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Dear Fellow Investor,
You should be paying attention to this canary in the coal mine.
You see, Ultra-High-Net-Worth investors (“UHNWIs”) and institutional investors are shedding stocks in droves.
According to Mark Wiseman, the global head of equities at Blackrock, Inc., one of the world’s largest investment management firms with $6.9 trillion in assets under management, 50% of Blackrock institutional investors are actively reallocating their assets from public to private markets.
“We’ve never seen numbers like these before,” said Wiseman.
Why the switch now?
Recession fears? Trade war?
Inverted Treasury yields?
I’m sure those are all factors, but it could be that wealthy investors are just tired of low yields, volatility and the fact that public companies no longer value shareholders as their top priority.
Here’s proof. In August of this year, the Business Roundtable, a group of chief executive officers from major U.S. corporations, issued a statement offering a new definition of the “purpose of a corporation.”
According to the new definition of the “purpose of a corporation,” serving the shareholders and maximizing profits were no longer the top priorities. That age-old notion has now given way to more social-centric purposes.
It’s harder and harder to beat the market the way things are without having CEOs turning their backs on investors too. It seems to be the death knell of an increasingly irrelevant public market. No wonder the wealthy are fleeing.
Today’s digital age has brought extreme market efficiencies, and gaining any informational advantage in the public markets is nearly impossible. This makes above-market gains an uphill climb.
In market-speak, those seeking alpha are better off seeking elsewhere. If you’re playing the market, you might as well put your money in an index fund because there’s very little chance you’re going to beat it.
Institutional investors like university endowments and UNHWIs have long been at the forefront of investment trends, often forewarning of disaster — the so-called canary in a coal mine.
And what they’re saying loud and clear right now is “Get out of the stock market.”
But where do you put the money you pull out of the stock market? Follow the trail blazed by the wealthy and institutions and it will lead you to alternatives — specifically, private investments.
And in the world of private investments, the wealthy are putting their money in real assets, private equity or a combination of both.
Commercial real estate has long
delivered alpha for investors
seeking above-market returns.
That’s because unlike efficient public markets, inefficient private markets like commercial real estate allow skilled managers to exploit informational advantages for financial gain and for investor profitability.
Expert management can unearth value from market inefficiencies by, for example, acquiring a property at below-market value; leveraging operational advantages to update properties to increase occupancy and raising rents to market rates. The combination of improved cash flow along with long-term appreciation is a powerful combination for delivering killer returns — income well above market rates.
As a bonus, commercial real estate is illiquid and shielded from market volatility.
For recession proofing, there is one commercial real estate segment that’s as close to a sure thing as you can find in today’s market. Because we’ve become a renter nation, the multi-family asset class is thriving because of high demand and short supply.
This is especially true in the affordable housing segment. And the one subsegment we love is mobile home communities (“MHCs”).
We love MHCs because they’re in short supply with no relief in sight. Municipalities across the country are refusing to permit zoning for new MHCs, swayed by unfair stigmas associated with mobile homes perpetuated by pop culture and tornado jokes.
As a result, the MHC market is flush with value-add opportunities for those willing to put in the work.
You should consider MHCs for your next investment...and you don’t have to go it alone. Do what the wealthy do. Combine your love of real assets with your love of private equity and invest in a private real estate fund.
Here at Four Peaks, we’ve been investing in and reaping profits from MHCs for years. By partnering with us, you can take advantage of our expertise, personnel, processes, and infrastructure to profit from the MHC sector without the headaches of being a landlord.
Contact us today to learn how you can invest in MHCs and start earning the type of yields the public markets can’t offer.
FIND OUT WHY MOBILE HOME PARKS ARE ALPHA FOR SAVVY INVESTORS
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