It was a rather quiet week in the market as is typical this time of year. In addition to the market being closed for 1 and a half days, the remainder of the week was characterized by low volume from a large percentage of traders taking the week off. Occasionally something wonky happens in the low volume as market orders can fall through the floor with insufficient limit orders to catch them, but things were fairly stable this week.
2 trading days remain before the close of the year. We will continue to watch for opportunities to catch things that drop off due to either a low volume mishap or tax loss selling. Otherwise, we have a big wave of dividends coming in soon. The stocks in 2CHYP have somewhat concentrated ex-dividend dates toward the end of quarters, so there should be some cashflow to start the year.
Triple nets look like they could be a solid place to park this cash as they have gotten cheaper in recent weeks. Gladstone Commercial (GOOD) has fallen down to around $21.30 and we find it quite attractive at this level. One Libery Properties (OLP) remains on our radar screen as well although we would prefer to see it drop a bit more.
A recent conversation with OLP’s management confirmed our suspicion that its FFO is at a trough level due to the timing of a sale of a Texas medical property. Thus, we anticipate a rebound of a few pennies a share of FFO going into 2020. Given the stability of earnings typical of triple nets, a few pennies can make quite a difference to stock price. It will remove the fears of erosion that are currently causing apprehension among potential investors.
We are broadly happy with current holdings which is why we haven’t traded much in the past few weeks. Fundamentals generally look better than market prices are suggesting for these stocks, so we are giving the stocks time to play out. We believe these stocks are well positioned going into 2020 and anticipate some of them rebounding once tax loss selling is over. There is a wait period to not trigger a wash sale, so depending on when former holders sold, the buying back in process could occur throughout January or even early February. It will not be a block of purchases on January 1st.
Happy New Year and we will try to make 2020 another year of portfolio dividend growth.
2CHYP Portfolio Snap Shot
2CHYP Performance: inception through end of November, 2019
Performance Disclaimer. Past Performance does not guarantee future performance. Markets are uncertain and there is no level of return that we can guarantee. Trading of equities can result in material or total loss of principal.