ARCP--time to jump?

[ronn38]

I'm going to do what we generally don't do here, ask advice buy/sell advice.

I bought into ARCP years ago when it was riding high (a full position; i.e. 3%), and I've tried to stick it out through this whole mess (lessons learned about sucker yield). So far I've lost almost 40% of my initial capital investment, and all of the dividend yield. So, whereas I'm not having a "Kodak moment", I'm as underwater as I care to be.

I’ve wanted a position in WPC, and have been accumulating the cash for a full position. Everything about WPC seems a better bet than anything ARCP might be able to managing in the next few years. Therefore, think my best course of action now is to let ARCP ride up (as its doing today) and on the first pull back sell, then hold that cash until WPC drops below into the mid $59's and buy in. This would give me about a 2/3 position in WPC, and I could also add a ½ position in EMR—seems like a win/win.

This seems like a no brainier actually, but just wondering the degree of agreement vrs contrarian opinion out there?

Thanks,

Ronn

[EricL]

Seems reasonable enough to me, WPC and EMR both seem to be decent values.

I sold my ARCP on the dividend suspension, so wouldn't blame you at all for cutting bait there.

[Kerim]

Completely agree that it is a reasonable course. But I'm going to stubbornly hold on to my shares until they announce the dividend plan, which I believe is supposed to be in the next month or two. There may be nothing logical or rational about this at all. I don't think it necessarily means they'll be reinstating the dividend soon, but just announcing the plan. This could cause a significant move in the share price, which could be up or down.

I haven't done a ton of reading lately on the situation, but iirc, the actual amount of the misstatement shenanigans was not all that large. And they still hold a lot of great properties and have actual revenue. I am hoping that the announcement is reasonably ok, and that it marks the beginning of a recovery in the share price. If that happens, I'll either get out as the price improves, or I'll enjoy the reinstated dividends. If that doesn't happen, I'll be one of the last suckers out the door at an even worse loss than I have on paper now.

I know, "hope" is not a strategy. But this was never a large or core position for me, and I'm going to allow myself the psychological weakness on this one.

EDITED TO ADD: But yes, I've also learned my lesson from this one. Only top-quality for me from here on in!

[ChadR]

I agree with EricL and Kerim. This is reasonable. I sold in January so I can't fault you for bailing. WPC and EMR are both on my watch list for July.

[earthtodan]

ARCP is still correlated with REITs, so selling it high and buying WPC low might not be so easy. If REITs fall while you wait, you win, if REITs rally you lose. But more likely than not, ARCP starts to outperform relative to peers when they announce their new dividend policy in August. Selling before then doesn't seem like great timing.

I held my shares and even added a little after the crash, and if it weren't for Roth IRA contribution limits I'd buy more. It's easy to hate, but it's a textbook special situation/turnaround stock IMHO. Like Kerim said, the revenue is still there. It's not like SDRL where the underlying business crashed.

[DRILLINDK]

It has been a test of sure will or stupidity holding ARCP over the last 12 months. However, looking purely at the collection of properties the have been accumulating and disregarding the soap opera drama that has occurred; I have convinced myself to hold.

I believe we have seen the worst of the storm. We know for certain the books are clean (they have been combed over and evaluated by one of the best firm in the business). They have hired strong management to move the company forward and begin delivering returns to shareholders.

I see ARCP as a 5+ year play. They are beging to right the ship and if you have stuck in there this long...you might as well reap the benefits that are surely to come.

[rnsmth]

Time to jump? I did when the crap got announced. Jump now? I have no idea.

[Kerim]

So we've got some news on this one. ARCP is now re-branded as VER, and they will be paying a quarterly dividend of $0.1375 per share starting in Q3. That works out to an annualized yield of about 6.29 percent at present prices. Stock is up slightly today, but not a big move either way on the news.

My first instinct is that I'll continue to hold, collect the divvy, and see where things go.

Here is the new website.

[earthtodan]

An underwhelming reaction in the stock, which I kind of expected. Also no special dividend to make up for lost time. At least it sounds like they've been deleveraging. It's going to take a while for the company to rebuild trust but it looks like they're on that path. I continue to hold.

[Owner]

I sold about two months ago... couldn't take it anymore. Lost 14K (about 25%) but there are plenty of other great companies that are down 25% or more (CVX, BBL, COP, RDS.B, etc) so I bought them with the proceeds.

[ronn38]

Having unfortunately bought at the 52 week high, a $0.55 annual dividend my div is only 3.8%; which is unacceptable in this market. I'm gonna see if I can ride it up a bit, then establish new positions in XOM and/or WPC, or add to my positions in MMP or EDP. All of these companies (save WPC) have better credit ratings and moats than VER, and I think in the long term may provide better investments. ARCP was an income play, and my timing was simply bad.

Energy is on sale, and if I get a little bump in this REIT, I can go shopping

On the bright side, MAIN is still working out very nicely--you win some, you lose some :-)

Ronn