By SA Editors' Picks :
Good evening! I'm your curator, Jason Kirsch. Today, we're going to take a look at what our contributors have to say about Realty Income ( O ). Does the recent volatility offer an opportunity? Enjoy.
Articles Of The Week:
A forensic analysis of Realty Income suggests that more downside exists (Ben Axler)
Hedge fund manager Ben Axler shook the Seeking Alpha community on Wednesday after publishing a bearish article accusing the company of optimistically engineering financial results. While analysts see upside in the REIT, Axler believes Realty Income can drop as much as 45%.
Will Realty Income drop 30%+ like others have suggested? (Ian Bezek)
Contributor Ian Bezek analyzes Realty Income to confirm whether Spruce Point's argument that Realty Income may drop another 30% has merit. He confirms it does. In fact, Bezek predicted volatility in late 2016. According to him, there was simply "no reason to be long an overpriced REIT against its direct peers at a time when interest rates were set to head up and leave the whole REIT space struggling."
Still bullish on Realty Income (Brad Thomas)
In opposition to Axler's article, long-time income investing analyst (and Realty bull) Brad Thomas adds his own two cents. After providing data in response to Axler's comments, Thomas reassures Realty investors that everything's fine. As he states, "my buy recommendation is stronger than ever." Thomas himself is taking advantage of the "noise" and buying more shares.
Realty Income's management team lacks expertise (Old Time REITster)
After publishing a bearish PRO article which provided investors with specific evidence of struggles, contributor Old Time REITster is back at it with an analysis of Realty Income's management team. He provides background of specific personnel and concludes that the lack of real estate expertise may hurt O in the coming year.
Another look at bearish arguments (Beyond Saving)
Adding an opinion on Old Time REITster's comments, contributor Beyond Saving argues that things are often more complicated and that no investor should ever think they're undoubtedly right. He argues that, while the REIT faces macroeconomic challenges, it provides investors with a safe and growing dividend and is trading at a reasonable price.
Realty Income Chart of the week:Realty Income stock chart .
Realty Income Comment of the week, by contributor Investment Pancake
One of the more balanced article on O that I've read. The author does an admirable job weighing pros, cons, and most refreshing of all, he doesn't set price targets or take a position that the stock will go one way or another. He simply points out risks and arguments, leaving it for the reader to use the reader's own best reasoning.
For my part, I own O, and have owned it since 2009. If the stock price truly tanks, then I would be pretty happy to purchase more shares. I haven't done so for a long time, though - the stock isn't wildly cheap, and I already own enough that I'm content to stay diversified and not over-allocate into this company. I have no concerns about the management at all, and no concerns with the accounting which appears conservative in my own personal view. I'm agnostic on interest rate risk - since every single person with a pulse is 100% certain rates will rise, I have to assume that the opposite is just as likely. I certainly am in no position to outguess the market. What I am in a position to judge is whether O can continue to deliver consistent dividend growth, and from everything I see, the answer seems to be "yes."
I'd start looking to add some more shares if O gets down in the range of $40 a share. Until then, I'm looking at utilities and consumer staples.
Have a great day!
See also Alliance One's ( AOI ) CEO Pieter Sikkel on Q3 2018 Results - Earnings Call Transcript on seekingalpha.com