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 Cleveland-based real-estate owner Forest City Enterprises
So what: Most significantly, Forest City announced that it's throwing in the towel on its land business. Not because the company thinks it's a terrible business -- or at least isn't willing to say that -- but rather because it's choosing to focus its efforts on the rental-property side of its business. Forest City was originally built on its raw-land operations and CEO David LaRue said that the company "[believes] strongly in the communities where we have land-development projects," but the company sees a brighter future elsewhere.
In addition to the strategic announcement, the company also announced that it will expand disclosure to investors, offering up a schedule of net asset value components to make it easier for investors to value the company. The company also announced that it's cutting its board of directors from 15 members to 13 and aiming for a majority of directors to be independent.
Now what: Investors have good reason to be cheering today. It's obviously too early to say whether the company's strategic shift will pay off over the long term, but its plans to use proceeds from its sales to improve its balance sheet sounds like a great idea. Meanwhile, the improved disclosure and board changes appear to be shareholder-friendly moves that will -- among other things -- give current and potential investors more clarity on what they're investing in.
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