Sector Highlight: Single Family Rental REITs – Bullish
Zenolytics is bullish on single family rental REITs for conservative portfolios: AMH - American Homes 4 Rent INVH - Invitation Homes The largest homeowners in the country post financial crisis are private equity firms and corporations. Single family rental REITs purchase portfolios of homes for the purpose of renting them out and capital appreciation on the underlying real estate assets. Rental REITs thrive in a low interest rate environment due to a cheap cost of capital to expand their real estate portfolios and appreciating real estate prices incentivizing consumers to seek out rentals. The 11% decline in the ten year yield thus far in 2019 has created an attractive situation. The negative correlation to rates (rates decline, single family rental REITs appreciate) has been showing up in performance YTD: AMH +21% INVH +26% The uptrend in the sector is set to accelerate. AMH and INVH are conservative, low volatility plays on the sector. Growth at INVH is accelerating while operational efficiencies are taking place: 18% growth in funds from operations in Q1 Highest ever average occupancy of 96.5% in Q1 A 9% decrease in net cost to maintain properties in Q1 In the most recent earnings call the CEO stated: Fundamentals are fantastic. New single-family supply is not keeping pace with demand, especially in Invitation Homes markets where household formations in 2019 are expected to grow at almost 2% or 90% greater than the U.S. average. With the millennial generation aging toward our average resident age of 40 years old, we are convinced more and more people will continue choosing the convenience of a professionally managed single-family leasing lifestyle. He goes on to state: Now our operating teams continue to get more efficient. Our asset management teams continue to enhance the portfolio. And our capital markets teams continue to reduce leverage on our balance sheet. Across the sector, the message is the same: Economic tailwinds Demographics tailwinds Operating efficiencies Portfolio enhancements Reduction in leverage AMH is experiencing much of the same benefits: 11.6% growth in funds from operations in Q1 96.7% occupancy AMH has the most conservative balance sheet in the industry, with no significant maturities until 2024. Additionally, there has been significant insider buying taking place at AMH over a considerable period of time, led by the original founder of the company. The low volatility, income producing nature of INVH and AMH make them a conservative portfolio investment. Zenolytics is adding AMH and INVH to its conservative portfolio with a quarterly review period for further allocation or liquidation. Zenolytics now offers Turning Points Premium service for unparalleled insight into critical junctures for stocks, indices and commodity...
Zenolytics Goes Bullish On AMD
The SOX has experienced a ruinous decline during May, falling 11% from its April high, while key components within the average such as XLNX and NVDA have been treated like scraps of red meat for the eagerly awaiting, starving population of bears. In what has been a form of subtle bullish signalling, AMD has refused to to participate in this foray of self-loathing behavior among the semiconductor names, instead choosing to pin itself to recent highs, directly beneath a key trajectory point, while there are very obvious signs of accumulation taking place. In the category of technical imagery, this is the equity equivalent of increasing the throttle on the jets before takeoff. In the midst of this bullish technical dance are a symphony of bubbling positive fundamental developments: Data center revenue has doubled year over year Gross margin expansion Market share expansion versus competitors, specifically: INTC and NVDA A growing list of competitive product offerings targeting high growth markets, including gaming and datacenter markets Potential immediate upside catalyst 2019 Computex Conference May 28-June 1, with the CEO of AMD giving the keynote address Zenolytics is bullish on AMD seeing a test of the 2018 highs at $34 as being imminent, with the possibility of further gains entirely dependent on whether the market gains traction away from the current bearish regime. Zenolytics now offers Turning Points Premium service for unparalleled insight into critical junctures for stocks, indices and commodity issues. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing. Information throughout this site, whether stock quotes, charts, articles, or...