Year: 2013

XRE, iShares S&P/TSX Capped REIT index fund.

Hamilton

XRE june 6 s 2013xre jun 6 2013

Real Estate Income Trusts are, superficially, rather easy to value. They still have the tax advantage of being able to operate on a flow-through bases and consequently they approximate the micro economic model where you buy a single unit and rent it out. Essentially it is a pile of bricks against a pile of debt that results in a return that can then be valued much like a bond. But, last time this REIT ETF hit $18 interest rates where around 5 or 6 % if my memory serves me well. Now that we double top six years later interest rates are at 1%. So theoretically, under the Efficient Market nonsense , these REITS should be considerable undervalued at $18! and even go a lot higher. Instead they drop in a single month almost as much as they rose in the previous 6 months. A mood change perhaps with regard to commercial property which, by the way, unlike stocks, can actually have a negative value under certain circumstances. Expect a lot more to the downside.

FB update

Hamilton

fb june 5 2013

Back in January we recommended a sell on this stock. It was a little above $31 at the time. It has lost about $10 since the and also about 60% of the rebound from September. Nice a-b-c down, perhaps. Or alternatively just a 1-2 etc., no idea so would leave it alone for a while.

COS update

Hamilton

Then, Feb.5 ,2013 and now charts;

cos feb 5 2013cos june 4 2013

At the time, Feb. 2013 we called the triangle (wave B in an A-B-C) structure “plausible”. So far at least, that is exactly what we got so the pattern has become more plausible. It can still go slightly higher but after that you run the risk that this scenario is, in fact, the correct one. Assuming a proportionate drop in the C and A legs (about 50%), a target in the vicinity of $10.50 or so is realistic. You do not have to sell, a tight stop-loss would do equally well! The possibility of “stranded costs” ,a concept raised in this blog quite some time ago , is also becoming a more distinct reality. Unlike Ontario Hydro they will not be able to ding you the customer for that.

CP revisited

Hamilton

A few days ago we recommended this stock as a short to our broker friends (there is only one). We have been way too early before on this one and that may happen again, but we feel strongly that this stock is in it’s own bubble. We now also have a plausible wave count as per the chart below;

cp june 4 2013

The count may well be wrong but it is nevertheless plausible. The e-wave in the triangle is a little underdeveloped but otherwise most other aspects fit the description.

cp and cnr june 4 2013

Also the stock’s performance , apart from , perhaps, the operating ratio, is on a par with CNR. And, after tripling their money the hedge fund primarily responsible for the agitation, has now made it known that their position has grown relatively too large. Is this legal ?? Anyway a number of extremely astute investment dealers like RBC have now cut back on their expectations for the stock (this is known as “running with the bulls”). Add to that a p/e of 41. If the stock does what it is supposed to do, it should return to the bottom of the triangle in about the same time as it took to climb up. The stock could therefore be below $60 by the end of 2014. A put option would fit this situation best.