Our premium monthly newsletter costs $449 annually and features my personal stock picks. To showcase my stock picking ability once or twice a year I share one of my high conviction stock picks free of charge. I made an exception this year and shared three big trade ideas with our free subscribers.
I shared this year’s first free trade idea on February 27th in an article titled “Recession Is Imminent: We Need A Travel Ban NOW!“. At the time of the publication of that article the U.S. COVID-19 death toll stood at zero and we had only 1 confirmed COVID-19 case of community transmission. It is an amazing article. I predicted that the S&P 500 Index will decline by 20-30% by the end of the year and told you to short the market. A lot of readers call me an alarmist. Now we know that I was actually too optimistic about our reaction. I used put options on SPY to gain short exposure and closed those put options later in March as the stock market dipped (currently I have a small long position in SPY which I don’t want to sell because of tax consequences).
The second time I shared a stock pick this year was in March when the total U.S. COVID-19 deaths was fewer than 200. In this article I predicted that the U.S. death toll will surpass 20,000 in less than 4 weeks and told our readers to buy hospital stocks, specifically Tenet Healthcare (THC).
Tenet Healthcare was one of our monthly newsletter’s new stock picks at the time and the stock closed at $12.98 on the day we published that article. Last month we closed our THC recommendation and told our subscribers to sell THC at a price of $30.
By the way, this is Dr. Inan Dogan. I am Insider Monkey’s research director.
Insider Monkey’s monthly newsletter shares my personal stock picks. We have 18 positions in our portfolio at the moment. In the coming issue of our monthly newsletter I am going to recommend a new position in a biotech stock that I expect to double in the next 12 months.
We usually recommend 6-8 new positions per year and the number of recommendations typically ranges around 15 to 20. Most of these recommendations are small-cap stocks.
What we do in our monthly newsletter is very similar to what a hedge fund does. We basically run a concentrated “hedge fund” portfolio of 15-20 stocks but our subscribers don’t have to worry about fraud, withdrawal restrictions, and they only pay a very small fixed annual subscription fee.
We launched our monthly newsletter’s portfolio strategy in March 2017. Our shadow “hedge fund” returned close to 112% since its inception vs. 54% gain for S&P 500 ETF (SPY).
Before this year, the last time we shared another stock pick from our monthly newsletter’s portfolio was 2 years ago. We shared a free issue of our monthly newsletter where we laid out why we were recommending a position in Ascendis Pharma (ASND) when the stock was trading at $62. You can still download this free report on our website.
ASND is still one of the 18 stocks in our monthly newsletter’s “hedge fund” portfolio. Today it trades for $161 and returned 160% since we published that free report.
As you can see, whenever we shared one of our monthly newsletter’s stock picks publicly in the past, that stock doubled. So, pay attention because I am going to share another stock pick from our monthly newsletter. I believe this stock will double in value over the next 12 months or so.
We have a promotion going on right now. You can subscribe to our monthly or quarterly newsletter at a 20% discount if you follow this link.
Below is our free stock pick: Empire State Realty Trust, Inc. (ESRT). Last month I sent the following email write-up to our free subscribers. ESRT shares were trading at $6.30 when I sent that email to our free subscribers. If you aren’t already subscribed to our free daily newsletter, you can enter your email address below:
Empire State Realty Trust owns 9 properties including the Empire State Building in midtown Manhattan and another 5 properties nearby New York City.
ESRT was generating about $0.90 per share of funds from operations (FFO) and trading for $14 before the coronavirus pandemic hit New York City. Today, investors price the stock as if the demand for office space in New York City won’t ever go back to “normal” levels, rental rates will permanently decline, and tourists won’t come back to visit Empire State Building’s observation deck. ESRT shares currently trade for only $6.30.
We believe ESRT will manage to register a $0.80 per share in expected FFO within a year and investors will be willing to pay a multiple of 18 in this ultra-low interest rate environment. ESRT shares will trade for more than $14 in a year, returning 120%.
Short sellers think that COVID-19 pandemic is here to stay and ESRT will lose a quarter of its occupancies once the crisis ends. We think multiple vaccines will be approved in the next 6 months and life will snap back to normal. We are already sick and tired of wearing masks, social distancing, and isolation. There is pent up demand for social gatherings, events, and travel. Once a large enough percentage of US population is vaccinated, consumers will start feeling safe again and we will see above average demand for travel, concerts, restaurants, and all the other activities that make us feel “normal”.
Empire State Building’s observation deck generates about 20% of ESRT’s total revenues. Right now, it is basically zero and investors feel discouraged. It is the main reason why ESRT trades at such a huge discount relative to other NYC office REITs. We believe this is temporary and as soon as investors see some green shoots ESRT shares will move up 30-40% in a very short period of time.
New York City is the business capital of the world. Finance, media, fashion, and healthcare industries dominate the economic landscape in NYC. In recent years, technology companies decided to relocate to New York City. If there is any industry that is most suitable for “working from home”, that’s technology. Yet, companies like Facebook, Google, and Amazon are snapping up office space in New York City. A month ago Facebook signed a deal to lease 730K square feet of office space from Vornado. Last November, Facebook rented another 1.5 million square feet of office space in New York City. The average rent per sqft in these buildings approach $100. This means Facebook will be spending around $200 million per year on rent in New York City. This isn’t cheap by any standard. Why did Mark Zuckerberg decide to pay through the nose for New York City real estate when he said “as much as 50% of Facebook employees could work from home in the next 5 to 10 years”? Couldn’t he find a cheaper city to rent office space?
ESRT’s buildings are older and it charges $65 to $70 per square foot in its Manhattan properties. If there is a decline in demand for New York City office space, companies will probably relocate from Class A buildings that charge $100 per square foot and move to ESRT’s buildings that charge 30% less. ESRT’s business model is to renovate/upgrade its office floors and rent at higher rates. Even if the average rental rate in New York City stays stagnant for a few years, we believe ESRT can boost its revenue and income by attracting price conscious tenants and charging them $70- $75 per square foot.
We believe the probability of the S&P 500 Index trading at the 7000 level over the next 12 months is zero, whereas ESRT can easily double within a year.
I am very confident about ESRT. It is the biggest stock position in my personal portfolio right now. Don’t wait and miss this once in a decade opportunity to buy a solid stock that can potentially double within the next 12 months.
If you like this idea and interested in finding out my remaining 17 (well actually 16 because I also told you about ASND) stock picks, you can subscribe to our monthly newsletter at a 20% discount by following this link.
Note: This article is originally published at Insider Monkey.