One of my favorite investment bloggers, Clark Street Value, recently wrote
about mortgage real estate investment trust (mREIT) Ladder Capital (LADR). Ladder
mainly invests in commercial mortgage backed securities (CMBS), or pools of
mortgage loans to businesses.
The post described how Ladder is well positioned to survive
the current downturn due to its high quality assets and use of unsecured debt
to fund those assets. It provided much information about both topics; I encourage
interested readers to read it.
As an investor, though, I am not just interested in how well
a company might survive the current downturn. I am also interested in the long
term value the company can generate for me if I invest.
This is especially important since downturns offer two common
types of opportunities for investors:
- High quality companies trading at a modest discount from normal prices.
- More average companies trading at a much larger discount to their intrinsic value.
In the long run, high quality companies compound an
investor’s capital far more than average ones. This is true even if those average
companies are purchased at much cheaper valuations.
In that context, after reading Clark Street Value’s post, I
was curious which type of company Ladder Capital is. Is it a high quality company
I can “buy and hold” forever while it compounds my investment? (Read More)
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