Andy Marsh is President and Chief Executive Officer of Plug Power Inc. Mr. Marsh joined Plug Power as President and CEO in April 2008. Under his leadership, Plug Power has led innovation, bringing the hydrogen fuel cell market from concept to commercialization.
Early on, Marsh identified material handling as the first commercially viable market targeted by Plug Power. Today, the firm’s fuel cell solutions are leveraged by world leaders such as Amazon, Walmart and Carrefour to power industrial electric vehicles.
In this 2,774 word interview, Mr. Marsh outlines the near term tactics and the long term strategy for his successful alternative energy vehicle company.
“…One of the company’s core strengths is that we are the largest user of hydrogen as a fuel in the world, and that is because we have shipped out over 32,000 units and built more hydrogen stations than anyone else. It is a really unique business…”
The future is bright for Plug Power:
“Plug Power is a member of a global group called the Hydrogen Council, which includes 80 companies looking to develop this market. We hired McKinsey to put together a study to tell us where it thinks the market is today as well as the applications that will make fuel cells more attractive than alternatives by 2030.
The long-term view of hydrogen is that it is a $2.5 trillion market, and that view includes storage of hydrogen for power processing and industrial heating where hydrogen is much more effective.
For example, if you are going to use electricity for steel or cement manufacturing, a need is there. We talked about on-road vehicles here, but we also are interesting to a company like National Grid that is looking to convert a natural gas base into a hydrogen one to heat buildings in the U.K. by 2040. Overall, it is a huge pie.
What is going to come first? As the cost of hydrogen continues to go down, it opens opportunities for fuel cells. The lower cost of hydrogen is really closely tied to green hydrogen and a continual reduction in price of renewable energy. But over the next five years, we will see the cost of renewable hydrogen, green hydrogen, on par with hydrogen produced by natural gas.
That opens up huge markets because hydrogen itself today in the fertilizer and other industries is already a $30 billion to $50 billion market opportunity. ”
Get the full picture by reading the entire 2,774 word interview, only in the Wall Street Transcript.
Travis Miller is an Energy and Utilities Strategist for Morningstar, Inc. Prior to joining Morningstar in 2007, Mr. Miller worked as a reporter at several Chicago-area newspapers, including the Daily Herald, Arlington Heights, Illinois.
He holds a bachelor’s degree in journalism from Northwestern University’s Medill School of Journalism and an MBA from the University of Chicago Booth School of Business, with concentrations in accounting and finance.
In this 2,326 word interview, exclusively with the Wall Street Transcript, Mr. Miller details his current outlook on the energy sector:
“…We do think there are a couple of good stocks available in the utility sector. We think renewable energy is also still a good place to invest for the long run. In the midstream space, there are still a lot of good value names out there as one considers the energy
landscape in the U.S right now…Another name that I like is…based in the U.S., with its biggest manufacturing facilities in Ohio. It has a unique technology that is different than the more common silicon-based panels.”
One interesting pick is a renewable energy play for a turnaround utility company:
“In the utility space, one of my top picks is Edison International (NYSE:EIX), which is the utility in Southern California that runs the electric system for just about all of Southern California outside of Los Angeles.
The fallout from wildfires across the state really hit the stock recently. Even though its service territory has not been all that impacted directly, it had to deal with the statewide ramifications following the PG&E (NYSE:PCG) situation.
It was required by state regulators to take on a lot more cost and invest a lot more money in wildfire safety. But at the same time, it was getting a lot of support from customers and from regulators to make these investments and to go beyond to strengthen the system, support electric vehicles and support California’s 100% renewable energy target.
We see exceptional growth available over the next four to five years for Edison. With the stock trading around a 4% yield right now, we think that combination of yield and growth is attractive.”
Get many more detailed energy sector investment ideas from Mr. Miller, exclusively in this 2,326 word interview in the Wall Street Transcript.
