. Both REITs have been on a tear. Mr. Gaffney runs TIAA’s precious metals and foreign currency account division which gives individual investors direct access to industry experts with online accounts that have super low minimums.

Then, back by popular demand from Vegas I refereed Mike Larson, Senior Analyst at Weiss Ratings and Jon Markman, Editor of Tech Trend Trader, The Power Elite, and Strategic Advantage in Market Bubble vs. Market Boom? They Debate, You Decide! I won of course, just kidding; it was a lively discussion where Mr. Larson made the case that we are seeing signs of recession and market slowdown and it’s time for safety in defensive sectors whereas Mr. Markman made the case that we have only just begun and the market is set to achieve new heights with only minor setbacks. We of course opened the floor up to Q/A with attendees.

In addition I conducted several interviews that will be available soon at https://www.moneyshow.com/videos/ with: Zach Jonson, Senior Portfolio Manager Stack Financial Management, John Carter, President, and Jack Roberts, Options Trading Specialist at Simpler Trading, Adrian & Julie Manz, Co-Founders, TraderInsight, and Jackie Ann Patterson, Author, Truth About ETF Rotation.

So, whether you’re a trader, long-term investor or financial advisor there is always plenty at MoneyShows to learn, absorb and folks to network with. Kim and her team continue to change with the times and keep these events buzzing with the latest trading and investing trends as well as maintaining a complete offering of time- and battle-tested strategies, services and the latest in financial and investment education. So I hope you’ll join me at TradersEXPO Chicago July 21-23 or The MoneyShow San Francisco August 15-17.

[charlessizemore]

REITs: Heavily Shorted and Ready to Rally

I’m not wildly enthusiastic about the prospects for the broader stock market over the remainder of 2015. But I do think that REITs offer a pocket of value. I don’t see bond yields rising much in today’s market. If the Fed is too timid to raise rates, that tells you that there are enough macro risks out there to keep bond yields low. But if and when the Fed finally does get motivated to raise rates, I don’t see that translating to higher long-term bond yields, or at least not for a while. A higher Fed funds rate is disinflationary, which is good for bond prices.

So for the time being, we seem to be in a sweet spot for bonds where, irrespective of what the Fed does, bond yields should stay lower-than-normal for a while. And as long as bond yields stay low, REITs should outperform the broader market.

Source: Nasdaq

But there is one more reason to believe that REITs are due to continue their rally. Several of the names I follow are very heavily shorted right now. Short sellers have been punishing the sector for months in the view that higher interest rates would wreck the sector. But here’s the thing about heavily-shorted stocks. When you short a stock, you are obligated to buy it back. So when you see a heavily-shorted stock, you know that there is a lot of buying that must happen… eventually. And if too many short sellers try to close their positions at the same time, you get a short squeeze that can send the stock price sharply higher. To toss out a few examples from the list above, Realty Income has a short interest currently equal to more than 11 days’ worth of daily volume. VEREIT has a short ratio of 9 days to cover. And Digital Realty has an almost ridiculously high short ratio of 20 days to cover.

Short sellers have had a great six months shorting the REIT sector. It’s been a profitable trade for them. But with REITs showing modest strength right now in the face of broad market weakness, I expect those short sellers to start bailing… and soon.

Even though they generally have a low correlation to the broader market, REITs are still stocks. And if we have another volatile rough patch like August, you can expect them to fall alongside the rest of the market, at least temporarily. But I still expect REITs to massively outperform the broader market for the remainder of 2015, particularly if the shorts get squeezed.

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.