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Steve Romick’s Top Short Positions: VZ, AVB, ESS, FRT

September 27, 2010 | About:

Shorting stocks as a strategy is reserved for people who really know what they are doing. The potential loss for longing equity is 100%, the potential loss for shorting is infinity. On the other hand, shorting is being practiced by so few people so the competition is not as fierce. And in general, people who short tend to do more homework than people who go long.

In the past, we covered Steven Romick of FPA Funds rather extensively. He was a nominated for the best fund manager for the decade by Morningstar in 2009. The fund he manage, FPA Crescent Fund returned 10.18% for the 10 years through August 31, 2010, a decade during which S&P 500 managed to lose money.

Romick’s investment strategy is very flexible. As of June 30, 2010, this is how he allocate his funds: Equities 51.7%, Bonds & Notes 32.76%, Cash & Equivalents 18.21%, Common Stocks Short -4.31%. He also held a fraction of percent of Preferred Stocks, Limited Partnerships and Futures.

Interestingly, Romick actually discloses his short positions. As of June 30, 2010, he has 31 short positions, many of which are tiny positions that are immaterial. Here are his top five short positions:

Symbol Number of Shares Value ($1000) Percentage (%)
VZ -785000 -21995.7 -1.4
AVB -100400 -9374.35 -0.6
ESS -87900 -8573.77 -0.55
FRT -106800 -7504.84 -0.48

Verizon Communications Inc. (NYSE:VZ)

Verizon Communications, formed by the merger of Bell Atlantic and GTE, is one of the world's providers of high-growth communications services. Verizon Communications Inc. has a market cap of $92.27 billion; its shares were traded at around $32.64 with a P/E ratio of 14.32 and P/S ratio of 0.86. The dividend yield of Verizon Communications Inc. stocks is 5.82%. Verizon Communications Inc. had an annual average earning growth of 2.3% over the past 10 years.

AvalonBay Communities Inc. (NYSE:AVB)

AvalonBay Communities, Inc. is a real estate investment trust. Avalonbay Communities Inc. has a market cap of $9.1 billion; its shares were traded at around $106.9 with a P/E ratio of 28.66 and P/S ratio of 10.69. The dividend yield of Avalonbay Communities Inc. stocks is 3.34%.

Essex Property Trust Inc. (NYSE:ESS)

ESSEX PROPERTY TRUST, INC. is a self-administered and self-managed real estate investment trust, engaged in the acquisition, refurbishing, marketing, leasing, management, development and construction of multifamily residential and retail properties. Essex Property Trust Inc. has a market cap of $3.35 billion; its shares were traded at around $110.57 with a P/E ratio of 22.47 and P/S ratio of 8.15. The dividend yield of Essex Property Trust Inc. stocks is 3.74%. Essex Property Trust Inc. had an annual average earning growth of 6.1% over the past 10 years.

Federal Realty Investment Trust (NYSE:FRT)

Federal Realty Investment Trust is an owner, operator & redeveloper ofretail properties. Federal Realty Investment Trust has a market cap of $4.98 billion; its shares were traded at around $81.06 with and P/S ratio of 9.38. The dividend yield of Federal Realty Investment Trust stocks is 3.31%. Federal Realty Investment Trust had an annual average earning growth of 2% over the past 10 years. GuruFocus rated Federal Realty Investment Trust the business predictability rank of 4-star.

Check out Romick’s complete equity portfolio here: http://www.gurufocus.com/holdings.php?GuruName=Steven+Romick

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