Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) was another of Rosenstein’s small cap picks. Ryman is a real estate investment trust, and as such receives favorable tax status conditional on distributing a large share of pretax income to investors. This often results in high yields at REITs; Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) currently offers quarterly dividend payments of 50 cents per share, which at current prices gives an annual yield of over 5% (though the company seems to be struggling). Billionaire John Paulson’s Paulson & Co. owned 2.2 million shares according to its own 13F (find Paulson’s favorite stocks).
The filing disclosed ownership of 5.3 million shares of Fifth & Pacific Companies Inc (NYSE:FNP). The designer of apparel and accessories has more than doubled in price since a year ago, and while it remains unprofitable on a trailing basis analysts are projecting that it will break into the black this year. Projections are then for 40 cents per share in EPS for 2014, though we’d note that still leaves a forward earnings multiple of over 50. Even with the business doing well in terms of revenue that valuation seems to high for us to consider buying right now.
Copart, Inc. (NASDAQ:CPRT) and Fifth & Pacific Companies Inc (NYSE:FNP) both seem quite dependent on high earnings growth, considering their current valuations, and in each case we don’t think recent results justify buying. Ryman, despite its high yield, also seems like a questionable pick. If we are interested in learning more about any of JANA’s picks here it would be Big Lots, Inc. (NYSE:BIG) – which, even though it hasn’t been doing well, features attractive valuation metrics- and Visteon Corp (NYSE:VC), which may be worth watching to see if it is in fact on track to meet analyst projections for the next year and a half.
Disclosure: I own no shares of any stocks mentioned in this article.