Luxor Capital Loves REITs

Luxor Capital, a hedge fund managed by Christian Leone, has reported that it now owns 15 million shares of American Realty Capital Trust (ARCT). This gives it 9.5% of the total shares outstanding, up from a position of 10 million shares reported to the SEC filing in early October. We can conclude that Luxor has increased its stake by 50% in the last three months. According to our database of 13F filings, the fund had initiated its position in American Realty between July and September 2012. American Realty Capital Trust is a real estate investment trust that owns commercial real estate property. Luxor apparently loves investing in REITs (these companies receive special tax treatment as long as they distribute 90% of their taxable income, as defined by the IRS, to shareholders). About a month ago a filing reported that the fund had a large position in CommonWealth REIT (CWH), so Leone and his team seem to like the space.

Income investors are often interested in REITs because of the requirement that they distribute cash to shareholders results in substantial dividend yields. American Realty went public in March 2012 (the stock is up 20% since shortly after its initial public offering, beating the market thanks to a strong rally year to date), and has made monthly dividend payments since that time. Recently, these payments have been a steady $0.06 per share, which annualizes to $0.72 cents, or a 5.7% yield based on the current market price of $12.59....341 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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