Dan Ives is Managing Director and Equity Analyst, Technology Sector at Wedbush Securities. Mr. Ives is a world-renowned software and technology analyst with 20-plus years’ experience educating on cloud computing, cybersecurity, Big Data and the mobile landscape.
Before his tenure at Wedbush Securities, he spent the first few years of his career as a financial analyst at HBO before becoming a well-known research analyst and Managing Director with FBR Capital Markets, focusing on the enterprise software/hardware sectors.
He also served in executive roles at Synchronoss Technologies, a mobile cloud vendor, and GBH Insights, a leading market research firm. Mr. Ives is a highly sought-after tech expert and regularly makes television appearances on networks such as CNBC, Bloomberg, BBC, CNN and Fox to provide commentary related to his technology experience and is often cited by publications such as The Wall Street Journal, USA Today, Investor’s Business Daily, The Mercury News, Financial Times and The New York Times.
In this 2,828 word interview, exclusively in the Wall Street Transcript, Mr. Ives discusses the sector economics of cloud computing along with an introduction to his new cloud computing ETF.
“When you think about call centers, as a good example, more and more of them are moving into the cloud. As they do, companies like NICE Systems (NASDAQ:NICE) facilitate this move. NICE is one of the bigger holdings in the ETF.
Then, there are application players. You look at companies like Datadog (NASDAQ:DDOG) and Anaplan (NYSE:PLAN), and these are enablers or facilitators of the next generation of cloud.
These are all examples of companies that are in the IVES ETF, as opposed to applications such as a Slack (NYSE:WORK) and Zoom (NASDAQ:ZM) that sit on top of the infrastructure.”
The ETF will create returns in this specific sector and will include several stock names that are fairly unknown to investors:
“Cloud has many opportunities, but there are also security issues. That’s where cybersecurity names are so important in terms of guarding cloud workloads with the connections, the data and the pipes accelerating to the cloud. These companies are benefiting from the cloud theme.
Cybersecurity names are seeing significant growth related to the cloud shift. We see that with companies like Zscaler (NASDAQ:ZS) or Palo Alto (NYSE:PANW), CyberArk (NASDAQ:CYBR), just to name a few.”
There are also international names included in the ETF:
“We have companies that are higher, but 4.5% tends to be a lot of the weighted ones. Sinch AB (STO:SINCH) is an Asian infrastructure play and one that plays into the data center theme, especially in Asia.”
Get the complete 2,828 word interview for the full detail from Dan Ives, exclusively in the Wall Street Transcript.
Michael Pachter is Managing Director, Equity Research Analyst and Expert for Wedbush ETFMG Video Game Tech ETF at Wedbush Securities. Michael Pachter is a 20-plus-year industry veteran covering the entertainment software, entertainment retail, social internet, e-commerce and movies/entertainment sectors.
Prior to his current role as Managing Director of Equity Research at Wedbush Securities, Mr. Pachter spent 15-plus years in various financial and management positions. Mr. Pachter has been repeatedly recognized as StarMine’s “Top Earnings Estimator” and WSJ’s “Best on the Street”.
In this 4,873 word interview, exclusively in the Wall Street Transcript, Mr. Pachter details his obsession with beating the market with his informative stock picks.
Mr. Pachter is a strong bull on the video game industry:
“I have a view, and it’s super conservative, that the sector grows 8% a year in perpetuity. My not-so-conservative bias is that it is in the double digits. Those numbers are like health care was from the 1960s to the 2000s; it was up 8% or so per year.
The reason was more people aged, lived longer, and the longer you lived, the more health care you consumed, and we were getting wealthier at the same time. So people are older and have greater consumption and more money to spend.
The same is true for games. We have an aging demographic, so literally 20 years ago, the average gamer was probably 20, and now the average gamer is probably 30, and in 20 years, the average gamer will be 40. That gamer keeps aging. Kids playing Fortnite today aren’t going to just stop playing games ever.”
