Why Northstar Realty Finance Corp. Shares Popped Today

Is this meaningful or just another movement?

Apr 28, 2014 at 4:57PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Northstar Realty Finance (NYSE:NRF) are trading 8% higher this afternoon after topping out at an early gain of over 11%. News of a proposed acquisition by American Realty Capital Properties (NYSE:VER) is driving today's gain, but the fluctuations in price indicate the market is unsure that this deal will go through.

So what: American Realty is reportedly considering making a $20-per-share offer for Northstar, which would amount to a buyout price of roughly $6.5 billion. This would be American Realty's second big buyout in a year, if it goes through -- last October, the real estate investment trust bought out Cole Real Estate Investments for $11.2 billion, including the assumption of debt, in a deal that later shrank to just under $10 billion by the time it closed this February.

However, it's important to note that any negotiations are still in their very earliest stages, and no deal has yet been reached. Northstar's shares are trading at a 14% discount to its reported buyout price right now. American Realty is also trading over 2% lower today on news of the deal, as investors seem somewhat lukewarm on the possibility of this combination.

Now what: Both REITs boast solid dividend yields -- Northstar pays out 6.6% and American Realty's yield is 7.5% -- but it should be clear to investors which of these companies have been better managed over the past few years. Since Northstar went public in late 2011, it has produced total growth of 440%, but American Realty has rewarded shareholders with a mediocre return of 21% including dividends reinvested. If you're going to use today's news as a buy signal, I'd look at Northstar long before dipping into American Realty -- and hope that the deal doesn't go through, for the sake of your returns with that stock.

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Editor's note: A previous version of this story incorrectly stated Northstar and American Realty's returns were 21% and 440%, respectively. The opposite is true. The Fool regrets the error. 

Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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