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Why I'm Not Buying Anything Today

Alex Pape
November 1, 2010

This article is part of our Rising Star Portfolios series.

The short answer: I don't see any screaming buys. 

Don't get me wrong; I would love to kick off my Rising Star portfolio with a juicy fat pitch of a stock pick. What better way to ignite the portfolio than to put our money to work on day one?

The thing about fat pitches, though, is they don't come along very often. Charlie Munger, Warren Buffett's investing partner at Berkshire Hathaway (NYSE: BRK-B  ) (NYSE: BRK-A  ) , claims that if you take away Berkshire's 15 best investments, their investment record will go from world-class to mediocre in a heartbeat. And they've been at it for more than 40 years. To be frank, I refuse to buy something less-than-stellar for the sake of timing it well with the portfolio's launch. I'm about making money for the long term -- optimal publication dates be damned.

But I almost bought ...
I have, however, come close to buying shares of Pebblebrook Investment Trust (NYSE: PEB  ) . Pebblebrook is an investment vehicle formed for the express purpose of buying up hotels on the cheap. In the past six months, the pickings have been good. The economic downturn has wreaked havoc on the hotel business, and many heavily debt-laden hoteliers are being forced to sell their properties or risk defaulting on their loans. That's where Pebblebrook swoops in, buying hotels at fire-sale prices -- and usually without the debt. As it turns out, it's a lot easier to turn a profit in the hotel business when you aren't using all of your operating income to pay the interest on your loans.

Betting on the jockey
An investment in a vehicle like Pebblebrook is really an investment in the guy or gal making the investment decisions. Enter Jon Bortz.

Bortz is our jockey, and he has a track record of buying hotels on the cheap and turning them around operationally. After starting the hotel investment division at real estate firm Jones Lang Lasalle (NYSE: JLL  ) , Bortz founded his own venture, LaSalle Hotel