Stabilization after disaster

Hurricane Harvey is somewhat analogous to some of 2CHYP’s holdings.  It did some damage, but now it has passed and Houston can begin to rebuild.  UNIT, WSR and JCAP each got hit by a market storm but have begun to recover a bit.  While our timing was not perfect, we were able to buy more WSR and UNIT at what for now appears to be near the bottom.

Another potential opportunity spawned by Harvey is NexPoint Residential (NXRT).  With 3 properties in Houston, it has sold off recently, but we think the hurricane could represent opportunity for them as it created an incremental negative supply situation for single family homes and multifamily.  Displaced families will need somewhere to live and NXRT’s freshly refurbished B class apartments will be a cost effective solution.

We have owned NXRT in the past and still have some legacy positions, but may look to add more in this dip.  It is a strong management and the stock represents both value and growth potential.  I have a call in to management inquiring about whether their properties sustained any damage.  Hopefully I can get an answer before I pull the trigger for 2CHYP, but perhaps this is something management cannot tell investors without doing a full press release for regulatory reasons.

Stay tuned, I’ll let you know if we find an answer.

Commentary may contain forward looking statements which are by definition uncertain.  We retain no obligation to update or correct forward looking statements should the available information change.  Actual results may differ materially from our forecasts or estimations.

2CHYP Portfolio Snap Shot

8/31/17 2CHYP Performance since inception

2CHYP Weekly Trade Confirmation Report