Diamond Hill Capital, an investment management company, released its “Small Cap Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fourth quarter posted another period of favorable gains for equity markets, with the Russell 2000 Index returning 2.19%, roughly in line with the Russell 1000 Index’s 2.41% gain. Health care (+18.6%) emerged as the best-performing sector in the Russell 2000 Index. Heightened uncertainty and geopolitical risks contributed to a mixed ma ...

Core Viewpoint - The article discusses the risks associated with shorting REITs, particularly in December 2025, when short interest increased as REIT prices were at their lows, suggesting that this strategy may lead to significant losses as the market rebounds in 2026 [1][3][5]. Group 1: Market Trends and Shorting Dynamics - Short interest in REITs surged in December 2025, coinciding with a market low for these assets [1][3]. - The Vanguard REIT ETF (VNQ) saw a substantial price increase in 2026, indicating that many shorts entered positions at an inopportune time [5]. - The average short position is currently underwater by about 5%, which is not unusual in the stock market [5]. Group 2: Risks of Momentum Investing - Shorting based on momentum is deemed particularly risky, as it assumes that price movements reflect underlying fundamentals, which may not always be the case [7][10]. - The average stock historically rises by 8%-9% annually, meaning that short sellers must outperform this benchmark to avoid losses [11][12]. - The asymmetry of risk in shorting is highlighted, as potential losses are theoretically unlimited while gains are capped at the stock price going to zero [17]. Group 3: Specific REITs Under Scrutiny - Centerspace (CSR) is identified as a heavily shorted REIT, with a short interest increase of 270 basis points in December [14][16]. - Other REITs with significant short interest include NETSTREIT (NTST), Acadia Realty (AKR), and Americold (COLD), each facing unique market conditions that challenge the short thesis [26][34][40]. - CSR is projected to remain profitable, with consensus estimates for FFO per share showing steady growth through 2027, making it a risky short position [20][22]. Group 4: Potential for Short Squeezes - The article suggests that CSR, NTST, AKR, and COLD are well-positioned for potential short squeezes due to high short interest and the stability of their underlying fundamentals [49][50]. - The demand for cold storage properties remains strong, indicating that Americold could recover from current oversupply issues, further complicating the short thesis [42][45]. - The overall sentiment is that shorting stable, profitable companies with high dividend yields is a precarious strategy, especially as market conditions improve [47][49].

MINNEAPOLIS, Jan. 27, 2026 /PRNewswire/ -- Centerspace (NYSE: CSR) will release its operating results for the quarter and year ended December 31, 2025, after the market closes on Tuesday, February 17, 2026. Management will host a conference call to discuss those results on Wednesday, February 18, 2026, at 10:00 a.m. Eastern Time. Interested parties may access the conference call via the following: Live Conference Call Details: Live webcast: https://events.q4inc.com/attendee/297674377 Operator Assisted Dial ...

MINNEAPOLIS, Jan. 22, 2026 /PRNewswire/ -- Centerspace (NYSE: CSR) announced today the tax treatment (Form 1099-DIV) for calendar year 2025 distributions on its common shares of beneficial interest. Shareholders are encouraged to consult with their personal tax advisors as to the specific tax treatment of their Centerspace distributions. SecurityDescription Record Date Payable Date Cash Distribution Per Share(1) Box 1aOrdinary Taxable Dividend Box 1bQualified Dividend(2) Box 2aLong-Term Capital Gain ...

Group 1 - The analyst has over a decade of experience researching various companies across different sectors, including commodities like oil, natural gas, gold, and copper, as well as technology firms such as Google and Nokia [1] - The analyst has transitioned from writing a blog to creating a value investing-focused YouTube channel, where extensive research on hundreds of companies has been conducted [1] - The analyst expresses a particular interest in covering metals and mining stocks, while also being comfortable with other industries like consumer discretionary/staples, REITs, and utilities [1]

Upgrades - JPMorgan upgraded Outfront Media (OUT) to Overweight from Neutral with a price target of $25, up from $19, citing the out-of-home channel as the most resilient traditional advertising market with improved momentum in Q3 [2] - Guggenheim upgraded Grail (GRAL) to Buy from Neutral with a price target of $100, noting that while Galleri is not a perfect test, it remains the leading commercially available MCED test with a significant data moat [3] - Piper Sandler upgraded Floor & Decor (FND) to Overweight from Neutral with a price target of $80, up from $75, highlighting potential for comparable sales improvement by Q1 of 2026 [4] - KeyBanc upgraded Progyny (PGNY) to Overweight from Sector Weight with a price target of $30, indicating limited share downside and several positive catalysts over the next 12 months [4] - KeyBanc upgraded AT&T (T) to Overweight from Sector Weight with a price target of $30, attributing the recent share pullback to overblown wireless competition concerns [5] Downgrades - Raymond James downgraded Bath & Body Works (BBWI) to Market Perform from Outperform, stating that the company's growth will be below its long-term potential due to slow improvements in digital capabilities and distribution [6] - Wolfe Research downgraded Intellia Therapeutics (NTLA) to Peer Perform from Outperform, citing safety issues with nexiguran ziclumeran as a hindrance to the bull thesis [6] - Raymond James double downgraded Brighthouse Financial (BHF) to Market Perform from Strong Buy, referencing the announcement of its acquisition deal for $70 per share [6] - Raymond James double downgraded Centerspace (CSR) to Market Perform from Strong Buy, noting that while the portfolio is attractive for potential buyers, the recent rally has closed the valuation gap with multifamily peers [6] - Northland downgraded QuickLogic (QUIK) to Market Perform from Outperform, maintaining a price target of $5.95, after the company reported revenue in line with guidance and uncertainty regarding a $3M contract [6]

