Select Income REIT (SIR): Lakewood Capital Issues Presentation Supporting Its Board Candidate; Explains Why Stock is Underperforming

Select Income announced today that they were in the process of reviewing the presentation, and that they would file their proxy statement in regards to the trustee nomination in due course. The potential nomination of a new board member comes just two weeks before Select Income shareholders are scheduled to vote on and finalize their deal to purchase Cole Corporate Income Trust for $3 billion in cash or Select Income stock. That deal was first announced in September.

Select Income’s stock is up just under 2% today in afternoon trading on the news of Lakewood’s presentation. The stock now stands at $26.53. The stock hit a 52-week low in late November before a strong rebound over the past 6 weeks. However the stock is still down 2.64% over the past year, and has severely underperformed in comparison to its peers.

In contrast to Lakewood’s report, many analysts are divided on the prospects of Select Income’s stock (though due to those governance issues Lakewood seeks to remedy). Zack’s has an outperform rating and $29.50 price target on it, while RBC Capital has a comparable $29.00 price target. Hartley’s Research has the stock rated as a “buy”, while Bank of America has an underperform rating for the stock.

Investor sentiment has been positive to the news of Lakewood’s involvement, which emphasizes the importance of monitoring the activity of investment funds and their acquisition of company’s stock. Lakewood brings a strong track record into play, with their returns having exceeded the S&P 500 Index by 60.5% since their inception, as of the end of 2014.

The full presentation is available below:

Lakewood Capital Management Presentation on SIR

Disclosure: None