His top picks right now:
“My two favorites are Activision (NASDAQ:ATVI) and Zynga. Activision — the stock is ripping right now — makes Call of Duty, and they own Tony Hawk, World of Warcraft and Overwatch. They have got really big franchises. They are having a great year, and the stock is up because of that.
They have a bunch of catalysts on the horizon. The bigger theme that helps them is that they are a console publisher, meaning that the primary business is selling people a $60 game, and you own it, and you play it till you’re tired of playing it, but the secondary business is in-game purchases, so there’s a free-to-play element of everything that they make.
Some of those free-to-play games are behind a paywall, meaning you have to buy Call of Duty premium and the Call of Duty console game to play the multiplayer Call of Duty and upgrade your weapons and stuff. They also have a straight free-to-play Call of Duty called the Warzone and a straight free-to-play Call of Duty mobile game. They capitalize on the brand a bunch of different ways.
They are going to benefit over the next five to 10 years because we are going to see competition for delivering games to any device from the cloud. ”
To get more detail on these and many other picks from Mr. Pachter, read the complete 4,873 word interview, exclusively in the Wall Street Transcript.
St. Denis Villere III is Partner and Portfolio Manager at Villere & Co. Mr. Villere joined Villere & Co. in 1999 when he launched Villere’s first mutual fund.
He started his career as an institutional research analyst and equity sellside analyst with Gerard Klauer Mattison, a Wall Street institutional equity research firm. He earned a B.S. in finance from Southern Methodist University. He is a member of the CFA Institute.
Mr. Villere has been frequently quoted by The Wall Street Journal, Associated Press and Reuters.
In this 3,950 word essay, only in the Wall Street Transcript, Mr. Villere has some interesting stock picks for today’s volatile market.
“We are really bottom-up investors. We really don’t look at what’s going on in the economy and try to figure the macro and then trickle down to individual stocks. We take the opposite approach and look at very good companies that have low debt and strong cash flow characteristics.
We like companies that are low price-to-earnings relative to their growth potential.
While we are multicap, we do focus on the smaller- and mid-cap names, as we find those are where most of the value is that maybe Wall Street hasn’t seen.”
“Stryker is interesting because we tend to do a lot of research and talk to a lot of orthopedic surgeons that were installing anything from knee replacements to hip replacements to spine surgeries. Stryker is an absolutely industry-leading medical device company.
However, over the short run, interviewing many of these orthopedic surgeons, we found that their businesses literally were going to zero. They stopped performing any of these things during the shutdown, as many of these procedures were considered nonessential.
Therefore, the stocks went down, and I think that just sets up as a perfect opportunity to buy an industry-leading company at an extremely reasonable valuation knowing that these nonessential surgeries will come back…”
Mr. Villere bangs the table for another one in the healthcare tech space:
eHealth (NASDAQ:EHTH) is a great story considering the current environment, as they thrive with people doing more remotely on the internet. They own the website ehealth.com that was essentially founded about 20 years ago to make people buy Medicare insurance. It is a very simple story. They are essentially trying to make it as easy for seniors to buy Medicare insurance online as it is to buy a plane ticket on websites like Expedia (NASDAQ:EXPE) or Travelocity. The competition is literally medicare.gov and healthcare.gov; websites that are extremely clunky and not easy to use.
So the backdrop is, there are about 10,500 people every single day who are turning 65 and eligible to buy Medicare insurance. eHealth is just hoping to go from 1% share of the market up to 4% to be very successful. When we bought the stock, there was a little bit of an opportunity because there was a short report written about how these guys calculate churn or the rate at which customers leave, as this is an important component of the lifetime value of their contracts and how they recognize revenue. It is literally done based on an accounting rule called ASC 606, which is the standard way that companies like this account for it.”
Get more information on these and many other top picks from this highly regarded portfolio manager, in his 3,950 word interview, only in the Wall Street Transcript.
