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'Bricks and Mortar' Portfolio Posts Big Gains

Penn National's $67-a-share deal is expected to close in about 12 months. At around $59, Penn National is trading 12% below its buyout price, making owning Penn a very attractive proposition today.

Global Real Estate ETF (Own)

Investors looking for commercial real estate exposure should head internationally, where growth remains strong. The Global Real Estate ETF (RWX) remains the easiest way to play the market, since there are no pure-play international real estate stocks on U.S. exchanges.

Trump (Flag)

I traveled to Atlantic City, where all of Trump's casinos are located, last weekend. The city had decent traffic at its casinos.

But the market remains competitive, with every casino operator working hard to bring in customers from Pennsylvania and New York, which both introduced slots facilities over the past year. Atlantic City has suffered from declining gambling revenue this year because of lost customers.

Of Trump's casinos, Trump Plaza should eventually benefit from its location near the Caesar's Pier, which is a great shopping and dining destination owned by luxury mall developer Taubman Centers (TCO).

But at the end of the day, I'm still not sure how Trump Plaza and Trump Taj Mahal can compete with the Borgata, a luxury casino owned by MGM Mirage (MGM) and Boyd Gaming (BYD) that is truly the nicest destination in the city.

Until there are signs of a recovery on the horizon, Trump shares should stay stuck between $6 and $8, making it a poor investment unless you are an expert at market timing.

Ryland (Flag)

As I noted in a recent article , Ryland's positive cash flow and relatively strong balance sheet mean the company is likely to survive the housing downturn. But I see no reason why investors should buy the stock right now.

To get comfortable buying the stock at today's levels, you need to believe margins and deliveries will improve by 2009. But there's no evidence of that yet, so I continue to flag Ryland as overvalued.

Home Solutions of America (Flag)

I've flagged Home Solutions because of a big lack of visibility about the future. The construction management firm did hold a conference call last week to provide updates on its projects, but it didn't include much new information.

Management said it is in the process of expanding its credit facility from $60 million to $125 million. However, the present credit line remains in limbo , since lenders have yet to sign off on the resolution of a note payable related to Home Solutions' acquisition of Fireline Restoration last year.

Numerous question marks surround the company's future revenue growth and where margins will eventually settle, as the company switches from high-margin hurricane recovery work to lower-margin construction management jobs.

Bricks and Mortar Portfolio
A Look at How Nicholas Yulico's Picks Have Performed
Rating Date Price at Rating Rating Current Price* Return**
Brookfield Properties (BPO) 1/23/2007 $28.67 Own 26.18 -8.7%
Global Real Estate ETF (RWX) 1/23/2007 $64 Own 64.49 0.6%
Ryland (RYL) 1/23/2007 $56 Flag 24.44 56.4%
Trump (TRMP) 1/23/2007 $17.50 Flag 7.15 59.1%
Penn National (PENN) 2/6/2007 $45.56 Own 59.10 29.7%
Hilton (HLT) 3/2/2007 $34.69 Own 46.80 34.9%
Melco PBL (MPEL) 3/12/2007 $15.46 Own 18.92 22.4%
Home Solutions of America (HSOA) 4/24/2007 $4.98 Flag 3.56 28.5%
Starwood Hotels (HOT) 7/12/2007 $72.37 Own 62.10 -14.2%
Average Total Return, Unweighted 23.2%
Close At Start of Portfolio Current Value
S&P 500 1427.99 1,546.63 8.3%
U.S. MSCI REIT Index 1140.36 1,053.13 -7.6%
*(10/2/07 closing prices)
**For "flagged" stocks, a drop in price is tracked as a positive for the portfolio, and a rise in price is a negative.

In keeping with TSC's editorial policy, Yulico doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.
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SYM TRADE IT LAST %CHG
BPO $20.52 0.00%
HLT $29.41 0.00%
HOT $84.09 0.00%
MPEL $19.44 0.00%
RYL $42.75 0.00%

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DOW 18,126.12 -36.87 -0.20%
S&P 500 2,120.79 -2.69 -0.13%
NASDAQ 5,097.9760 -8.6170 -0.17%

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