Investors displayed renewed optimism about the outlook for real estate company stocks in May.
Seven of the 10 issues that comprise the hypothetical Inman Index finished the one-month period in plus territory while the Index overall gained 4.3 percent, a performance that matched the Dow Jones Industrials and bested both the Standard and Poor’s 500 and Nasdaq Composite, which gained 3.2 percent and 3 percent, respectively. For the year to-date, however, the Inman Index is still in negative territory with a 3.2 percent loss while the broader market measures have posted gains of 7.5 percent or better.
Financial companies IndyMac Bancorp and Fidelity National Financial were the top two Inman Index performers in May.
The mortgage company’s shares rose from $29.10 to $33.58, a gain of more than 15 percent, though the shares dived more than 27 percent for the first five months of 2007.
During May, IndyMac was named as one of the first lenders to participate in a new program that will allow borrowers to use an American Express card to make monthly mortgage payments. IndyMac Bank priced a $500 million noncumulative perpetual offer of preferred stock with an 8.5 percent dividend and said the offering, which was expected to close May 30, was oversubscribed as of May 23. Two research firms downgraded IndyMac’s shares: Roth Capital from “hold” to “sell” and UBS from “buy” to “neutral.”
Fidelity and competitor First American Financial were the only two Inman Index issues that rewarded investors with gains in May and the first five months of this year. Fidelity’s shares rose from $25.50 to $28.04, a 10 percent gain for the month; the shares are up more than 31 percent for the year so far. FirstAm’s stock gained 4 percent in May and almost 17 percent for the five-month period.
On the last day of the month, Fidelity announced the promotion of three senior executives: Alan L. Stinson was named CEO while Raymond R. Quirk and Brent B. Bickett were named co-presidents. Former CEO William P. Foley II will continue to serve as chairman of the board. Foley earlier in the month was named to Forbes magazine’s 2007 list of the nation’s highest-paid chief executives, ranked fourth with annual compensation of $180 million.
Fidelity and investment firm Thomas H. Lee Partners jointly agreed to acquire Ceridian Corp. in a $5.3 billion all-cash transaction. Ceridian’s two principal divisions are Human Resources Solutions, which provides human resources outsourcing services, and Comdata, a payment processor that also issues credit, debt and stored value cards. The deal adds to Fidelity’s interests in non-real estate-related businesses.
Fidelity, FirstAm and LandAmerica were the subject of an investment report by stock-rater Morningstar. The analyst said companies like Fidelity and LandAmerica “should do fine,” but gave the final nod to First American as the preferred pick with the conclusion: “We’d put our money on First America.”
Move Inc. and HouseValues, two small companies in the Inman Index, were again the biggest decliners on a percentage basis in May. Shares of Move dropped from $4.71 to $4.20, a decline of more than 10 percent for the month, and have fallen more than 27 this year. Shares of HouseValues were down 5 percent in May from $4.82 to $4.59 and have declined almost 26 percent this year.
Move opened May with a report of first-quarter financial results. Revenue was $71 million, a 3 percent increase compared with $69 million for the first quarter of 2006. Net income was essentially at the breakeven point compared with a net loss of $2.3 million, or $0.02 per share, in the prior-year first quarter. Separately, the company named Lorna Borenstein to the new position of president.
Marcie Geffner is a real estate reporter in Los Angeles.
Copyright 2007 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.