I really want exposure to commercial real estate so I am willing to buy Apollo Commercial Real Estate Finance ( ARI) at 90% of net asset value. Commercial real estate has not recovered as quickly as the residential markets but there are signs of improvement. There is $1.6 trillion of CRE loans that will need to be refinanced over the next five years as we reach the outer limits of extend and pretend, and that is going to create significant opportunities for Apollo.

We have done very well with alternative-income vehicles associated with Apollo Global Management in the past, and I expect to do so with its CRE Finance offering. The hedge fund and asset manager has extensive real estate and finance assets under management, and its expertise should help the finance REIT turn in stellar long-term returns.

That wraps up my view on the world and what I think is cheap enough to buy right now. It is interesting that outside of small banks and long shots, which are separate businesses and portfolios in my mind, I can only find 25 stocks to buy now at current prices.

Even if I jumped into a full 2% starting position, new portfolios would only be 50% invested. Since I am a scale buyer, the vast majority of the time the actual percentage would be less than that initially. There is no excess of cheap stocks now. While that is not a market call, it does serve as something of a caution flag for me.

At the time of publication, Melvin was long NLY, ARR and ARI.

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