Ken Fisher, an American investment analyst is part of the Forbes 400 list of world billionaires. He owns a money management firm, Fisher Investments, and as on Dec'12 the total funds managed under his firm was ~$34 billion. In my article today I have picked up three stocks from Ken Fisher's portfolio in which he invested recently in the last quarter. Although all these three stocks haven't performed well in their returns, however with their strong balance sheets they have managed good dividend yields for the shareholders. All the three companies have struggled in 2012 with one or the other segment and thereby not performing as expected. But the investment seems sensible as I anticipate good upside potential in the stocks in 2013 as their long-term fundamentals remain intact. Let's discuss each of these stocks in detail.
Education Realty Trust, Inc. (NYSE:EDR)'s
||5 Year Average Dividend Yield
||Forward Annual Dividend Yield
||Stock Movement 2012 (~)
|Education Realty Trust, Inc. (NYSE:EDR)
|Mack Cali Realty Corp (NYSE:CLI)
|Harris Teeter Supermarkets Inc (NYSE:HTSI)
leasing performance has remained slightly dull in the lease term 2012-13 with occupancy dropping to 90.5% (down from 94.7% last year). However, this was clearly offset by the ~5% increase in the rental rates. The stock price reacted accordingly with lots of ups and downs, thereby giving an overall return of just ~5% in 2012. The poor leasing results were mainly because of its three properties, Southern Illinois University (enrolment declined 5%), North Carolina State University (enrolment declined 8%), and Georgia Southern University (enrolment declined 1%).
Looking at the brighter side, Education Realty's portfolio quality looks impressive for future growth. The company has five properties with a total of ~2700 beds and a development value of ~$190 million scheduled for 2013 delivery. Moreover, it has another five new projects in the pipeline with ~2516 beds and development value of ~$153 million for 2014. The majority of these properties are on campus locations which would help the company in achieving higher occupancy rates. I expect these properties to operate at a yield of ~7-8%.
Overall, I feel the company's long term prospects remain stable
at the moment. The company is adding high-quality assets to its portfolio as well as disposing of certain assets that do not generate adequate returns. This is a strong reason why Fisher has shown interest in this stock this quarter. Also, not to forget the company's stable balance sheet position which will always help it in returning higher value to its shareholders.
Another pick for Fisher's recent buys is Mack Cali Realty Corp (NYSE:CLI)'s
which deals in commercial real estate properties. Its stock has disappointed investors in the last year with a negative return of 0.23%. This was mainly because the overall leasing conditions were challenging for suburban office properties which constitute ~89% of its total portfolio. As a result, the company is venturing into various other sectors with a new focus. To enter into the currently booming apartment sector, Mack-Cali acquired
real estate development assets of Roseland Property for ~$135 million in Oct '12. I feel this acquisition would be a game changing opportunity for Mack-Cali to develop its non-income producing properties. Over the years, Roseland has built its portfolio with luxury apartments and mixed-use projects in areas like Morrristown, Weehawken, etc. The deal will provide the infrastructure to Mack-Cali to build in multi-family residential communities. Under this acquisition, the company will also acquire Roseland's interests in 11 operating residential properties and 13 other projects that are under development plus various other land proposals. This would provide a huge strength to Mack-Cali to gain out of two important real estate segments and will be a key component for its future growth.