The problem with stock outlook stories

Hal Morris, writing Thursday on his Grumpy Editor blog, has problems with a Wall Street Journal article that lumps all real estate investment trusts together in an outlook piece when many of them have different strategies.

Morris writes, “After noting REITs have rebounded big from their recent lows and ‘the sector is trading at a premium to the value of the underlying assets,’ writer Anton Troianovski mentioned in the second paragraph: ‘To some stock-pickers, that is one of several signs that REITs are overvalued and a correction is around the corner.’

“But the almost half-page story focuses mainly on office REITs and devotes three long paragraphs on Atlanta-based, New York Stock Exchange-listed Cousins Properties Inc., which the writer reported ‘posted a 3 percent loss in the third quarter — making it the worst performer in the Dow Jones index among REITs with a market capitalization greater than $500 million.’

“Cousins’ portfolio includes commercial and office properties, including a troubled 25-story office tower in Atlanta.

“While the office (and industrial) segment is a major part of the REIT industry’s mix, others in the field — with about 200 REITs publicly traded — distinguish themselves by specialization: • Retail; • Residential; • Health care; • Self storage; • Mortgage backed; • Lodging/resort; • Diversified; • Specialty.

“So a true REIT roundup should touch on representative companies in all categories.”

Read more here.