We are always on the lookout for value in this crazy market, or as some like to call it, the Wall Street Casino. One of the most battered sectors of late has been retail. Thankfully, we have been underexposed to the sector as a whole, though we do have a substantial position in Foot Locker (NYSE:FL) which we are currently taking a bath on. Over the course of the last six months, we have stepped up our coverage of the sector, as it has been battered for what seems like two years straight, with some individual names struggling even further. We recently made a quick trade on J.C. Penney (NYSE:JCP), and admitted it was a gamble. We have now picked up some more exposure to retail.
For those unfamiliar with our strategy, we like to have long-standing, core positions in moderate-to-high dividend paying names (about 50% of the portfolio), as well as in popular growth names (about 20-25% of the portfolio), cash (about 10-15% in so-called dry powder), 5% in precious metals, and the other 5% for “gambling.” Perhaps the proper vernacular is “speculating.” In this column, we will discuss a purchase made yesterday (9/5/2017) on the open market to bolster our long-term dividend portion of the portfolio. The name in question? Tanger Factory Outlet Centers (NYSE:SKT), a real estate investment trust, or REIT.
We have had exposure to REITs over the years, having owned Realty Income (NYSE:O), Federal Realty Investment Trust (NYSE:FRT) and Vornado Realty Trust (NYSE:VNO) at various points in the last 10 years. We open and close positions for a variety of reasons but still consider these all solid investments as part of a long-term compounding plan (reinvesting the dividends). We also own some exposure to the more volatile mortgage real estate investment trusts, or mREITs, including Annaly Capital (NYSE:NLY), and AGNC Investment Corp. (NASDAQ:AGNC). We never want to overexpose ourselves to any one sector, but if you were going to do it, REITs aren’t a poor decision, but pain in interest rates will lead to pain in your portfolio. While Tanger is a REIT, and there are similar names out there, we see Tanger as an interesting play offering…..READ MORE