A Big Upgrade for NorthStar Realty Finance

• Email
• Share
• Print

Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track records of the companies behind them -- so individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 140,000 members, many of whom demonstrate better investing insight than published analysts do.

After spending several months earlier this year stuck at a three-star rank, enough top-performing CAPS members have turned bullish on NorthStar Realty Finance (NYSE: NRF) recently to upgrade it to a more formidable four stars. A total of 547 members have given their opinion on NorthStar Realty Finance, with many of them offering analysis and commentary explaining the recent optimism.

It's no surprise that the words "real estate" and "finance" scare many investors these days, especially following a financial meltdown that saw companies like AIG (NYSE: AIG), Fannie Mae (NYSE: FNM), and Freddie Mac (NYSE: FRE) require life support from the federal government. But even as investors acknowledge the risk involved with stocks like NorthStar and iStar Financial (NYSE: SFI), some are beginning to believe that NorthStar will hold up well and benefit from an eventual recovery in the sector.

The real estate investment trust invests in commercial real estate debt and securities and acquires properties that are net leased to corporate tenants such as Lockheed Martin (NYSE: LMT). It aggressively managed its credit risk and liquidity early on in the recession to help minimize the effects of the downturn, and though challenges remain, it boosted its liquidity in the second quarter to help it ride out the storm. NorthStar even predicts that it may be able to acquire more assets at discount prices, as the government sheds assets from failed banks, and healthy banks sell written-down assets. Shareholders continue to enjoy NorthStar's dividends like the monster yield of Annaly Capital (NYSE: NLY), and CAPS members like that management is also invested in a sizable piece of the common equity. 

Do you think NorthStar Realty Finance deserves its star bump? Add your thoughts in the comments box below, or head over to CAPS to rate it yourself and check out all the information and opinions the community offers. CAPS is totally free.