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4/27/22 Capitalist Times Live Chat
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Jim T
6:08
What is/are your recommendations regarding Lithium.
AvatarRoger Conrad
6:08
We would be wary of any small stocks being hyped for their lithium exposure. This is obviously a badly needed resource. But if you're looking to play a boom in battery metals, the best idea is always to buy a mining giant. And the best of the biggest BHP Group is cheap right now with its NYSE-listed ADRs selling for less than $70 a share.
Alex M.
6:22
Hey Roger.  May I please get your thoughts on what happened over at CDR?  The company was bought out, but it sounds like the preferred shareholders got the short end of the stick.  The acquirer elected to suspend the CDR preferred dividends (and not call them) even though there was a change of ownership.  Sounds like a messy situation.  Have you heard of something like this happening before in a REIT?  Could this be a risk for future preferred shareholders?  Thank you.
AvatarRoger Conrad
6:22
Are you talking about Cedar Realty Trust? I don't really know this one. But the deal to sell the company for $29 a share has not closed yet, though management has completed several major asset sales in advance. The close is still expected by the end of Q2.

I'm not seeing much about the preferred shares. The 6.5% declared a quarterly dividend of 40.625 cents per share for payment May 20, so they appear to be current at this time. Priced to yield 13.7% they do appear to be distressed. But these are cumulative preferreds, which means suspended dividends should ultimately be paid. The 7.25% preferred is also current on all dividends.
Guest
6:24
Roger, i'm very interested in your current view on IIPR Innovative Industrial Properties, i just bought a small amount but dont want to get caught up in something just because its trendy.
AvatarRoger Conrad
6:24
As I noted answering a question earlier in the chat, cannabis REITs have taken a huge hit this year as the hype driving them has been largely punctured. I'm looking forward to seeing what IIPR reports for Q1 results and guidance on May 4--mainly, will they demonstrate a sustainable business growth model. But now back yielding almost 5% and down about -44% year to date, the bar of expectations is certainly a great deal lower than it was last year--and therefore easier to beat.
Jimmy
6:25
Roger/Elliott:  With some writers already stating we are in a recession (no need to wait for two successive down quarters), Fed members being macho about their intentions to tame inflation, and numerous projections of an additional 20% market pullback, do you see a logical time frame for us to reach a market bottom?  If a quarter point rate change and a likely .50-.75 upcoming hike affects the market like the past week has suggested, how far down do you thing a collective 3-5% rate boost will take us?
AvatarElliott Gue
6:25
Historically, the S&P 500 rarely enters a bear market more than one year before the economy enters recession and it usually bottoms before the economy exits recession.  My view is that the US economy won't enter recession until sometime in early 2023 at the earliest so, if this truly is the start of a bear market, history would suggest the lows of that bear market wouldn't be evident until sometime in H2 2023 at the earliest. The problem, in my view, is that the bull market off the 2020 lowes has been driven primarily by liquidity and "easy money" and it's primarily been focused on a handful of "growth" sectors that have become very expensive. These same stocks/sectors have become a very large part if the market (most of the S&P 500 in terms of index composition) thus if there's a bear market/recession, theres a lot of room for the market to fall as these bubble groups re-rate. The situation is much like what we saw in 1974-75 or 2000-02. I think it's awfully early to make specific predictions about
AvatarElliott Gue
6:25
the length or severity of any bear market. However, one interesting relationship exists between the valuation of the S&P 500 and the current rate of inflation -- valuations are inversely correlated to inflation. Bottom line is that an inflation rate of 4% (less than half the current rate) is consistent with an S&P 500 multiple of 15, which is some 36% below the current level.
6:26
Thanks everyone for attending this month's chat. As that seems to be all the questions, we'll bid you all a lovely evening and look forward to next month.
AvatarRoger Conrad
6:27
Thanks everyone. Look for a link to the Q&A transcript in the near future.
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