Joshua Honeycutt is a Partner at Mar Vista Investment Partners. He has 20 years of investment experience. He is a portfolio manager/analyst and is a member of the investment team.
Before joining Mar Vista Investment Partners in January 2009, he spent seven years as an analyst at Roxbury Capital Management with a special emphasis in covering consumer discretionary and retail stocks.
Mr. Honeycutt was also an analyst with Harvey & Company, covering mergers and acquisitions, and an associate in forensic accounting at Tucker Alan.
Jeffrey Prestine is a Partner at Mar Vista Investment Partners. He has 21 years of investment experience. He is a portfolio manager/analyst and is a member of the investment team.
Before joining Mar Vista Investment Partners in January 2009, he was an analyst covering technology and energy stocks at Roxbury Capital Management. Mr. Prestine joined Roxbury from Seneca Capital Management, where he was a technology and energy analyst for more than five years.
He began his career in finance at Prudential Securities as an associate analyst covering enterprise software companies.
In this 2,913 word interview, exclusively in the Wall Street Transcript, these two investment professionals reveal the current top stocks in their portfolio.
“…The firm currently manages around $5 billion in assets under advisement across our three strategies. The client base is a mix of endowments, foundations, public and private pension funds, and high net worth individuals.
We provide our clients a variety of investment vehicles, including separately managed accounts, subadvised portfolios, unified managed accounts — UMA — as well as a global comingled investment trust.
In terms of structure, the four members of our investment team, along with our Chief Operating Officer, own 100% of Mar Vista. As you probably know, a common attribute of successful multigenerational investment firms is equity ownership by the investment team.
For us, this incentive structure better aligns our decision-making with the objectives of our investors. Having our entire compensation based on the value we create for our clients is critical to the culture of the firm, the consistency of the team and the long-term alpha generation of our products.
TWST: And when you look at what to include in the portfolio, are there any overarching investment philosophies?
Mr. Prestine: Yes, absolutely.
Mar Vista invests exclusively in wide-moat businesses that compound free cash flow, possess the opportunity to produce high returns on invested capital and trade at a discount to our estimate of their intrinsic value.”
Some examples from the Mar Vista portfolio include:
“The first one to talk about is Adidas (OTCMKTS:ADDYY). This is a business that owns a 70-year-old global portfolio of branded, innovative athletic products. The company has built its economic moat around their iconic brands and tremendous scale.
As one of only two athletic brands with direct-to-consumer capabilities, referred to as DTC, Adidas is well-positioned to increase its competitive advantages in an evolving consumer marketplace. These DTC initiatives really capture an increasing portion of the retail value chain by creating direct connections with consumers. With direct selling, Adidas eliminates the middleman from the industry profit pool and earns higher returns on invested capital.
These types of business model transitions require strategic vision and sound execution. We think Adidas’ CEO, Kasper Rorsted, possesses both of those requirements. Adidas was successful in attracting Rorsted away from his successful tenure at Henkel (OTCMKTS:HENKY) years ago. Under his leadership, Adidas’ global supply chain and its underperforming U.S. business has been transformed.
Adidas is roughly one-third the size of Nike’s (NYSE:NKE) U.S. business. Therefore, there’s meaningful market share and profit opportunity in the world’s largest consumer market. We think as Adidas continues to gain U.S. market share, the company’s operating margins and cash flows will converge with those of industry-leader Nike.
We expect our investment returns in Adidas to shadow the company’s long-term business opportunity and 13% to 15% intrinsic value growth. ”
Get the complete analysis of Adidas vs. Nike as a portfolio investment by reading the entire 2,913 word interview, exclusively in the Wall Street Transcript
Emile Haddad is Chairman and Chief Executive Officer of Five Point Holdings, LLC. Five Point, the largest developer of mixed-use communities in coastal California, owns and manages Great Park Neighborhoods in Irvine, Newhall Ranch in Los Angeles County and The San Francisco Shipyard and Candlestick Point in San Francisco.
