Next on the list is one of my favorite value managers, David Dreman. If you’re not familiar with Dreman, you should be. He wrote the book on contrarian investing, and I mean that literally. His Contrarian Investment Strategies is a classic any serious investor should have in their library. He’s also a regular contributor to Forbes.
So, what has Mr. Dreman been buying?
One position that caught my eye is Mack-Cali Realty (CLI), a real estate investment trust specializing in office and light industrial properties.
REITs have gotten pounded in the recent “taper” turbulence, and Mack-Cali is no exception. In the past three months, the stock has lost a quarter of its value. But as the consummate contrarian, Dreman appears to view the selloff as an opportunity.
In looking at Dreman’s portfolio, it is clear that he does not take large, overweighted positions, and his overall investment in Mack-Cali is fairly modest. Still, it is telling that he is buying REITs at all given the recent volatility in their share prices.
At current prices, Mack-Cali yields a juicy 5.8%. Though disturbingly, the dividend was recently cut by a third. I like David Dreman, and recommend you read his books, but as a general rule, I don’t like to buy REITs with falling dividends. In fact, I like to see a long track record of growing dividends. I would gladly take a Realty Income (O) or a National Retail Properties (NNN) over Mack-Cali.