REIT Hedge Fund Up In Down Market

Feb 6 2009 | 1:16pm ET

Arcanum Capital Management’s REIT Investment Fund got off to a good start to the new year. The fund returned 3.4% in January while the average real estate investment trust dropped more than 17%, erasing all the gains from December’s rally.

About 20% of the REITs that the firm is monitoring are now trading below $5, according to portfolio manager Henrik Laulund, in an investor letter.

“The large REIT correction over the last few months has brought REIT prices down to a more reasonable level,” he wrote. “Compared to real estate sold on the private market REITs are now trading at huge discounts and appear inexpensive. Compared to stocks in general REITs are now also reasonable priced.”

However, Laulund added that it is difficult to say if the market has reached the bottom because it tends to overreact in both directions.

Arcanum’s fund gained 21.8% last year.


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