Combined, these four mixed-used communities will include approximately 40,000 residential homes and 23 million square feet of commercial space. All total, these developments will generate approximately 288,000 jobs during construction and $54 billion in activity for the California economy.
Prior to founding Five Point, Mr. Haddad was the Chief Investment Officer of Lennar Corporation, one of the nation’s leading homebuilders, where he was in charge of the company’s real estate investments and asset management.
In this 5,964 word interview, exclusively in the Wall Street Transcript, Mr. Haddad explores his company’s strategy to continue its real estate development in the midst of the COVID 19 global pandemic.
Mr. Haddad has a unique perspective on economic adversity:
“I grew up in Beirut, Lebanon, and went to the American University of Beirut and studied civil engineering. And as we are witnessing right now, once in a while in life you get thrown a curveball, and that curveball actually takes you to a place that changes perspective and allows you to start looking at things differently.
So that shift happened in my life in 1975 when I was 17, when the civil war in Lebanon started.
We lived 11 years in the civil war, which created conditions very different than the rest of the world. There was no water and no electricity, no gas and, a lot of times, no food. That’s how life was.
I went through high school and then school of engineering and studied by candlelight.
During the war, I saw a lot of unfortunate people who didn’t make it, but I also saw people who are like me, who were lucky enough to come out and gain perspective.”
His life in America has been the result of hard work and perseverance:
“At that point, we became a very familiar story of a family in pursuit of the American dream, and we lived together in a small place for five years, and I started working my first job.
After looking for a job for six months, I found a job that was about 75 miles away from my home. They paid me $10 an hour as a junior engineer, and I was so excited to get it because it gave me a job and allowed me to start helping and support the family.
About a year later, I had an offer to work for a client, at that time was a homebuilding company in West L.A., and I took that because I wanted to be on the development side and I was doing some tenant improvements on the side to make more money.
So my days used to be like, I hit the road at 4:45 in the morning, and I’d be back about 9:30 or 10 o’clock at night and do it all over again. On the weekends I was studying to get my licenses in engineering and contracting.
Then, my career path started getting a little bit more clarity. People started realizing that I can do more, and I started getting promotions.”
The company’s financial strength is lower leverage and a conservative financial outlook:
“The company’s approach has always been a balance-sheet-first approach. We are not the company that is looking for growth just for the sake of growth.
We have a lot of assets, and our assets are honestly irreplaceable, and we have a lot of value creation out of them. So again, our focus is on cash flow and the balance sheet.
We have 24% debt to cap. That’s all in bonds that are maturing five years from now. We are sitting with a lot of liquidity, very little debt; none of these assets are encumbered with any project financing except an office complex that we own.
We are very well-positioned for this crisis and, in some ways, have been preparing for this for a long time.”
Read the rest of this 5,964 word interview, exclusively in the Wall Street Transcript, and get the rest of the outlook on Mr. Haddad’s real estate development company.
Kevin Mitchell is Senior Vice President at HCI Group, Inc. He is also President of TypTap Insurance Company, a subsidiary of HCI Group. Earlier, he worked at Arthur J. Gallagher & Co. He is a graduate of Bowling Green State University.
In his 2,307 word interview, exclusively with the Wall Street Transcript, Mr. Mitchell gives detailed background on how his insurance company started up and expanded.
“The benefit of this approach is that we’re able to pre-underwrite the state of Florida and determine which policies we do or don’t want before homeowners even approach us for a quote, and it’s allowed us to truly manage exposure and to understand where are areas around the state to focus on for driving profitable results.
And with the profitable results, we’re able to maintain continuity in terms and conditions, to have consistency from a rating standpoint and to allow our agent partners to build a long-term, stable book of business. Even though it’s an insurtech company, we do work with agent partners.
That brings us to the current day. HCI Group is the corporate umbrella. We have these four main divisions that we feel are diverse yet complementary.
