Successful Earnings Season
Earnings season is a great time to be a fundamental investor because for a brief moment fundamental performance takes center stage and displaces momentum and technicals. It is the time of year in which those invested in undervalued securities will be rewarded. We exclusively invest in securities that we think are undervalued so to the extent that we are correct, earnings season can be quite beneficial.
So far, this batch of reports has been quite favorable for 2CHYP. A majority of the companies held in 2CHYP have reported and most came in strong.
- PLYM – double digit lease rollups and significantly raised guidance
- CXW – new contracts and strong FFO
- GOV performed better than expected and is up materially since earnings
- GPT’s leasing has turned positive indicating that 2017 was the trough year for FFO and its growth phase is beginning
- JCAP beat substantially with an additional certificate of occupancy achieved in 1Q17 as construction is ahead of schedule.
- MPW continues its rock solid performance with affirmed guidance for healthy normalized FFO/share growth.
- STAG’s leasing came in well above expectations with a high retention rate and double digit positive rent rolls.
- Windstream’s OIBDA was up slightly which preserves the margin of safety in being able to pay UNIT’s lease.
In addition to the reports being strong, we were pleased to see that the market actually responded to the reports. Our stocks remain deeply undervalued in our opinion, but this week made some good headway to closing the gap.