If you haven’t bought Government Properties Income Trust (GOV) when I talked about about 2 years ago (see here), then you got a great second chance now. This is a fantastic income generating machine that you can trust since its tenant is the governments, which for sure will have the money to pay the rentals. If they are short of money, they can always tax you and me to make it up. Unless GOV changes its business model someday to stay away from the excellent tenants of Uncle Sam, I don’t see how it won’t make money.
Well, apparently somebody got panic lately and dumped the stock en mass. It has dropped over 10% in the past 2 weeks. The reason? GOV was making secondary share offering to pay down its debt. When a company issues more shares, it is diluting the existing shares and that spooked the shareholders. They ran in rush. But it is stupid. The thing is, GOV is actually doing something great in the long run for the shareholders because it is a cheaper way to reduce debt by selling more shares than borrowing money. Apparently the insiders think the same as I do and see this panic selling as a great buying opportunity. Two insiders, Trust directors Barry and Adam, bought $10.3 million and $8.5 million worth shares, respectively, following secondary share offering. If they did not consider this was a great buy, they would not have bought the shares, period. I bet they know much better about the company’s prospects than those outsiders who dumped the stock. I will go with them and have added more to my existing positions. By the way, GOV’s current dividend yield is 7.5%.
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