Wesley Capital’s Top Real Estate Stock Picks for Q2

#3 Colony Capital Inc (NYSE:CLNY)

 – Shares held by Wesley Capital Management (as of March 31): 565,000

 – Value of Holding (as of March 31): $9.47 million

Colony Capital Inc (NYSE:CLNY) is another stock in which Wesley Capital Management increased its stake during the first quarter, by 22%. Though the stock of Colony Capital Inc (NYSE:CLNY) has stabilized in the past few months after enduring a steady decline from April of 2015 through February, it is still trading down by 7.82% year-to-date. The massive decline that the stock has gone through in the last year has boosted its annual dividend yield to 9%. For the first quarter, analysts expect the company to report EPS of $0.50 on revenue of $200.40 million, while for the same quarter of the previous financial year it had reported EPS of $0.45 on revenue of $116.61 million. According to recent reports, Colony Capital is on the verge of acquiring NorthStar Asset Management (NYSE:NSAM). Murray Stahl‘s Horizon Asset Management inched up its stake in the company by 1% to 29,872 shares during the January-to-March period.

#2 Blackstone Mortgage Trust Inc (NYSE:BXMT)

 – Shares held by Wesley Capital Management (as of March 31): 1.00 million

 – Value of Holding (as of March 31): $27.10 million

Moving on, Wesley Capital Management reduced its stake in Blackstone Mortgage Trust Inc (NYSE:BXMT) by 12% during the first quarter. Unlike the stocks of most other REITs, Blackstone Mortgage Trust Inc (NYSE:BXMT)’s stock is trading in the green for the year, up by 4.80%. However, despite this rise, the stock still sports an attractive annual dividend yield of 8.79%. A few analysts who track both Blackstone Mortgage Trust and its parent Blackstone Group LP (NYSE:BX), feel that owing to the former’s higher dividend yield, lower valuation, and impressive balance sheet, it is a better stock to buy at current levels than the latter. Blackstone Mortgage Trust came out with its first quarter earnings on April 26, declaring EPS of $0.65 on revenue of $77.64 million largely in-line with the consensus estimates of EPS of $0.65 on revenue of $78.51 million. Following the earnings release, analysts at FBR & Co. reiterated their ‘Buy’ rating on the stock on April 28. Billionaire Ken Griffin‘s Citadel Investment Group reduced its stake in Blackstone Mortgage Trust by 58% to 598,819 shares during the first quarter.

#1 Starwood Property Trust, Inc. (NYSE:STWD)

 – Shares held by Wesley Capital Management (as of March 31): 1.50 million

 – Value of Holding (as of March 31): $28.49 million

Starwood Property Trust, Inc. (NYSE:STWD) continued to remain Wesley Capital Management’s largest equity holding at the end of March, despite the fund reducing its stake in the company by 5% during the first quarter. After trading above the $20 mark for nearly three years, Starwood Property Trust, Inc. (NYSE:STWD)’s stock fell below it early in 2016 and stayed there for much of the year. It has managed to recoup most of the losses it suffered at the beginning of the year since however and finally broke back above that $20 mark on May 9. Analysts who track the stock feel that it could deliver a lot of upside in the coming quarters as the Starwood Property Trust is among the few remaining companies that still services commercial mortgage-backed securities (CMBS) and is in a position to benefit from the present rising interest rate environment. The stock currently sports an average rating of ‘Buy’ and an average price target of $21.89 from the ten prominent analysts and brokerage houses that track it. Starwood Property Trust was another stock in which BlueCrest Capital Mgmt. initiated a stake during the first quarter, purchasing 13,759 shares of the company.

Disclosure: None