Grey Owl Sees Large Upside For 3 High-Yield REITs; Bullish On 2 Other Stocks

Independence Realty Trust Inc (NYSEMKT:IRT) is an apartment real estate investment trust (REIT) that operates a portfolio of garden style and mid-rise apartment communities in the Southeastern United States. The company owns and operates 50 apartment properties containing an aggregate of over 13,700 apartment units. Grey Owl likes the REIT because of the high dividend yield that its pays (8.09%) and the significant discount to its Net Asset Value (NAV). This small-cap REIT has a market value of $621 million and has given a return of 13.5% to its shareholders over the last year. Out of the 7 analysts covering the stock, 5 analysts have rated it as a ‘Buy’, while 2 have it rated ‘Hold’. The number of hedge funds in our system long Independence Realty Trust Inc (NYSEMKT:IRT) soared to 22 from 7 during the third quarter, while the value of their holdings increased to $138 million from $29.5 million quarter-over-quarter.

NorthStar Asset Management Group Inc. (NYSE:NSAM) is another  REIT that Grey Owl Capital is bullish on. The company manages real estate and other investment platforms in the United States and internationally. NorthStar Asset Management Group (NYSE:NSAM) recently merged with its former parent NorthStar Realty Finance, as well as Colony Capital to form a single REIT with a combined AUM of $58 billion. The REIT earned revenue of $435 million in 2015 with net income of more than $119 million. The company has a market value of $2.89 billion has an annual dividend yield of 2.68%. The stock is currently trading near the top of its 52-week price range. Approximately 43% of the REIT’s float was held by 47 hedge funds that we track as of September 30, making them very overweight the stock.

Wheeler Real Estate Investment Trust Inc. (NASDAQ:WHLR) is a small commercial REIT with a market value of $115 million. It has very high dividend yield of 12.43%, which made it attractive to Grey Owl. The company owns a portfolio of approximately 50 properties, including 40 retail shopping centers and three freestanding retail properties. The stock has done poorly over the past year, declining in value by around 9%. Grey Owl likes the company because it thinks that the stock will increase once it starts to trade near its NAV. The hedge fund saw a similar story play out with another REIT last year and expects the same result from this stock as well. As per our database, the number of hedge funds with a position in Wheeler Real Estate Investment Trust Inc. (NASDAQ:WHLR) increased to 10 as of the end of the third quarter from 7 a quarter earlier. The value of their collective holdings also increased to $39.5 million from $23 million quarter-over-quarter.

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