The buy thesis
Ashford Hospitality Trust (AHT) represents a tremendous discount to the value of its assets. There is a disparity between private and public hotel valuations exacerbated by a general distrust of external management. A third layer of discounting comes from the disparate performance of hotel REITs and hotel REOCs. All in, AHT is trading at just a fraction of its $14 NAV. After discounting the NAV for some risk factors, we see about 40% upside to fair value.
Let us begin with a discussion of the hotel REIT sector and follow with the Ashford specific analysis.
Hotel REIT cheapness
Hotels at the real estate level have performed well. National RevPAR is at record highs, and supply has remained largely in check. However, the market performance in different ownership vehicles has had quite disparate performance.
Hotel REOCs have nearly doubled in the last 2 years while hotel REITs are only up slightly.
Source: SNL Financial
Hot Value Stocks To Invest In Right Now: (SMPQY)
- [By SEEKINGALPHA.COM]
The majority owner is Sun Pharma (OTC:SMPQY) (the largest drug business in India). There have been a number of articles that have outlined Sun Pharma and its quest for Taro, but it makes a lot of sense for Sun to want to own all – and not just the majority – of Taro. One big reason is that owning all of Taro means that any investments that Sun makes with Taros $1.2 billion cash hoard will not be diluted by the presence of minority shareholders. Another reason that Sun likely wants Taro is simply because it is very cheap right now. Sun is run by its founder and majority shareholder, Dilip Shanghvi, who is sort of a pharmaceutical value investor who has opportunistically made acquisitions and investments over time, building his firm starting with a loan of $200 in the early 1980s to the multi-billion business it is today.
- [By SEEKINGALPHA.COM]
We believe that two main risks currently exist. First, a few days ago, U.S. Department of Justice filed charges in generic drug price-fixing probe. The U.S. Department of Justice accused two former generic pharmaceutical executives of colluding with other generic manufacturers to fix prices – the first criminal charges stemming from a two-year investigation. Companies in the congressional probe have since publicly disclosed that they have received subpoenas, including Mylan NV (NASDAQ:MYL), Allergan (NYSE:AGN), which later sold its generics business to Teva (NASDAQ:TEVA), Lannett (NYSEMKT:LCI), Impax Laboratories (NASDAQ:IPXL), Endo International (NASDAQ