And now, we march into 2020. Homeowners Choice, our first insurance division, had a transaction in February of this year, acquiring a book of business from a company called Anchor Property & Casualty. We’ve assumed that book of business, and that continues to be folded into Homeowners Choice.
TypTap continues to grow its homeowners and flood insurance book of business. Greenleaf is constantly evaluating different opportunities from a real estate standpoint.
The Exzeo technology division is constantly trying to improve and refine, whether it’s underwriting and data or user features and functions from the insurance agent side. And then, we have Claddaugh, which is there to give a helping hand and in case we need it from a reinsurance perspective.”
Even the global pandemic has not slowed the company down:
“In our headquarters city of Tampa, Florida, everyone has been working from home since early March. But because of the technology and systems that we built, our agents and policyholders haven’t noticed the difference from a customer service claims communication standpoint.”
This will support the investors in HCI:
“…make sure that our shareholders understand that we’re working to see that the dividend remains safe and in a strong position, tied to solid cash flow. And since we just did the acquisition and a transition of policies in February, that was our big portion of growth for the year..”
Get the full detail by reading the entire 2,307 word interview, exclusively with the Wall Street Transcript.
Tom MacKinnon is an Equity Analyst at BMO Capital Markets. He began working at BMO Capital Markets Equity Research in April 2010. Earlier, he had 12 years’ experience covering insurance stocks in equity research at Scotia Capital in Toronto.
Before working at Scotia Capital in 1998, Mr. MacKinnon spent six years at Tillinghast-Towers Perrin, an actuarial consulting firm, in the firm’s Toronto and New York offices. Prior to that, he worked at Canada Life as an actuary.
In the 2019 Brendan Wood International survey, Mr. MacKinnon was once ranked a top gun analyst in insurance and was ranked a top gun analyst in the Brendan Wood International Survey from 1999 through 2019.
In this 3,109 word interview, exclusively in the Wall Street Transcript, Mr. MacKinnon details his top Canadian insurance company picks, many of which are paying high single digit dividend yields.
“One thing we’ve noticed with respect to the life companies is that their capital positions were strong going into this crisis, and their capital positions are relatively insensitive to swings in interest rates in equity markets. And if anything, the widening corporate spreads, these probably end up helping a little bit of their capital structure as well.
What we found is that their LICAT ratios — that’s life insurance capital adequacy testing; that’s a regulatory capital framework — those ratios actually went up between the fourth quarter of 2019 and the first quarter of 2020.
I’m not sure if everybody was expecting them to go up and go up that degree — sure, tougher equity markets have hurt those ratios — but they’ve got a lot of excess capital, and that’s largely in bonds, and that’s at mark to market, and that helps that capital. And in fact, the book values have gone up a little bit as well.
We didn’t see any kind of significant hits to capital. And I think that’s the first thing that investors wanted to see: Are the capital positions good?
And this is totally unlike they were in 2008. ”
One his top picks is paying 7% currently:
“I think one that’s interesting here that trades under seven times — and that’s even after we’ve taken our numbers down as a result of potential disruptions over COVID-19 — is Manulife Financial. I think one of the things is 35% or 40% of its earnings come out of Asia.
You’ve got a rapidly growing middle class there, at least 60% of the world’s middle class will be in Asia by 2025. I think insurance products are very underpenetrated there. A large portion of the middle class is underinsured. And so it’s a company, the number-three player in Asia behind AIA (OTCMKTS:AAIGF) and Pru UK, and I think it’s well-positioned there.
It’s also well-positioned in terms of its strong balance sheet. Its LICAT ratio sensitivity from interest rates and equity markets are running at a fraction of what it used to be. And thirdly, it’s been a very good grower. From 2013 to 2018, it grew its core EPS in excess of 12% or 13%. It’s been a good grower. It’s a proven grower, got a good platform in Asia.
It’s got a strong balance sheet.”
Get the full detail on this and many other picks, only be reading the entire 3,109 word interview, exclusively in the Wall Street Transcript.
