NorthStar Realty Finance (NRF) is a buy up to 12.57 a share.

music selection: “Rock Me” — Great White

NorthStar is a REIT that has attracted the attention of top performing hedge fund managers such as Robert Pitts of Steadfast Capital Management (who owns over 17 million shares at last 13F filing).  It yields over 11%.   Management has authorized the spinoff of European operations to shareholders which is expected to unlock hidden value.

This stock has strong inside ownership at 6% to supplement the vote of confidence from hedge funds.  Management has their interests aligned with our own.

This stock is cheap but I have holding out for super cheap.  Shares are a buy at anything below 90% of book value, which comes out to 12.57 a share.  I think we could see 1.2 times book value multiple after the spinoff.  Shares are currently priced at 12.45, just inside of buy range.

I’d love to purchase this personally but my cash position will not support it until something I have written calls on gets called away.  I’m hoping the price will stay depressed long enough.  Raptors playing the home game version may be in a better liquidity position though.

I’ll make one other note which is that there are options available on NRF.  This could be a great opportunity for a buy/write strategy at about 7-8% out of the money.  You could pick up a few extra points of bonus yield on top of the rich 11% it already yields.

Devour your prey raptors!

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Buy NorthStar Realty Finance Corp. (NRF) up to 12.57

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