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
But I almost bought ...
I have, however, come close to buying shares of Pebblebrook Investment Trust
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
Are the deals really that sweet?
The reason I'm unprepared to commit capital right now to Pebblebrook shares is that I'm not positive that Bortz is making out like a bandit on all his hotel deals.
Some of the deals look incredible. For example, Bortz bought the Intercontinental Buckhead in Atlanta for $105 million; by my calculations, the hotel is worth $115 million even if profits never grow again -- and considering how poorly the hotel has done the past couple of years, it is hard to bet that it won't generate more cash in future years.
But then there are deals like the one Pebblebrook made to buy the Sir Francis Drake. I have a hard time reconciling the $90 million price tag to the iconic hotel's earning power.
Don't get me wrong, Bortz can definitely be a savvy buyer. He bought the Doubletree Bethesda outside of Washington, D.C., for $67 million. This seemed like a break in protocol to me; Pebblebrook generally focuses on upscale hotels in major urban areas, and buying a chain hotel that happened to be in the same town as Pebblebrook's offices seemed fishy. Further digging, however, revealed that the Walter Reed Medical Center, the U.S. Army's flagship hospital, is being moved to Bethesda -- directly across the street from the Doubletree. The day the new medical center opens its doors, that hotel's occupancy struggles will be history.
Pebblebrook certainly has potential as an investment. But before I buy stock, I need a better understanding of Bortz's modus operandi. He has the track record, and he's certainly been around the block. But still, I'm not about to put my, and, more importantly, your money in his hands on faith alone. For now, the jury is still out on Pebblebrook. When I reach a verdict, you'll hear from me straight away.
In the meantime, head to our discussion boards with your thoughts, questions, and comments on Pebblebrook Investment Trust.
This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. Click here to see all of our Rising Star analysts (and their portfolios).
Berkshire Hathaway is a Motley Fool Inside Value pick. Berkshire Hathaway is a Motley Fool Stock Advisor recommendation. Jones Lang Lasalle is a Motley Fool Hidden Gems recommendation. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days.
Alex Pape does not own shares of any company mentioned. 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.