Yousuf Hafuda is an Equity Analyst covering the real estate space on the financial services team at Morningstar. His coverage list includes office, industrial and self-storage REITs as well as real estate services companies. Before assuming his current role, Mr. Hafuda was an associate equity analyst on the basic materials team at Morningstar. Mr. Hafuda holds a bachelor’s degree in political science from Grinnell College. He is an active member of the Urban Land Institute — ULI.
Kevin Brown is an Equity Analyst in the Finance Team for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers health care, hotel, residential, retail and triple net REITs in the U.S. Before joining Morningstar in 2018, Mr. Brown worked for the securities group in a global real-estate-focused asset management company, spending nine years covering health care and hotel REITs. Mr. Brown holds a bachelor’s degree in economics after graduating from Dartmouth College in 2005.
In the extensive 6,467 word review of the Real Estate sector for investors, these two expert analysts pick some investment highlights and demonstrate the ability “to hit them where they ain’t”.
The bad news is in several real estate sectors and Mr. Brown notes the devastation in the hotel industry:
“The hotel industry is probably not going to be looking at any sort of positive EBITDA or cash flows for any time in the near future, and when people do start traveling again, it’s going to take a while for them to come back online fully to the prior levels of travel, where they had been.
So we could be looking at maybe two, three years of negative cash flows for the hotel REITs.”
Mr. Hafuda identifies what could be a bright spot in real estate:
“Now to move on to the office REITs, which I think has definitely gotten a lot of attention and press, we’re not as concerned from a long-term perspective. The two subsectors that I just mentioned to you are very transactional in nature.
Office real estate leases are done by contract, and the contracts run around seven to 10 years long. It’s one of the longer lease lengths among the subsectors in commercial real estate…there is some legal indication, at least based on some of the research that I’ve seen, that even if you’re a multinational corporation, and you’re not able to use any of your corporate space that you’re currently leasing, that you won’t be able to get out of that lease.
From that perspective, if you’re the office REIT, then you’re going to continue to collect cash and perhaps even in certain instances that you were previously performing services that you’re no longer performing, there might be a slight benefit from a cost perspective.”
Another bright spot in real estate:
“One that’s been a little overlooked, at least in terms of the headlines, that I think is interesting is the self-storage space.
That is probably going to be pretty resilient because anyone who currently has self-storage space probably is going to be really hesitant to go in and move their stuff. In this kind of environment, the last thing that people want to do is move unnecessarily.”
Mr. Brown sees the value in some of the most depressed stocks:
“Disruption does impact our fair-value estimates. But we’d like to think that as long as these companies are going to make it through, pretty much every name that is under my coverage is currently trading below their fair-value estimate.
The ones that have been hit the hardest because they have the most short-term disruption are the ones that are the most attractive. While I have brought down my fair-value estimates the most for those companies, I didn’t bring them down nearly as much as the market has dropped them in the past month and a half.
I’m currently seeing some really attractive opportunities among some of the best-quality and biggest names in the malls. I really like Simon Property Group (NYSE:SPG), who owns half of the top 100 malls in America.
I really like Welltower (NYSE:WELL), who is the biggest health care REIT, who has a really fantastic management team and just the high-quality properties. Those are some of my best top ideas right now. And they are some of the names that have been beaten up the most.”
Mr. Hafuda also identifies some interesting names:
“One of the names that I think is attractive on my list is SL Green (NYSE:SLG). SL Green owns high-quality office properties in New York City, specifically in Manhattan, in the Midtown neighborhood.
And so I think any investor who’s looking at that gets extremely concerned because there are potentially impacts in terms of the reputation of New York City following this and then also what’s going on on the ground, and then add to that the fact that investors were already concerned about the prospects of office real estate to begin with.
It’s areas like that where we see the most opportunity for some investors who are willing to hold their nerve and be OK with the prevailing level of volatility with the realization that, at some point, humanity is going to have to return back to normal.”