NEW YORK ( TheStreet) -- The recent dividend selloff has created some good entry points for real estate investment trust investors, but true bargains -- with a wide margin of safety -- are harder to find. Still there's one blue chip that is becoming noticeably undervalued and the tailwinds are being driven by more than the whispers of Uncle Ben (Bernanke).Digital Realty (DRL) -- a dominating global data storage REIT with 123 properties and over 23.1 million square feet -- has been the target of a Highfields Capital Management short squeeze. Since May 8, Digital has been under the microscope as the hedge fund contends that Digital's shares are worth only around $20, much less than the $59.89 pricing today.
The short thesis is essentially centered around a silly argument that Digital's earnings (or FFO in REIT-dom) aren't sustainable and that the San Francisco-based REIT is not accounting for certain cap ex-related expenses. It's not common for a blue-chip REIT to become the subject of a short play and I find Highfield's arguments to be extraordinarily stupid. Why?