Core Viewpoint - Centerspace's Board of Trustees has initiated a review of the REIT's strategic alternatives, considering options such as sale, merger, and other business combinations [1][2]. Group 1: Strategic Review - The board is supported by independent financial and legal advisors and has not set a timetable for the review process [2][3]. - There is no assurance that the review will lead to a transaction or strategic change [2]. Group 2: Recent Sales and Portfolio Management - Centerspace has been actively selling properties, including a five-community portfolio in St. Cloud for $124 million, marking its exit from that area [4][5]. - The REIT also sold seven properties in Minneapolis for $88.1 million, indicating a strategy to pare down its portfolio in Minnesota [5]. - Despite these sales, the growth profile in Minneapolis remains significant, as noted by an investment analyst [6]. Group 3: Acquisitions and Market Strategy - Centerspace has expanded its portfolio by entering new markets, such as purchasing a 341-unit property in Salt Lake City for $149 million and a 420-unit community in Fort Collins, Colorado for $132 million [7]. - The company's strategy involves balancing portfolio expansion while pruning over-exposed markets, although challenges arise from the investment spread and slower market fundamentals [8].

Core Viewpoint - Centerspace's Board of Trustees has initiated a review of the company's strategic alternatives, considering options such as a sale, merger, or continuing its independent business strategy [1][2]. Group 1: Strategic Review - The review process does not have a set timetable, and no decisions regarding potential strategic alternatives have been made at this time [2]. - Centerspace has engaged BMO Capital Markets Corp. as its financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel to assist in the review [3]. Group 2: Company Overview - Centerspace is an owner and operator of apartment communities, with a portfolio of 68 apartment communities comprising 12,941 homes across several states including Colorado, Minnesota, and Utah [4]. - The company has been recognized as a top workplace for the sixth consecutive year in 2025 by the Minneapolis Star Tribune [4].

Company Strategy - Centerspace, a real estate company specializing in apartment complexes, is considering strategic alternatives, including a possible sale [1]

Financial Data and Key Metrics Changes - Centerspace reported a 4.5% year-over-year growth in NOI within the same-store portfolio for Q3 2025, driven by solid revenue increases and effective expense control [4][12] - Core FFO for Q3 was $1.19 per diluted share, with a reduction in the midpoint of core FFO guidance by $0.02 to $4.92 due to timing adjustments related to strategic transactions and G&A costs [5][12] - Same-store revenues increased by 2.4%, with a 20 basis point increase in occupancy and a 2.2% increase in average monthly revenue per occupied home [12][13] Business Line Data and Key Metrics Changes - The Denver portfolio faced challenges with Q3 blended lease rates down 3.5%, while North Dakota showed strong performance with blended increases of 5.2% [6][10] - Retention rates exceeded expectations at 60% during peak leasing quarters, with Minneapolis benefiting from improved occupancy and increasing rental rates [6][10] Market Data and Key Metrics Changes - The Minneapolis market is expected to outperform historical trends, with strong demand and absorption projected for 2026 [18][41] - Fort Collins showed significant outperformance compared to Denver, with retention rates 800 basis points ahead and strong year-over-year occupancy increases [10][41] Company Strategy and Development Direction - Centerspace is focused on enhancing market position and shareholder value through strategic acquisitions and dispositions, including the sale of lower-growth communities in Minnesota [5][10] - The company aims to maintain operational excellence and financial discipline while navigating the current cost of capital environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in Minneapolis and expects it to be among the top U.S. markets for rent growth in 2026 [18][41] - The company anticipates that demand in Denver will start to outpace supply in late 2026, leading to improved market conditions [41][42] Other Important Information - The company has recycled approximately $212 million of capital through strategic transactions, enhancing the quality and efficiency of its portfolio [5][10] - Recent acquisitions included properties in Salt Lake City and Fort Collins, with a focus on scaling in these markets [9][10] Q&A Session Summary Question: How does the company balance share repurchases with reducing leverage? - Management indicated that share repurchases were a small use of proceeds and emphasized the importance of capital allocation based on market conditions [16][17] Question: What are the expectations for the Minneapolis market going forward? - Management expects a return to normalcy in Minneapolis, with potential for above-average performance due to strong demand and absorption [18][19] Question: Can you elaborate on concession levels in Denver? - Concessions in Denver range from no concessions to six weeks free, with the market experiencing varying levels of concessions [22][23] Question: What are the expectations for blended lease growth in Q4? - Renewals are expected to remain strong, but new lease tradeouts are negative, indicating a stable occupancy trend [30][31] Question: What are the drivers of higher G&A expenses? - Higher G&A expenses were attributed to additional fees and legal expenses, but these are not expected to be run-rate items [32][33] Question: How does the company view the performance of smaller markets? - North Dakota is expected to continue outperforming, with Minneapolis also showing strong potential for growth in 2026 [80][81]