RE:RE:RE:RE:RBC: Upgraded to Outperform, $24 target, $34 upside TheCapitalist wrote: dsark wrote: TheCapitalist wrote: dsark wrote: Beauty. Increased target $1 to $24. Upside is $34. Moved from Sector Perform to Outpeform. The boys are back baby!
I gained almost 9% today in capital appreciation. I'll have more than doubled my money at $34/unit.
Definitely glad I took your advice.
Hey man, you made that decision, I just gave my opinion! However, I'm glad you loaded up. I also went all in. My cost went up to $16.34 but that's okay. I sold AX & DRG moderate gains.
When I wrote that bit in December about how they should cut to $1.50, cancel the DRIP, and sell properties to buy back shares. To be honest, I didn't think they'd actually do it. However, as an accountant, I know what the end result will be. A much higher share price! I think the ones that took modest profits today will be sorry. I also believe their actions will be accretive to shareholders as in the book value will increase, which will cause analysts to revise targets up down the road.
Cheers to everyone that added or is enjoying the ride!
Well, you made a great call either way.
As someone who isn't studying finance or accounting in university, I'm having to self-educate myself on investing. As a professional, would you recommend I focus on learning in terms of accounting/valuation?
You have to understand balance sheets, income statements & cash flow statements. To be honest, I spent 7 years in public practice accounting firms where that is what I did all day. Put together financial statements, so I was immersed in it.
The reason I knew (well I had a good feeling) that the market would react favorably to the strategic plan was that it was designed to increase net asset value per share AKA net equity per share AKA book value per share. In the conference call, Michael Cooper talked about selling $1.2 billion in assets and having $700M in proceeds, which they thought they would put $350M against debt and put $350M into share buybacks.
Let's take a look at what that may look like:
In this example for simplicity, Dream net equity is roughly $3,500M & they have 108M shares outstanding. That gives us a book value of $32.41 (3,500 / 108).
If in 3 years they executed their plan and sold $1,200M in properties, their equity would change as follows, with all other things remaining static.
3,500 - opening equity
(1,200) - Disposal of buildings
500 - Loans paid out on disposed buildings(1,200 less proceeds of 700 = 500)
350 - 50% of proceeds used to reduce debt
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3,150 - as you can see, their net equity or assets minus liabilities has decreased
108 - opening shares outstanding
(17.5) - 50% of proceeds used to buy back shares at ~$20 per share (350 / $20)
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90.5 - So Dream has now brought the share count down to 90.5M from 108M
3,150 / 90.5 = $34.81 - new book value.
So disposing of these properties has increased book value from $32.41 to $34.81. A solid gain of $2.40 per share.
This is what is going to drive value for Dream shareholders. That in conjunction with them using the 35% portion of AFFO to invest in existing buildings (will boost book value!), repay debt (will boost book value!), and buy heavily discounted shares (will boost book value!).
So like I said before, the game here is to collect your 9% dividend (if you are already a shareholder) and watch book value start jumping leaps and bounds.
Honestly, Capitalist, just start studying financial statements. Understand the B/S, I/S & CFS. Ask questions. Maybe take Financial Accounting 1 & 2 if you really want to get into it.